1

chemicals and insurance. He was elected Chairman of all Pakistan Textile Mills Association. He
died in 1969, at the age of 51 having achieved so much in so short time.

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

The group has its roots firmly planted into four core business namely

 Textiles

 Power Generation

 Banking

 Cement

 Insurance

TEXTILES

The textile business is further subdivided into 3-textile division:

 Nishat Faislabad

 Nishat Bhikhi

 Nishat dyeing and Finishing Lahore

The textile capacity of the group is the largest in the country. An addition of 20,000 new
spindles, 100 new air jet looms and new dyeing plants has increased the existing capacity of
242,000 spindles, 740 looms and dyeing and finishing capacity of 5 million meters. The largest
exporters of textile products from Pakistan, for more then decade!

NML Lahore revenue 236,000,000.

 2

POWER GENERATION

Nishat group has also been a pioneer in power generation in the private sector of the country.
Nishat setup the first power generation unit in the private sector in 1995.

CEMENT

In 1992, Nishat Group acquired D.G Khan Cement Company Limited (DGKCC) from the
second largest project of the group and is ideally located in the heart of the country, with easy
access to transportation all over Pakistan. DGKCC unit No. 1 has a capacity of 2,200 tons per
day. A new unit heaving the capacity of 3,300 tons was setup in 1997.

International Finance Corporation and common Wealth Development Corporation have financed
this unit. With the addition of unit No.2, DGKCC has become the largest manufacturer of cement
in Pakistan.

BANKING

In 1991, Nishat Group ventured into the financial sector through the acquisition of Muslim
commercial Bank. MCB has grown ever since and is now the largest bank in the private sector.
MCB has a network of over 1200 branches employing over 12,000 people. Deposit base of
280.billiion and assets over 300.biliion. No of customers 4 million and 1026 braches in all over
the Pakistan

INSURANCE

Adamjee Insurance Company Limited (AICL) was incorporated as a Public Limited

Company on September 28, 1960 and is listed on all three stock exchanges of Pakistan. The
Company is also registered with the Central Depository Company of Pakistan Limited (CDC)
and is involved in the business of general insurance.

The Company commenced operations with a Paid-up Capital of Rs. 2.5 million, which hasgrown
phenomenally in the past 5 decades. As of 2008 the Paid-up Capital of the Companyis Rs. 1.022
 3

billion, which is the highest amongst all the General Insurance companies in Pakistan. AICL
enjoys a competitive edge in the insurance industry due to its strong assetbase, paid-up capital,
substantial reserves, balanced portfolio mix and steady growth in grosspremium.

Major competitors

Nishat competitors are:

 Crescent

 Chenab

 Arzoo

 Alkarms

 Sitara

 Kohinoor

 Amtex

But main competitors of Nishat Mill are

“Crescent Textile Mills”

“Chenab Textile”
 4

Organizational structure
 5

Area of my internship

Accounts department

There are teams working in the accounts department recording and maintaining
different sections of Nishat Mills Ltd.

These teams include the following:

 Power
 Costing
 Purchases
 Dyeing and finishing
 Audit and Accounts of Administration

Power section

This includes the team of three persons headed by AGM Mr. Tariq Iqbal Khan
subordinated by AM Mr. Muhammad Burhan and AM Mr. Ali Mesam. They
control, record and maintain the records of Power units installed by Nishat Mills
along with its textile units. These units are numbered from 41-45 units. All issues
related these units and issues regarding the LESCO and SNGPL are tackled in this
section of accounts. Very agile and energetic team deals these matters tactfully and
keeps the power run through the mills. It is the life line of Mills.

Costing
This team includes four members reporting to the AGM Mr. Tariq Iqbal Khan.
These include Mr. Nisar Ahmed, Mr. Naveed Ahmed, Mr. Aslam,
 6

Mr. Abrar. This team is agile in accounting for both variable costs in the dyeing
finish and weaving. Their responsibilities also include verifying the exports bill
and bility numbers, to take the stock record from the units 31, 32 and 36.
Purchases & Imports

This department is headed by the Manager Mr. Muhammad Shahid who is assisted
by the Deputy Manager Mr. Ahmad Shakur Malik and a team of about four
persons assist them to record, maintain and report accounts regarding the purchases
particularly import purchases. They also account for the fixed assets of company.

Dyeing and Finishing

It consists of a team led by Manager Mr. Shahanzeb. This team is basically a
costing team that accounts for the dyeing and finishing costs incurring at each
process of dyeing and finishing.
Admin Accounts and Audit team
This is a largest team on the accounts floor which consists of seven members
including the head. It is headed by Manager Mr. Khalid Rabbani. This team is
performing multiple tasks. They are making records of the accounts of admin and
also performing the job of internal audit auxiliary. It is helping the printing and
proof reading of annual financial report of company. Once it is proof read by this
team then it is sent for printing. It is also maintaining the admin accounts.
 7

Training Program

It started from the 20th of September 2017 in the accounts department of Nishat Mills Ltd. I was
hired as internee in unit#19 accounts by the acceptance of my application of internship. I was to
report to the Assistant Manager Power sector, Mr. Muhammad Burhan. He introduced me to the
system on which the accounts are maintained on the daily basis. It is oracle based environment
which has been modified by the IT department to help Nishat to record maintain and report the
accounts as required by the different departments.

In the first week I got familiarity with the system and with the basis entries in the journal
vouchers. These were for the expenses and liabilities to be recorded in the official login of the
AM. I got familiar with the working environment on the official login of the organization and
learned how it works to enable the smooth working of the organization.

I also learned by helping the personnel on the floor the scanning and printing of different
documents. Nishat is turning to be a paperless organization so a systematic linkage has been
established among systems and scanners have been attached to the floor that enables everyone to
scan the papers and make a soft copy of each document they receive in hard form. This is aimed
to be a environmental friendly organization.

In the second week it is the next step forward on the system. This week I started entering bank
payment vouchers in the system with an official login of AM. Many a bill were entered for
payment that these entries were registered and payments were to be made by the finance team
after checking and approval of AGM.

Sales tax calculation and sales tax implications were learned under the guidance of AM. Sales
tax according to the rates specified by PRA is deducted at source only on services received by
the Mills. The same is repaid to PRA monthly basis.

Likewise IT evaluation and its record method was taught by AM Mr. Muhammad Burhan and
AM Mr. Ali Mesam. IT is deducted while making payments to the creditors based on the
criterion specified by the FBR. IT and Sales tax both were assessed by the manually calculating
the amount from the bills.
 8

In the third week I entered in the books of accounts in system all those bills whose sales tax and
income tax was calculated in the last week. It was good experience to learn this practical work.

Then comes the reconciliation phase regarding the Income Tax and sales tax generated by the
system and tax return generated of sales and Income tax by the tax department. It took two days
each to tally income tax return and the system generated taxes. It was again a good learning
experience.

I was called for assistance in the cost team where I had to tally bility numbers with the transport
permits and was to mention the bill number and date of checking on the transport permit. It was
the first interaction with the cost team.

In the fourth week Microsoft representative visited Nishat Mills Ltd. To give the orientation on
their new product Office 365. It was an informative and professional introduction to office 365
that highlighted the uses of office 365 in the modern office scenario that has shortened the
distance and has reduced the office space by providing on the go usage on cellular device. It also
introduced the business version of Skype. The business and office social environment the best
replacement to Facebook in office environment named as Yammer. And other analytical tools
were also introduced by the Mr. Khalid- Microsoft Representative.

In the same week I learned to check the ledgers of debtors and creditors of Nishat Mils. Every
creditor and debtor has certain codes allotted to them that are entered in the system and the
ledgers are opened in the system for reporting purposes. These are reconciled at the month end
with the payments made and expenses recorded.

For the purpose of approval of a journal voucher a complete set is formed comprising of certain
documents that constitute a complete voucher to be completed and to be sent for approval to the
AGM or Manager. IT voucher takes 5 documents to be accompanied by the online voucher
number that is viewed from the system by the AGM and Manager. These documents include the
original invoice of the seller or service provider, IT information whether he is active filer or nor,
what is shown by the FBR regarding the creditor or debtor, ledger of the creditor. Likewise the
sales tax voucher is accompanied by certain documents from the online FBR or PRA sites to get
it approved from the AGM or Manager accounts. I scanned and make sets of these vouchers that
were to be sent for the approval.
 9

In the start of fifth week I was a called for in the purchase department. It comprises of a team of
assistant managers headed by the Manager Mr. Shahid Bashir. It deals with the imports of goods
that are necessary for the production. As the foreign reserves are on the shorter side in Pakistan
so State Bank of Pakistan does not allow importers to enter into purchase agreement of any
import amounting more than $10,000 and for that too, as the goods imported are reached in the
Mills gowdown, evidence of receiving of documents are sent to SBP at the allotted time given by
the SBP. All the imports documents are to be sorted out in the serial arrangement to keep the
serial wise arranged documents which helps to find the required document that is to be sent to
SBP on or before the allowed date. I arranged all the documents of the year closed 2016-17 in
serial wise. It took me two days to arrange these documents. Then I was to find the GRNs- goods
received numbers using the system and then to find the related documents from the arranged
documents. Then I scanned all these documents and got the prints of these documents. These
documents include the invoice number and the carriage invoice of the respective carrier. It was a
new experience and purchase process is worth knowing.

In the sixth week costing team was assigned the task of stock taking from the stitching units
31,32 & 36. It was factory area visit and it took a detail check of units for the closing year. All
sorts of inventory including, raw material, work in process and finished goods data was taken
with the counting of each segment of inventory. It was hectic and tiring job. It took two days of
doing it. It is a necessary task that needs to be undertaken to have a completer check on the
production process. There are teams working in the factory and jobs have been assigned on the
skills bases. Most of the production is exported. I came to know that the most expensive curtains
are being produced in Nishat that have a luxurious touch and delicacy in it outlook and in
making. Costing team is also responsible to submit the marketwise distribution lists to the
marketing department. I also assisted the team in doing so. Then as the quarterly reports of
commodities were to be submitted to CFO. It is made by the power’s AMs Mr. Ali Mesam and
Mr. Muhammad Burhan. I also assisted them in this making of quarterly reports. It was quite a
learning as how the real work is performed in making the financial report. Though the Oracle is
quite a system that generates ledgers and all reports pertaining to financial reports but some
times it happens that some technical issue may give rise to unbalance trial balance, Nishat Mills
is aiming to be a paperless company and its in the initial stages of implementation. IT department
 10

is also initiating the paper less working. So as the time would pass there would be more
cooperation among the sections of different departments of company.

All in all it is very learned experience to be part of this esteemed institution that is contributing
not only in the exports of the country by making quality products but is also having finest people
on board on this journey of success.

Week wise tasks:

First week:
Entering the Journal Voucher for expenses and liabilities
Scanning of Documents and saving it to specified logins
Learned how to use the official login and emailing system
Second week
Bank Payment Voucher entry in the official account
Assessing the sales tax by calculating it manually
Calculating the amount of income tax manually on individual bills for payments
Third week
Recording the Sales Tax and Income tax in the system while entering journal and bank vouchers
Reconciliation of Income Tax and Income Tax Return
Bililty number telling with the transport permit
Fourth week
Attended the orientation of Microsoft Office 360 by the Microsoft officials
Ledger checking from the system for the payment reconciliation
Scanning and printing of vouchers for making the approval
Fifth Week
Arranging the Import documents in Purchase department
Finding GRNs of each import from the Oracle
Scanning the invoices of all due imports GRNs to the SBP
Sixth Week

Stock taking with costing Team

Making the marketwise distribution lists

 11

Quarterly reports of Nishat Commodities (imported coal)

Learned some on the job excel skills

 12

Structure of your concerned specialization department

CFO

COSTING DYEING & POWER WEAVING

MANAGER FINISHING
MANAGER
MANAGER

AGM AGM
AGM AGM
AM AM
AM AM
AM AM
AM AM
AM
AM AM
 13

Financial analysis
 14

DEFINITION:

Ratio Analysis is a form of FINANCIAL STATEMENT Analysis that is used to obtain

quick indication of a firm’s financial performance.
 15

RATIO ANALYSIS OF NISHAT MILLS LIMITED

CURRENT RATIO

The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-
term obligations.

𝐶𝑈𝑅𝑅𝐸𝑁𝑇 𝐴𝑆𝑆𝐸𝑇𝑆
𝐶𝑈𝑅𝑅𝐸𝑁𝑇 𝑅𝐴𝑇𝐼𝑂 =
𝐶𝑈𝑅𝑅𝐸𝑁𝑇 𝐿𝐼𝐴𝐵𝐼𝐿𝐼𝑇𝐼𝐸𝑆

2017 (Rupees In Thousands) 2016 (Rupees In Thousands)

Current Current Current Current

Assets Liabilities Assets Liabilities

30,193,783 23,934,194 25,850,830 19,553,041

1.26 1.32

CURRENT RATIO

1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2017 2016

INTERPRETATION: Current ratio has marginally increased from previous year, which indicates
that the firm’s current assets are not sufficient pay, its current liabilities.
 16

QUICK RATIO

The quick ratio is an indicator of a company's short-term liquidity. The

quick ratio measures a company's ability to meet its short-term obligations with its most liquid
assets

𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑨𝑺𝑺𝑬𝑻𝑺 − 𝑰𝑵𝑽𝑬𝑵𝑻𝑶𝑹𝒀

𝑸𝑼𝑰𝑪𝑲 𝑹𝑨𝑻𝑰𝑶 =
𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑳𝑰𝑨𝑩𝑰𝑳𝑰𝑻𝑰𝑬𝑺
2016 (Rupees In Thousands) 2015 (Rupees In Thousands) QUICK

Current Assets- Current Current Assets- Current

1
0.9
Liabilities 0.8 Liabilities
Inventory Inventory
0.7
0.6
17,471,071 23,934,194 14,647,585 0.5 19,553,041
0.4
0.3
0.2
0.1
0
0.64 0.75 2017 2016

RATIO

INTERPRETATION:

Quick ratio is slightly increased from the previous year from 0.65 to 0.75.it means Nishat has more long term assets as compared
to the previous year to cover its long term liabilities. Generally a ratio of 1:1 is considered to be acceptable.

GROSS PROFIT RATIO

 17

Gross profit is a company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross
profit is the profit a company makes after deducting the costs associated with making and selling its
products, or the costs associated with providing its services.

2016 (Rupees In Thousands) 2015 (Rupees In Thousands)

SALES GROSS PFOFIT SALES GROSS PFOFIT

49,247,657 5,379,838 47,999,179 6,264,308

11% 13.05%

𝐺𝑅𝑂𝑆𝑆 𝑃𝑅𝑂𝐹𝐼𝑇
𝐺𝑅𝑂𝑆𝑆 𝑃𝑅𝑂𝐹𝐼𝑇 𝑅𝐴𝑇𝐼𝑂 =
𝑆𝐴𝐿𝐸𝑆

GROSS PROFIT RATIO

1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2017 2016

INTERPRETATION:Gross profit means how much profit is earned on the product without
considering indirect cost. The gross profit is increased from the previous year 11.77% to 13.05%.
Small changes in gross profit significantly affect the profitability.

NET PROFIT RATIO

 18

Net profit, also referred to as the bottom line, net income, or net earnings is a measure of the
profitability of a venture after accounting for all costs. It is the actual profit without inclusion of
working expense in the calculation of gross profit.

2016 (Rupees In Thousands) 2015 (Rupees In Thousands)

NET PROFIT SALES NET PROFIT SALES

4,262,342 49,247,657 4,923,038 47,999,179

8.65% 11%

𝑁𝐸𝑇 𝑃𝑅𝑂𝐹𝐼𝑇
𝑁𝐸𝑇 𝑃𝑅𝑂𝐹𝐼𝑇 𝑅𝐴𝑇𝐼𝑂 =
𝑆𝐴𝐿𝐸𝑆

NET PROFIT RATIO

12%

10%

8%

6%

4%

2%

0%
2017 2016

INTERPRETATION:

It shows that companies profits have decreased as the cost of sales has increased that has
declined the net profit ratio. It is due to increase in the cost of materials and FOH costs.

RETURN ON EQUITY
 19

Return on equity (ROE) is the amount of net income returned as a percentage of

shareholders equity. Return on equity measures a corporation's profitability by revealing how

2016 (Rupees In Thousands) 2015 (Rupees In Thousands)

NET INCOME SHAREHOLDER NET INCOME SHAREHOLDER

EQUITY EQUITY

4,262,342 88,762,796 4,923,038 79,148,989

4.80% 6.22

much profit a company generates with the money shareholders have invested.

𝐴𝑁𝑁𝐴𝑈𝐿 𝑁𝐸𝑇 𝐼𝑁𝐶𝑂𝑀𝐸

𝑅𝐸𝑇𝑈𝑅𝑁 𝑂𝑁 𝐸𝑄𝑈𝐼𝑇𝑌 =
𝐴𝑉𝐸𝑅𝐴𝐺𝐸 𝑆𝐻𝐴𝑅𝐸𝐻𝑂𝐿𝐷𝐸𝑅 𝐸𝑄𝑈𝐼𝑇𝑌

RETURN ON EQUITY

7
6
5
4
3
2
1
0
2017 2016

INTERPRETATION: The return on equity measures the return against the investment of the
owners in the firm. The return on equity has increased on 2016 which means the company is
using its investment effectively.

INVENTORY TURNOVER RATIO

 20

The inventory turnover ratio is an efficiency ratio that shows how effectively inventory is
managed by comparing cost of goods sold with average inventory for a period

𝐶𝑂𝑆𝑇 𝑂𝐹 𝐺𝑂𝑂𝐷𝑆 𝑆𝑂𝐿𝐷

𝐼𝑁𝑉𝐸𝑁𝑇𝑂𝑅𝑌 𝑇𝑈𝑅𝑁𝑂𝑉𝐸𝑅 𝑅𝐴𝑇𝐼𝑂 =
𝐴𝑉𝐸𝑅𝐴𝐺𝐸 𝐼𝑁𝑉𝐸𝑁𝑇𝑂𝑅𝑌
2016 (Rupees In Thousands) 2015 (Rupees In Thousands)

COST OF GOODS AVERAGE COST OF GOODS AVERAGE

SOLD INVENTORY SOLD INVENTORY

43867819 12,722,712 41,734,871 101419645

3.87 4.12

INVENTORY TURNOVER
4.15
RATIO 4.1
4.05
4
3.95
3.9
3.85
3.8
3.75
3.7
2017 2016

INTERPRETATION: This year inventory has not been managed effectively than the
previous year as this ratio has decreased from the last year. Inventory is being stocked for
more period than the previous year i.e.2016.

TOTAL ASSETS TURNOVER RATIO

 21

Asset turnover ratio is the ratio of the value of a company's sales or revenues generated relative to the
value of its assets.

2016 (Rupees In Thousands) 2015 (Rupees In Thousands)

SALES TOTAL ASSETS SALES TOTAL ASSETS

49,247,657 118,725,911 47,999,179 106,599,219

2.41 0.75:1

𝑆𝐴𝐿𝐸𝑆
𝑇𝑂𝑇𝐴𝐿 𝐴𝑆𝑆𝐸𝑇𝑆 𝑇𝑈𝑅𝑁𝑂𝑉𝐸𝑅 𝑅𝐴𝑇𝐼𝑂 =
𝑇𝑂𝑇𝐴𝐿 𝐴𝑆𝑆𝐸𝑇𝑆

TOTAL ASSETS TURNOVER RATIO

1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2017 2016

Interpretation

This ratio depicts that in this year assets have been used more efficiently than the previous year
and have contributed in the profit more effectively than 2016.

FIXED ASSETS TURNOVER RATIO

 22

2017 (Rupees In Thousands) 2016 (Rupees In Thousands)

SALES TOTAL ASSETS SALES TOTAL ASSETS

49,247,657 118,725,911 47,999,179 19,553,041

0.44 0.75

𝑆𝐴𝐿𝐸𝑆
𝑇𝑂𝑇𝐴𝐿 𝐴𝑆𝑆𝐸𝑇𝑆 𝑇𝑈𝑅𝑁𝑂𝑉𝐸𝑅 𝑅𝐴𝑇𝐼𝑂 =
𝐹𝑖𝑥𝑒𝑑 𝐴𝑆𝑆𝐸𝑇𝑆

FIXED ASSETS TURNOVER RATIO

1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2017 2016

Interpretation

Fixed assets have been used very effectively in the sales. All fixed assets are being efficiently
utilized this year for the profit making by increasing the sales this year as compared to 2016.

EARNING PER SHARE

 23

EARNING AVAILBLE FOR COMMON STOCK

EARNING PER SHARE =
NO OF COMMON SHARE OUTSTANDING

2016 (Rupees In Thousands) 2015 (Rupees In Thousands)

Earnings for No. of outstanding Earnings for No. of outstanding

Common stock shares Common stock shares

47,999,179 12.12 14.1 101,140,000

EARNING PER SHARE

1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2017 2016

INTERPRETATION:

Nishat is managing the organization in the best interest of shareholder and keeping up the share
return nearly equal to the previous year.

INVENTORY TURNOVER RATIO

 24

COST OF GOODS SOLD

INVENTORY TURNOVER RATIO =
AVERAGE INVENTORY

2017 (Rupees In Thousands) 2016 (Rupees In Thousands)

COST OF GOODS AVERAGE COST OF GOODS AVERAGE

SOLD INVENTORY SOLD INVENTORY

43867819 12,722,712 47,999,179 19,553,041

3.87 times 4.12 times

INVENTORY TURNOVER RATIO

1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2017 2016

Interpretation: It depicts that inventories are now taking more time at turning in to the sales.
Marketing team must be more active in selling the inventories efficiently.

EBITDA TO SALES RATIO

 25

EBIDTA
EBITDA TO SALES RATIO =
SALES

2017 (Rupees In Thousands) 2016 (Rupees In Thousands)

EBIDTA SALES EBIDTA SALES

8229719 49,247,657 8,937,616 47,999,179

0.75 0.65

EBITDA TO SALES RATIO

1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2017 2016

Interpretation: It shows that EBITDA has increased in ratio to sales in this year. There is
obviously larger the sales this year as compared to 2016.

This margin depicts that in 2017 it has been marginally increased and some operating expenses
has given rise to this ratio by 0.10%. It may be due to higher fuel prices.
 26

Vertical and |Horizontal analysis of Nishat Mills Ltd. VERTICAL Horizontal Horizontal
FTY 2014-17 ANALYSIS Analysis Analysis
Summarized Balance Sheet 2017 FTY 2017 $ Change %Change
Non-Current Assets % 2016-2017 2016-2017
Property, plant and equipment 27,767,699 23% 3,052,604 10.99%
Long term investments 60,008,322 51% 4,609,242 7.68%
Other non-current assets 756,107 1% 121,893 16.12%
Current Assets -
Stores, spares and loose tools 2,106,878 2% 837,369 39.74%
Stock in trade 12,722,712 11% 2,788,976 21.92%
Short term investments 2,535,973 2% 470,756 18.56%
Other current assets 12,828,220 11% 245,582 1.91%
Total Assets 118,725,911 100% 12,126,422 10.21%
Shareholders’ Equity 88,762,796 75% 6,607,641 7.44%
Non-Current Liabilities -
Long term financing 5,245,629 4% 616,173 11.75%
Deferred tax 783,292 1% 521,725 66.61%
Current Liabilities -
Short term borrowings 14,697,393 12% 4,221,736 28.72%
Current portion of non-current liabilities 2,093,024 2% 112,256 5.36%
Other current liabilities 7,143,777 6% 47,161 0.66%
Total Equity and Liabilities 118,725,911 100% 12,126,422 10.21%
Profit & Loss -
Sales 49,247,657 100% 1,248,478 2.54%
Gross profit 5,379,838 11% (57,084,470) -1061.08%
EBITDA 8,229,719 17% (707,897) -8.60%
Other Income 4,259,666 9% 180,612 4.24%
Profit before tax 5,020,342 10% (704,696) -14.04%
Profit after tax 4,262,342 9% (660,696) -15.50%
 27

Vertical and |Horizontal analysis of Nishat Mills Ltd.

FTY 2014-17
Verical
Analysis Horizontal
Summarized Balance Sheet 2016 FTY02016 Change Horizontal
Non-Current Assets % 2015-2016 2015-2016
Property, plant and equipment 24,715,095 23% 357,826 1%
Long term investments 55,399,080 52% 3,438,626 6%
Other non-current assets 634,214 1% 2,381 0%
Current Assets 0% -
Stores, spares and loose tools 1,269,509 1% (66,254) -5%
Stock in trade 9,933,736 9% (416,457) -4%
Short term investments 2,065,217 2% (124,643) -6%
Other current assets 12,582,638 12% 2,268,010 18%
Total Assets 106,599,489 100% 5,459,489 5%
Shareholders’ Equity 82,155,155 77% 6,012,332 7%
Non-Current Liabilities 0% -
Long term financing 4,629,456 4% (952,764) -21%
Deferred tax 261,567 0% 14,105 5%
Current Liabilities 0% -
Short term borrowings 10,475,657 10% (1,048,486) -10%
Current portion of non-current liabilities 1,980,768 2% 197,518 10%
Other current liabilities 7,096,616 7% 1,236,514 17%
Total Equity and Liabilities 106,599,489 100% 5,459,489 5%
Profit & Loss -
Sales 47,999,179 100% (3,201,044) -7%
Gross profit 62,464,308 130% 56,417,524 90%
EBITDA 8,937,616 19% 677,570 8%
Other Income 4,079,054 8% 97,045 2%
Profit before tax 5,725,038 12% 1,335,113 23%
Profit after tax 4,923,038 10% 1,011,113 21%
 28

Vertical and |Horizontal analysis of Nishat Mills Ltd. VERTICAL Horizontal Horizontal
FTY 2014-17 ANALYSIS Analysis Analysis
Summarized Balance Sheet 2015 FTY 2015 $ Change %Change
Non-Current Assets % 2015-2016 2015-2016
Property, plant and equipment 24,357,269 24% 1,392,881 6%
Long term investments 51,960,454 51% 7,188,739 14%
Other non-current assets 631,833 1% 94,351 15%
Current Assets
Stores, spares and loose tools 1,335,763 1% 50,392 4%
Stock in trade 10,350,193 10% (2,402,302) -23%
Short term investments 2,189,860 2% (1,037,700) -47%
Other current assets 10,314,628 10% (1,163,830) -11%
Total Assets 101,140,000 100% (869,345,777) -860%
Shareholders’ Equity 76,142,823 75% 7,553,647 10%
Non-Current Liabilities
Long term financing 5,582,220 6% (849,084) -15%
Deferred tax 247,462 0% (227,416) -92%
Current Liabilities
Short term borrowings 11,524,143 11% (2,943,981) -26%
Current portion of non-current liabilities 1,783,250 2% 187,598 11%
Other current liabilities 5,860,102 6% 370,659 6%
Total Equity and Liabilities 101,140,000 100% (868,908,577) -859%
Profit & Loss
Sales 51,200,223 100% 51,200,223 100%
Gross profit 6,046,784 12% (1,816,990) -30%
EBITDA 8,260,046 16% (865,631) -10%
Other Income 3,982,009 8% 328,968 8%
Profit before tax 4,389,925 9% (1,585,627) -36%
Profit after tax 3,911,925 8% (1,600,627) -41%
 29

SWOT ANALYSIS OF NISHAT MILLS

LIMITED
 30

DEFINITION OF SWOT NANLYSIS IN BUSINESS:

“SWOT analysis is a process that identifies the strengths, weaknesses, opportunities and threats
of an organization. Specifically, SWOT is a basic, analytical framework that assesses what an
organization can and cannot do, as well as its potential opportunities and threats”

STRENGHTS

 ISO 9001-2000

Nishat textile is certified under ISO 9001-2000 and so it meets the requirement of international
standard and has a value in the mind of concern people. Nishat is also Oktex 100 using 100%
cotton fabric.

 STRONG SECURITY SYSTEM

Nishat textile limited has a greater security system. There are different hidden security cameras
which capture the all moments.

 HIGH QUALITY PRODUCT

Nishat textile limited using advance technology like they have modern machinery by which the
quality of product produced is very high.

 LASTEST MECHANIZED MACHINERY

They are using modern looms which they have purchased from Japan and France. And by
using that latest machinery the productivity of the employees are very high.
 31

 HIGHLY QUALIFIED AND SKILLED MANAGEMENT

The management of Nishat is skilled they have hired the foreign graduate people

in their management and also experienced people from all over the country.

 ADEQUATE FINANCIAL RESOURCES

The owner of the Nishat is one of the richest persons of the Pakistan and they

have more plant and investment in other industries like cement, Bank, They have.

 EQUIPPED WITH MIS SYSYTEM

They have a management information system by which the departments and employees are
connect with each other and they have a data ware house by which they can share their resources
easily.

 OWN POWER GENERATION PLANT

They have own power generation plant and Nishat is the pioneer in the private

Organization that starts the power generation and also selling to the WAPDA.

 BONUS AND AUDIT

The company provides a good ratio of bonuses to his labor staff to keep them highly motivated
Company is using financial resources adequately and Audit is

done properly at the end of every financial period to show the true picture of the company to the
general public.
 32

WEAKNESSES

HIGH COST OF PRODUCTION

The production cost is high because of not properly utilization of its resources.

CENETERLIZED DECISION MAKING

The decisions are made by the upper management which is weakness of the Nishat because they
have no proper idea about the situation and their decision can be not fruitful for the company.

SMALL INTERNATIONAL MARKETING

Although Nishat is very strong at national level but it has small market share in the global textile
industry due to the sound competitors like china, and Bangladesh etc.

LESS PROMOTIONAL ACTIVITIES

The advertising and promotional cost of the Nishat textile is very low it can take advantage for
more turnouts.

LAKE OF BENEFITS AND REWARDS OF EMPLOYEES

Nishat Mills are providing transport facility to their employees but not any other facility like
medical.
 33

OPPORTUNITY

ORGANIZATION CAN EXPAND PRODUCT LINES

Currently the Nishat not dealing in knitwear they can expand their product line by producing
knitwear. They have plants and the extra cost for the production will be low for Nishat. And they
also have better market repute.

ORGANIZAION CAN REDUCED THE COST BY PROPER UTLIZATION OF

RESOURCES

If the cost of different matters which is not utilizing properly is controlled by the Nishat
management they can produce more in a few costs. It has to develop a further systematic process
for controlling and managing resources.

ORGANIZATION CAN HIRE MORE EDUCATED AND EXPERINCED

PERSON

They can take advantages by hiring more skilled people and they should hire young, fresh and
energetic staff for their betterment.

ADVERTISEMENT

They can do promotion online to expand their target market.

LATEST TECHNOLOGY

It can acquire latest technology related to digital printing machines.

 34

THREATS

BUYERS NEEDS DEMANDS CHANGES

Because of the research and development the design and the product of Nishat

is just satisfactory as compare to competitors in the globally and they are not fulfilling the
demand of customer.

POLITICAL INSTABILITY

Political instability effects the Nishat because of the quota system the company can be restrict by
the government to export and also because of the political condition, the foreigners hesitate o
trade with Pakistan.

CHANGED OF GOVERNMENT POLICIES

Government policies are changing day to day so it is a threat for the Nishat to survive in such a
changeable situation.

TERRORISM

Due to the increasing threats of terrorism trade and investment has effected in Pakistan.

INTERNATIONAL COMPETITORS

Bangladesh and China are the major competitors at international level which is attracting the
customers. Due to the stability of their countries and incentives given by their Government.
 35

POLITICAL INSTABILITY:

The political situation of Pakistan is not satisfactory. Due to the rapid change in the Government
every government sets its own new trade policies. Govt. should apply sustainable policies for the
beneficial of the exporters as well as the investors.

ECONOMIC SITUATION:

The economic condition of Pakistan can also affect the foreign investors increasing inflation rate
make the cost of production high and thus reduce the profit margin of the investor.
 36

SOCIAL SITUATION:

The change in the lifestyle of the people affects the growing demand of the NTM products. The
change in the lifestyle and needs in different demographics also affect the demand of the
customers. Due to all these changes NTM is performing excellent for the excellence organization
as well as for the customer.

TECHNOLOGICAL SITUATION:

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

NTM Excellent computerized machines and devices are installed in the NTM \has made
extension in its present setup by installation of well advanced technology imported from Japan
China and France.
 37

CONCULUSION OF THE REPORT

Professional education can only be best taught and understand if there is a considerable emphasis
on practical aspect of education. Likewise other professional disciplines, MBA requires the
students to undergo practical training to enable the students to get firsthand knowledge.

I completed my training at NISHAT MILLS LIMITED for 6 weeks and gained much
knowledge, which would be difficult to obtain while sitting in the classroom. While preparing
this internship report, I tried to present whole of experience obtained at Nishat Mills Limited
that would be beneficial for MBA students not only from examination point of view but also
from practical point of view.

During this training the lot of person guides me with best way and proper manner of doing work.

Nishat Mills Limited provided its staff with better working environment and facilities, which
enhanced efficiency and output.

Nishat Mills Limited has increasing its profitability by working efficiently, procuring better raw
material and most importantly kept a very close association with its customers. It visits its
business partners frequently and provides them with the best service possible. All of the above
mentioned points led to strengthened relationship with its business partners making it very
difficult for its competition to penetrate into its market share.
 38

References
Power sector analysis

http://fp.brecorder.com/2017/04/20170415168666/

Textile sector analysis

http://jcrvis.com.pk/docs/Textile201611.pdf

Financial report 2017

http://www.nishatmillsltd.com/nishat/pdf/annual17.pdf

Financial report 2016

http://www.nishatmillsltd.com/nishat/pdf/annual16.pdf
 39

Annexes

Balance Sheet
As at June 30, 2016

2016 2015

Note (Rupees in Thousands )

EQUITY AND LIABILITIES

SHARECAPITAL AND RESERVES

Authorized Share Capital

1,100,000,000 (2015: 1,100,000,000) ordinary

shares of Rupees 10 each 11,000,000 11,000,000

Issued, subscribed and paid-up share capital 3 3,515,999 3,515,999

Reserves 4 85,246,797 78,639,156

Total equity 88,762,796 82,155,155

LIABILITIES

NON-CURRENT LIABILITIES

Long term financing 5 5,245,629 4,629,456

Deferred income tax liability 6 783,292 261,567

6,028,921 4,891,023

CURRENT LIABILITIES
 40

Trade and other payables 7 5,837,390 5,737,896

Accrued mark-up 8 110,751 113,320

Short term borrowings 9 14,697,393 10,475,657

Current portion of non-current liabilities 10 2,093,024 1,980,768

Provision for taxation 1,195,636 1,245,400

23,934,194 19,553,041

TOTAL LIABILITIES 29,963,115 24,444,064

CONTINGENCIES AND COMMITMENTS 11

TOTAL EQUITY AND LIABILITIES 118,725,911 106,599,219

2016 2015

Note (Rupees in thousands)

ASSETS

NON-CURRENT ASSETS

Property, plant and equipment 12 27,767,699 24,715,095

Investment properties 13 466,935 472,765

Long term investments 14 60,008,322 55,399,080

Long term loans 15 167,526 97,762

Long term deposits 16 121,646 63,687

88,532,128 80,748,389

CURRENT ASSETS

Stores, spare parts and loose tools 17 2,106,878 1,269,509

 41

Stock in trade 18 12,722,712 9,933,736

Trade debts 19 2,245,620 2,253,369

Loans and advances 20 7,637,999 6,111,644

Short term deposits and prepayments 21 60,454 65,433

Other receivables 22 2,828,285 2,023,092

Accrued interest 23 11,917 13,662

Short term investments 24 2,535,973 2,065,217

Cash and bank balances 25 43,945 2,115,168

30,193,783 25,850,830

TOTAL ASSETS 118,725,911 106,599,219

2016 2015 2014 2013 2

 42

Profit and Loss Account

For the year ended June 30,
2017

Note 2017 2016

(Rupees in
thousands)

SALES 26 49,247,657 47,999,179

COST OF SALES 27 (43,867,819) (41,759,788)

GROSS PROFIT 5,379,838 6,264,308

DISTRIBUTION COST 28 (2,367,862) (2,137,894)

ADMINISTRATIVE EXPENSES 29 (1,128,721) (1,101,658)

OTHER EXPENSES 30 (207,507) (316,886)

(3,704,090) (3,572,103)

1,675,748 2,692,205

OTHER INCOME 31 4,259,666 3,982,009

PROFIT FROM OPERATIONS 5,935,414 6,771,259

FINANCE COST 32 (915,072) (1,046,221)

PROFIT BEFORE TAXATION 5,020,342 5,725,038

TAXATION 33 (758,000) (802,000)

PROFIT AFTER TAXATION 4,262,342 4,923,038

 43

EARNINGS PER SHARE - BASIC AND DILUTED (RUPEES) 34 12.12 14

 44

Statement of Comprehensive Income

For the year ended June 30, 2016

2016 2015

(Rupees in
thousands)

PROFIT AFTER TAXATION 4,923,038

OTHER COMPREHENSIVE
INCOME

Items that will not be reclassified to profit or loss - -

Items that may be reclassified subsequently to profit or loss:

Surplus arising on remeasurement of available for sale

investments to fair value 4,625,023 2,685,598

Reclassification adjustment for gains included in profit or loss -

Deferred income tax relating to (deficit) / surplus on available (14,105)

for sale investments (521,725)

Other comprehensive income for the year - net of tax 4,103,298 2,671,493

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 8,365,640 7,594,531

The annexed notes form an integral part of these financial statements.

 45

Cash Flow Statement

For the year ended June 30, 2016

Note 2016 2016

(Rupees in Thousands)

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations 35 6,795,658

Finance cost paid (1,154,295)

Income tax paid (917,685)

Exchange (loss) / gain on forward exchange contracts (paid) / received (8,550)

Net (increase) / decrease in long term loans to employees (5,266)

Net (increase) / decrease in long term deposits (5,380)

Net cash generated from operating

activities 4,704,482

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditure on property, plant and equipment (5,500,140) (2,595,237)

Proceeds from sale of property, plant and equipment 151,007 104,339

Investments made (460,479) (632,389)

Loans and advances to subsidiary companies (21,792,896) (15,509,708)

Repayment of loans from subsidiary companies 20,174,125 15,556,374

Interest received 131,364 112,374

Dividends received 3,403,733 3,700,227

Net cash from / (used in) investing activities (3,893,286) 735,980

CASH FLOWS FROM FINANCING ACTIVITIES

 46

Proceeds from long term financing 3,213,739 1,209,108

Repayment of long term financing (2,485,310) (1,964,354)

Repayment of liabilities against assets subject to finance lease - -

Short term borrowings - net 4,221,736 (1,048,486)

Dividend paid (1,749,545) (1,573,781)

Net cash used in financing activities 3,200,620 (3,377,513)

Net increase / (decrease) in cash and cash equivalents (2,071,223) 2,062,949

Cash and cash equivalents at the beginning of the year 2,115,168 52,219

Cash and cash equivalents at the end of the year 43,945 2,115,168
47