Professional Documents
Culture Documents
INTERNSHIP REPORT
RELIANCE WEAVING MILLS LTD
Khanewal Road, Multan
Submitted by: MUHAMMAD ADNAN MBA (Finance) Registration #: 22 Session 2009-11
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ACKNOWLEDGEMENT
Praise to Almighty Allah and His Prophet, Muhammad (PBUH) Who blessed me with the potential and ability to complete this study. I am also indebted to the eminent academicians my teachers, Mr. Khalid Aziz, Mr. Malik Mubashir from whom I have learned a great deal of knowledge, at different stages during my stay in the Department. In addition, my class-fellows, particularly deserve my deep and sincere gratitude for their cooperation, and assistance during this research. In the end, I find no words to express my feelings of gratitude and profound admiration to my affectionate father and mother for their invocations and benedictions, my brother for his moral support to carry myself through noble ideas of life, and my sisters for their devotions, innocent smiles and love. I can do no more than reaffirm my devotions to all members of my family.
M. Adnan Nazir
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RELIANCE WEAVING MILLS LTD is located in Multan. Reliance weaving Mills Ltd. (RWML) is part of the Fatima Group. Fatima Group established RWML on April 7, 1990 as a public limited company and obtained certificate for commencement of business on May 14, 1990. I visited RELIANCE WEAVING MILLS LTD three times for my report and was always warmly welcomed by their management and employees. All machinery installed in the mill is American. Plans and strategies are made in the head Office. decision is also made in the Head Office. Raw materials purchase Employees work in three
shifts, whereas these are both permanent and on daily wages. The mills units is supported by different facilities as canteen, store room, laboratory, godown, and many others. The production process is divided into two sections: In this report I have done SWOT analysis of RWML. Good quality with reasonable price is the major strength of RWML. Export sales cover major portion of total sales due to good quality. They contain very low portion of local market. Centralized decision-making is one of the weaknesses of the RWML, but good management covers this weakness in an appreciable manner. So for as Account department is concerned though there is a little bit workload on the employees, but inside friendly environment helps a lot to cover these tasks without fatiguenes and boredom. Finaly I have given some recommendations to cover these threats. My suggestions were highly appreciated by the management of RWML. Internship Report 5
Textile includes all the business related with yarn and cloths, so all the business from Cotton Ginning to Cloth and Apparel manufacturing comes under the Textiles. which are as under: There are different functions of Textiles,
Ginning
This is the first stage where cotton is separated from the seeds. Raw material of this stage is Cotton Seed. RELIANCE WEAVING MILLS LTD does not deal in this function.
Spinning
Raw material of this stage is Ginned Cotton. This cotton is spun to make yarn. Yarn produced in various qualities, this is the main raw material of RELIANCE WEAVING MILLS LTD, which is purchase from local market.
Weaving
In weaving unit yarn is converted into cloth through power looms or through hand driven machines. RELIANCE WEAVING MILLS LTD, engaged in this function.
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Reliance Weaving Mills Ltd. small, rural settlements. Few people lived in towns, as we now know them. Many people worked as producers of woolen and cotton cloth. They cleaned, combed, spun, dyed and many people worked as producers of woolen cloth. They cleaned, combed, spun, dye and wove the raw material into cloth. They did this work in their own houses. This type of production has become known by the general term of the Domestic (or Cottage) Industry. Work within the Cottage Industry was usually divided up between the members of one family. The women and girls were responsible for cleaning the sheep fleeces, carding the wool and spinning it. The process of weaving was physically hard work and, traditionally, it was the men who were responsible for it. Generally, at regular intervals, a cloth merchant visited each handloom weavers cottage. He would bring the raw material and take away the finished cloth to sell at the cloth hall. As soon as the new wool arrived, it was washed to clean out all the dirt and natural oil. After this, it was dyed with color and carded. This was the process of combing the wool between two parallel pads of nails, until all the fibers were laying the same way. Next, the carded wool was taken by the spinner and, using a spinning wheel, the thread was wound onto a bobbin. The unmarried daughters of the household who were called spinsters often performed this part of the process. The term spinster still exists in English to mean an unmarried lady. The spun yarn was then taken to the loom to be woven. In a weaver's cottage, the loom was often to be found on an Internship Report 9
Reliance Weaving Mills Ltd. upper floor. There were large windows in the room to let in plenty of daylight. The loom was worked by both hand and foot movements. Working the loom was quite strenuous work, which is why it was traditionally the work of the men of the household.
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PERFORMANCE
The textile industry which is endowed with a strong base of weaving had started its journey from almost non existence in 1947 with a meager size of 3000 shuttle looms that is too in the unorganized sector with only 10 textile units. The industry has gone through a long way and now possesses 220 units, 45000 looms in which include more or less 30000 shuttles looms. The textile industry is not only catering to the entire local requirement but sharing out 65% of the total foreign exchange earning. Pakistan being the fifth largest cotton producing country
provides a strong base for development sustenance of the textile industry. In spite of tremendous growth in all the peripheral areas of the textile industry includes cotton, ginning spinning, processing and made up sector. This industry which is the main pillar of the economy has not attained its optimum potential so far. The textile industry at present is passing through a transition phase. It is sailing smoothly under the protected cover of quota systems. How ever it has to face the rough water to open the sea when globalization of trade is implemented under` WTO agreement in 2004.
CAPACITY OPERATIVE
PERIOD. 1999-00 2000-01 2001-02 2002-03 UNITS 55 59 91 105 LOOMS 6600 7080 10920 13125
INSTALLED
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Reliance Weaving Mills Ltd. 2003-04 2004-05 2005-06 2006-07 115 153 166 157 14375 19125 20750 19480 12950 19556 19840 17850
PRODUCTION
PERIOD 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 GREY CLOTH
IN METERS (000)
Reliance Weaving Mills Ltd. number of textile units both listed and unlisted is however is around 452 approximately. The weaving capacity of the textile industry in our country is static at 9000 shuttle looms for past many years. The capacity of conventional looms is also around 19840, which have no match with quantum jump the industry ahs taken in this spinning sector. Instead of going for value added products the frenzy for setting up spinning projects dictated the mind of the textile industry over the years which took the 4.1 million spindles in 1996-97 instead of going to more value added textile products like dying bleaching units in the country.
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EXPORTS
The textile exports projection in the trade policy 1999-00 worth 6.5 billions $ of major textile products include cotton yarn with the target of 1800 million $, grey cloths 1680 million $, ready made garments 1050 million $, tent and canvas 55 million $, knit wear 950 million $ and made-ups 965 million $. The industry has to achieve these targets in the face of difficult t6rading conditions especially the disturb economies of Asian countries, threat of imposition of anti dumping duties on our gray cloths by the European Union countries, (E.U. has withdraw and anti dumping duty w.e.f 1.01.2002) cotton yarn of 20/s in Japan and constant decrease in imports from South Korea, all together posting an Internship Report 14
Reliance Weaving Mills Ltd. uphill task of achieving the export targets for the textile industry during the financial year. Duty drawback (rebate) is reducing from time to time and changing in sales tax refund to export oriented units, which is very poor sigh for the exporter of the value added items.
Reliance Weaving Mills Ltd. 5) Lack of institutional finance for modernization efforts.
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Following are the companies included in the group: Sr. # 1. 2. 3. 4. 5. 6. 7. 8. 9. Company Name FATIMA SUGAR MILLS LTD. RELIANCE WEAVING MILLS LTD. RELIANCE COTTON PVT. LTD. RELIANCE COMMODITIES PVT. LTD. RELIANCE EXPORT LTD. RELIANCE FIBRES LTD. FATIMA FERTILIZER COMPANY LTD. FAZAL CLOTH MILLS LTD. AHMED FINE TEXTILE MILLS LTD
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COMPANY PROFILE
Reliance weaving Mills Ltd. (RWML) is part of the Fatima Group. Fatima Group established RWML on April 17, 1990 as a public limited company and obtained certificate for commencement of business on May 14, 1990. Authorized capital of RWML at the time of incorporation was Rs.250 million and presently RWML has authorized and paid up capital of Rs.700million which has gradually increased and at present subscribed share capital of company stands at Rs. 308109370 , listed at Karachi and Lahore Stock Exchanges and also inducted into Central Depository Company (C.D.C). The company has issued 1 st tranche of Term Finance Certificate (TFCs) of Rs. million in February 2002, which has been fully subscribed. These TFCs are listed at Karachi Stock Exchange and has also been declared as eligible security in C.D.C. The principal business of the Company is manufacture and sale of cotton yarn and grey woven fabric. RWML production capacity consists of two main segments, Weaving and Spinning, both are ISO-9002 Certified for its quality. Today Reliance weaving Mills Limited is the 3 rd largest weaving mill in Pakistan with modern and technologically advanced greige weaving plant. The we4aving units are situated at Multan and the Spinning unit at Rawalpindi. The details are as under:
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Weaving units:
Weaving unit is situated at Fazalpur; Khanewal Road, Multan
commenced its commercial production on May 01, 1993 with 96 Tsudakoma air jet weaving machines imported from Japan along with modern auxiliary machinery to produce high quality cloth for export markets. Further and additional 20 Tsudakoma air jet weaving machines form Japan were installed in 1999 coupled with yarn doubling and twisting machines to produce value added fabrics. The installed production capacity of the unit is approximately 16.085 million meters per annum. Further more, a captive power plant consisting of 2.5 MW Capacities are also installed in the weaving unit-1 by which the company is saving power cost and production losses. During the last financial year, the company has implemented and expansion project for its weaving unit at a cost of a about Rs.500 million, comprising 108 Tsudakoma air jet weaving machines from Japan along with modern auxiliary machinery to produce high quality cloth for export markets. The project started its commercial production from October 01, 2001. The installed production capacity of the unit is approximately 21.70 million meters per annum.
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Reliance Weaving Mills Ltd. Another 48 air jet looms expansion plan in existing weaving unit # 2 is at advance stage, which will result in increase in production approximately by 9.00 million meters per annum. Now weaving unit comprise of 295 Tsudakoma with production capacity of 57.6 million meters of grey cloth annually.
Spinning Unit:
The spinning unit of the RWML is located at Mukhtarabad, Rawat, and District Rawalpindi in the province of Punjab. The unit commenced its commercial production on October 01, 1999 with 14400 spindles with a very good combination of European and Japanese machinery with allied accessories. It produces high quality yarn for in-house consumption and for export markets. The installed capacity after conversion into 20/s count is approximately 4.849 million kgs. The spinning unit has 35,520 spindles with an installed capacity of 12.30 million kgs of yarn converted at 20/s count. Cotton yarn produced is used in weaving units for manufacturing of fabric being sold in local and export market.
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CHIEF EXECTIVE
C.F.O.
FINANCE MANAGER
MKTING MANAGER
PURCHASE MANAGER
ACCOUNTS MANAGER
INTERNAL AUDITOR
CHIEF ACCOUNTANT
DCA
ASSISTANT ACCOUNTANT
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VISION STATEMENT
The company is interested to install complete textile finishing plant including bleaching, dyeing, mercerizing, calendaring, folding, printing plant in the existing weaving units at Multan to make it a complete composite unit, which can explore local and international market of high value products. The company would keep its emp0hasis on product and market diversification, values addition and cost effectiveness. We want to fully equip the company to play a meaningful role on the sustainable basis in the economic development of the country.
MISSION STATEMENT
The mission of the company is to operate state of the are textile plants capable of producing yarn and fabrics. The company will conduct its operations prudently assuring customer satisfaction and will provide profits and growth to its shareholders through: Manufacturing of yarn and fabrics as per the customers requirements and market demand. Exploring the global market with special emphasis on Europe and USA.
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Reliance Weaving Mills Ltd. Keeping pace with the rapidly changing technology by continuously balancing, modernization and replacement
(BMR) of plant and machinery. Enhancing the profitability by improved efficiency and cost controls. Recruiting, personnel developing, having motivating ability and and retaining dedication the by
exceptional
providing them good working conditions, performance based compensation, attractive benefit program and opportunity for growth. Protecting the environment and contributing towards the economic strength of the country and function corporate citizen. as a good
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THE PROJECT
The project of setting up 96 looms was successfully completed and the company commenced commercial production on May 01, 1993. The capacity of the project is 15.50 million Mtrs. Grey Cloth per year. In addition to further 20 looms was a installed in 1997 along with doubling machine and self power generation plant of 2.5 MW was installed in 1999.
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Reliance Weaving Mills Ltd. Warping Machine from Benninger Switzerland. Vaccum Cleaning plant from Germany. Power Generator from UK. 3 sets power Generator (Gas) from Caterpillar Switzerland.
The above plant and machinery was imported with the foreign currency financial assistance of Muslim Commercial Bank Limited.
LOCAL
The plant and machinery locally purchased up to 20% of the total machinery, which is as under: Bailing Press Motor Lifter 2 Nos. Beams 100 Nos. Electric material from semins. Folding Machines 3 Nos. Equipment for workshops. Electric appliances. Fire fighting equipment.
Both the imported and local machinery was brand new at the time of purchase.
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ESTIMATED COST
Pak. Rs. In (Million) Imported machinery Import incidentals Local machinery Land, Building, Others Total Estimated cost 210.50 25.20 13.50 44.80 294.00
ACTUAL COST
Imported machinery Imported incidentals Local machinery Land, building, others Total actual cost 199.00 22.40 5.60 47.00 284.00
The company has successfully completed the project within the projected cost by saving at least 11.00 (m) from the imported machinery due to forward booking of US $ on L/Cs through speculation with the bank. Internship Report 27
FINANCING
The project has been financed through; Pak.Rs. In (M) Share holders equity Redeemable capital FC loan I.BR.D Line world bank Local Bank Loan Directors Loan Local suppliers Actual project cost 109.55 3.00 146.45 13.60 4.80 6.60 284.00
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COMMERCIAL PRODUCTION
The company has commenced commercial production from May 1, 1993.
FINANCIAL YEAR
The financial year of the company is from October 1 st to September 30th.
RAW MATERIAL
The basic raw material for the company is cotton yarn, which is easily available in Pakistan.
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Reliance Weaving Mills Ltd. The total covered area is approximately 120,120sq. Feet (13,345sq. meters).
UTILITIES
SELF POWER GENERATION
The project has a self-powerhouse of 2.5MW consisting of 3 power Generators imported from caterpillar to provide smooth power to the Mills.
FEUL
Fuel requirement of the powerhouse is Sui Gas which is special installed by company on self finance scheme by cost of Rs.10.055 (M) and also have a diesel generator in case of any electric failure.
WATER
The total requirement of water for the project is met out of regular supply form the Tube- well.
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PRODUCTION
Year/Month Ended 30 September, 30 September, 30 September, 30 September, 30 September, 30 September, 30 September, 30 September, 30 September, 30 September, 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Production (000 Mtrs.) 12104 13255 13065 13530 13680 13193 14339 15539 15980 16587 Capacity Attained % 78.00 85.00 84.00 87.00 88.00 85.00 89.00 96.00 96.00 97.20
It is difficult to describe precisely the production capacity in weaving mills since it fluctuates widely depending on various factors such as count of yarn spun looms speed, width and construction of cloth. It also varies according to the production pattern adopted in a particular year.
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SALES (Cloth)
Year
Export sales Rs. (million) 54260 295639 395895 614060 660883 714587 755064 1228367 1115277
% sales
of
Export
To Total sales 43.96 73.46 88.19 92.03 90.89 98.72 94.34 93.99 85.34
Exports are increasing due to increase in demand in various markets because of with drawl of quota.
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Reliance Weaving Mills Ltd. The company is declaring regular dividend to its shareholders since previous 5 years. The shareholders of the company are fully satisfied by the company management decisions regarding dividends as well as operational matters. Due to regular payment of dividend in each year to the shareholders the market value of the companys share has increased to its face value to Rs.23 per share.
SHAREHOLERSS RIGHTS
None of the holders of the issued shares of the co. has any special or other interest in the property of profits of the company other than of as holder of ordinary shares in the capital of the company.
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WEAVING
Different types of the cloths are produced in the Weaving department. Weaving process includes the following steps. Yarn receiving and issuing Doubling/twisting Loading on sizing Sizing Loom shed Cutting/Folding and Packing
Yarn Receive
First of all in weaving unit yarn received by yarn clerk from the spinning unit. Yarn clerk check and count the bags and arrange its stacking in very arrange manner.
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Yarn Record
After receiving the correct result of the yarn from lab, it is recorded in stock register maintained in computer.
Yarn Requisition/Issuing
Yarn is issued to warping department after receiving the requisition from the General Manager/Production Manager.
YARN DOUBLING/TWISTING
The company has own doubler and twister machine in which yarn is doubled and twisted before issuing to warping section. But it must be noted that this process can only be operated due to demand of the certain construction to the cloth.
WRAPING
After receiving the yarn it is loaded on creel frame for the purpose of warping. There is one set in one time comprising of 12 Beams in which yarn warped for sizing. It is called one set ready.
SIZING
In this department one set consisting of 12 beams loaded on the sizing machine where all the chemicals are mixed and thread passed way from this mixture and prepare one full beam at the required length, which is commonly consisting of 55000 to 60000. Following are the chemicals used in the sizing machine: Internship Report 35
Reliance Weaving Mills Ltd. P.V.A Imported from Japan Textile wax from B.A.S.F. Pakistan Ltd. Starch from Rafhan Maize FSD.
The above chemicals are mixed from the sizing machine through revolving machine. After sizing the beams these are transferred to the stock of the sizing department and issued to production department as and when required otherwise these are held in this department with marking of its specification on that beam so that it can easily be located out of various beams stock.
LOOMS SHED
In this process, there are 116 looms installed by the company, which is the main process where yarn converted in grey cloth. Beam received from the sizing department is loaded on the loom and vacant beam replace with the beam gater. New beam knotted with the remaining thread of old beam with help of a modern knotting machine. These looms are adjustable. Its width can be or decreased with the requirement of construction of cloth.
WARP/WEFT
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Reliance Weaving Mills Ltd. There are two concepts of warp and weft in the looms shed. Warping is called the running of sized beam in state away and weft is called running of yarn cones in side away.
Machinery operation
In the looms shed there are more or less 40 workers are appointed on the looms. Each person is responsible for his three looms regarding breakage of thread, quality of cloth and efficiency of the loom production. This department has all the technical as well as maintenance staff in the loom shed so that any discrepancies may timely be removed and production may not suffer.
PACKING
There are two kinds of cloth packing one is bales shape band and other is in roll. All these packing are made with polythene bags which received from the store room bales are exported to Japan, Hong Kong, China and Taiwan. While roll packing are exported to USA and European countries.
Normal packing
1 Bale = 500 Meters and 600 Yards 1 Roll = 350 Yards
Piece length
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Reliance Weaving Mills Ltd. 1to 10 mtrs use in cut piece sale 11 to 20 mtrs use in local normal sale 21 to 50 mtrs use for export The packing may be changed in accordance with the demand of customers as well as the nature of consignment.
PRODUCTION REPORTS
Different reports are prepared when yarn is received from sizing section to completion of cloth. All records are maintained completely. Yarn receipt report in weft Sized beam receipt report Waste report Leno (cuttari) Rags (cloth) Cut pieces Daily used report Efficiency report Daily production report
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MARKETING MIX
Marketing mix is the marketing tasks that the company is to acquire its objectives in the target market.
4 PS
1. PRODUCT 2. PRICE 3. PLACE 4. PROMOTION
1.
PRODUCT
RWML produces high quality cloth only. They produce all kinds of construction as demanded by to customers. Its exports are more than 90% of its produce and remaining they sell in the local market. They sell to the well known local buyer like Al-Abid Silk Mills ltd. Fateh Textile Ltd. Chenab Ltd., which are the top leading companies of the Pakistan subsequently they export the cloth after processing. RWML take the advantage of second exporter from the govt. department. TYPES OF CLOTH BEING PRODUCED 100% Cotton Grey Cloth of the following main types is being produced.
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2.
PRICE
Pricing is an important element in the marketing process for any company. The price policy of co. should be in such a way that it should produce a reasonable profit for the co. and should satisfy the customer. Following tow factors are very important. Fixed cost Variable cost
FIXED COST
Fixed cost is the costs which remain always same in total whether produce large quantity or small quantity. Fixed cost per unit rises as the quantity produced decreases and vice versa. Some of the important factors of fixed cost are; Salaries Rent Local taxes
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VARIABLE COST
Variable cost changes in total with the change in quantity produced. It increases in total as quantity increases but remains same on per unit basis. Some examples are; Material cost Labor cost FOH
Direct selling
If co. sells directly then price components will be as follows; Fixed cost+variable cost+Desired profit
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3.
Direct channel.
RWML====Customer
Indirect Channel.
RWML==Middleman=====Customer Mostly RWML exports its products through ship. They are also using other modes of transportation as well: Trucking Shipping Air line 43
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Major export countries are as under; 1. Japan 2. Korea 3. Hong Kong 4. USA
SALES PROMOTION
RWML has no any promotion media to promote its products, because Japanese machines Tsudakoma are producing only cloth. Mainly Japanese and Hong Kong clients import the cloth form RWML.
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PROCEDURE
Inquiry
Customer inquiries are received via telex, Fax and letters and E-mail. These are directly sent to C.E for review. After C.Es review these are sent to export dept. in charge. After careful analysis, these inquires are replied after C.E.s approval.
Costing
Costing sheet prepares for C.E.s approval. In absence of C.E. dept. incharge approves price.
Costing approval
C.E. gives approval or may suggest any other price to be offered.
Prince quotation
In getting approval of costing and review of customers requirements, prices are quoted to customers for confirmation.
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Dispatch of goods/cloth
Packed cloth is dispatched to the customers. If the shipment is to be custom cleared from Multan dry port, goods are sent to Karachi on trucks with all necessary records. Dispatched goods are detail noted in relevant registers.
Shipment
RWML is having all well-known shipping companies namely;
Samin Enterprises
Pre-shipment documents are sent to Samin enterprises next day by dept. these goods are custom cleared at Multan dry port. Documents are sent to clearing agent same day or next6 day and followed up to Internship Report 46
Reliance Weaving Mills Ltd. ensure that these goods are custom cleared without any unnecessary delay. In case of dry port, original bill of loading and 4 th copy of shipping bills are collected from office agent for obtaining the rebate timely. If the consignment is cleared from Multan dry port than there is no need of follow up the consignment. Following are the companies, which are used for sea shipment. 1) APL CO. USA 2) UNITED MARINE AGENCIES 3) UNIQUE MARITIME AGENCIES 4) RIAZEDS PVT. LTD. 5) CHUGTAI BAOS. KARACHI
MIS Reports
Balance order instructions are updated periodically. Balance order list up dated fortnightly for their information. Sale comparison reports are updated in computer network on monthly basis, it comprises one months status of shipment, party wise and country wise invoice values, complaints and claims.
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Customer Complaints
After receiving goods, if customer find and defect / fault in the quality of cloth, he complains the same. Complaints are entered in complaint received register after taking complaint it is raised on corrective action and issued to responsible person/ dept. after getting reply, it is informed to the customer. Case is taken to remove the defects and to further restrain the faults. Complaints are processed quality and efficiently. After that claim is valued in US $ and Pak Rs. Than credit the customer account by couching the accounting entry and subsequent paid to customer in shape of FDD or FTT subject to realization the amount of concerned consignment.
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ADMINISTRATION DEPARTMENT
This is very important department of the organization as named shows, this dept. has to administer all the operations of the organization. Sections of this department are divided into offices as under; Labor office Security guard office Gate office Time office
LABOR OFFICE
As required by labor dept of the govt. of Pakistan, this office has been setup to deal with all the matters that are related with labor. The dept. is under the labor officer. He is responsible to resolve all the disputes, conflicts, misunderstandings and any other kind of matter, which may arise from time to time with the labor and the immediate supervisor or with any other person in the organization. It is the duty of the labor officer to inform the legal requirements concerning the labor and company affairs as well as any changes in rather labor laws. It is the duty of the labor officer to satisfy itself regarding payment bonus, gratuity, and other benefits to labor and to keep their morale and motivational level high.
Reliance Weaving Mills Ltd. company. All the keys relating to the mills office, labor colony, (quarters) are lying into the responsibility of the security officer No out side visitor can enter in the mills premises without the permission of the Admin Manager. a) Whenever any visitor wants to enter into the mill, security guard firstly contact with the authority in the mill top grant the permission to enter into the mills premises. b) They are the guardians of the every thing of the co. c) They are in uniform of dark army color. d) They sere and check the outward going pass of certain things when these going to out of the mills premises.
GATE OFFICE
This office has been made to keep the record of each and every thing coming in and going out of the Mills gate. For this purpose gate office clerk maintains two type of registers called; 1) Outward going pass register 2) Inward coming pass register When every thing including raw material, stores supplies, or any other things comes into the mills premises a document named as I.G.P is made in which information like date of supplier, description, quantity of the material and any other remarks are written. In the same way O.G.P is prepared for out going things etc. and they made a summary on daily basis and fax to head office.
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TIME OFFICE
1. It keeps the attendance records, which is than used to calculate the salary to be paid to the workers on monthly basis. 2. It keeps the records of the over time single as well as double, leaves, number of days worked of all the workers and than calculate their over time on the basis of the gross salary of each workers. 3. It keeps the records of gratuity, bonus, pensions and other benefits including CPL (cash paid leave) to each employee. 4. It keeps the records of Social Security, DOBI, Education Cess etc. of all employees. 5. This office keeps and maintain the time record of all the workers.
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PREPARATION OF ACCOUNTS
Following accounts are prepared in the Accounts Department of RELIANCE WEAVING MILLS LTD. 1. 2. 3. 4. 5. 6. 7. 8. 9. Store Creditor/Purchases Export Debtor/Realization Store Consumption Fuel and Power Salary and Wages Site Expansions Inter Unit Administration Expenses Selling Expenses
10. M/up on T.F.C. 11. Social security/E.O.B.I 12. Banks HBL FBL FBL (LOAN) ABL SPCB
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Reliance Weaving Mills Ltd. Building capitalized/repair and maintenance Labor welfare charges
PURCHASE PROCESS
First of all purchase requisition is issued to the different suppliers. Then the quotations are received from the different supplier and evaluated by the purchase manager Mr. Subhan sb. (C.A) then a purchase order is made. Three copies are maintained for the purchase order; One to the supplier One to the accounts department One is remained with the purchase department
Purchase includes; Raw material (Local) Starch Beveloid Softner-52 (Local) (Local) (Local)
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INTERNAL AUDIT
Inter audit is done by Mr. Sabir Bhatti Sb. is the Internal Audit Manager with his four Assistants; on daily basis of all the vouchers.
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Reliance Weaving Mills Ltd. Site stock inspection is also done at the end of each month by 3 or 4 accountants.
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When the imported items come into the counter, bank inform to get release the documents. By depositing the amount of the L/C is of sight nature. If the L/C is of deferred (30, 60, 90, 120 days) nature then the rate of the currency or the mark up required to deposit by the company in addition to L/C value is decided between the bank and the company provide some guarantee to the bank or the bank decides on the credit worthiness of the company. Amount deposited to the bank is then debited to the L/C account by debiting the bank is then debited to the L/C account by debiting the bank or payable. An entry is made: Internship Report 57
L/C # XYZ
Dr. Cr.
After releasing the documents these are sent to the agent sitting in Karachi who then release the shipment from the port by paying all the expenses authorities. The company sends time to time the amounts to the agent for the particular L/C #. If there is no payment is made to the bank then bank create the PAD is favor of the company and recovered form the RWML otherwise make the loan duly a mutual consideration. L/C # XYZ Dr. Import bill payable Cr. to cargo, carriers, customs, sales tax, income tax
Clearing agent after releasing the consignment dispatched it to the company and along with all documents (bill of entry and receipts of the expenses stated above). The company after checking all the documents sends the remaining amount if any to the agent. By making the same treatment in the companys account. When all the amounts are paid to the agent for that certain L/C then the entry is made to close the account of the agent for that particular L/C. the entry is: L/C # XYZ Agent Dr. Cr.
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SWOT ANALYSIS
STRENGTHS
1. Imported machinery 2. Strong market image 3. Awareness of product 4. High financial resources 5. Committed and competent staff 6. Strong industrial group
WEAKNESSES
2. Costly management staff 3. De motivated staff 4. No promotional activities 5. No other incentive except salary and bonus 6. Centralized control 7. Centralized decision making
OPPORTUNITIES
2. Potential in market 3. Market in USA & E.U. due to withdraw of quota 4. Throughout local market in Pakistan
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THREATS
1. New entrance 2. Economic instability 3. Tough competition 4. Increasing cost of production 5. War 6. Price fluctuations 7. Political instability
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The purpose of financial statement analysis is to make a quick assessment about a firms financial situation .It is also used to identify the major strengths and weaknesses of a business enterprise.
Tools of Financial Statement Analysis (1) Financial Ratio Analysis (2) Common Size Income Statements
Financial Ratios Financial ratios are a ratio of 2 numbers, at least one of which comes from the firms financial statements. A financial ratio has very little meaning unless it is compared to some other ratio. Two types of comparisons are cross-sectional analysis and time-series analysis.
Compare ratio for firm A at time t to industry average Compare ratio for firm A at time t to ratio for firm A at time t-1, etc.
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Reliance Weaving Mills Ltd. Financial ratio analysis is a fascinating topic because it can tell us so much about accounts and businesses. When we use ratio analysis we can work out how profitable a business is, we can tell if it has enough money to pay its bills and we can even tell whether its shareholders should be happy!
Ratio analysis can also help us to check whether a business is doing better this year than it was last year; and it can tell us if a business is doing better or worse than other businesses doing and selling the same things. What do we want ratio analysis to tell us? We have to start working on ratio analysis with the following question in our heads: What are we trying to find out? We can use ratio analysis to try to tell us whether the business is profitable has enough money to pay its bills could be paying its employees higher wages is paying its share of tax is using its assets efficiently has a gearing problem is a candidate for being bought by another company or investor
And more, once we have decided what we want to know then we can decide which ratios we need to use to answer the question or solve the problem facing us. Internship Report 67
Users of Analysis Information Now we know the kinds of questions we need to ask and we know the ratios available to us, we need to know who might ask all of these questions! This is an important issue because the person asking the question will normally need to know something particular. Of course, anyone can read and ask questions about the accounts of a business; but in the same way that we can put the ratios into groups, we should put readers and users of accounts into convenient groups. The list of categories of readers and users of accounts includes the following people and groups of people: Investors Lenders Managers of the organization Employees Suppliers and other trade creditors Customers Governments and their agencies Public Financial analysts Environmental groups Researchers: both academic and professional
The users of accounts that we have listed will want to know the sorts of things we can see in the table below: this is not necessarily everything they will ever need to know, but it is a starting point for us to think about the different needs and questions of different users.
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Reliance Weaving Mills Ltd. Investors To help them determine whether they should buy shares in the business, hold on to the shares they already own or sell the shares they already own. They also want to assess the ability of the business to pay dividends. Lenders To determine whether their loans and interest will be paid when due. Managers Might need segmental and total information to see how they fit into the overall picture. Employees Information about the stability and profitability of their employers to assess the ability of the business to provide remuneration, retirement benefits and employment opportunities. Suppliers other creditors and Businesses supplying goods and materials to other trade businesses will read their accounts to see that they don't have problems: after all, any supplier wants to know if his customers are going to pay their bills! Customers The continuance of a business, especially when they have a long term involvement with, or are dependent on, the business. Governments and The allocation of resources and, therefore, the their agencies activities of business. To regulate the activities of business, determine taxation policies and as the basis for national income and similar statistics Local community Financial statements may assist the public by providing information about the trends and recent developments in the prosperity of the business
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Reliance Weaving Mills Ltd. and the range of its activities as they affect their area. Financial analysts They need to know, for example, the accounting concepts employed for inventories, depreciation, bad debts and so on. Environmental groups Many organizations now publish reports
specifically aimed at informing us about how they are working to keep their environment clean.
Researchers
Researchers' demands cover a very wide range of lines of enquiry ranging from detailed statistical analysis of the income statement and balance sheet data extending over many years to the qualitative statements. analysis of the wording of the
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Reliance Weaving Mills Ltd. Interest Group Investors Ratios to watch Return on Capital Employed
Lenders
Managers Employees
Suppliers and other trade Liquidity creditors Customers Governments agencies Local Community Financial analysts Environmental groups Researchers This could be a long and interesting list Possibly all ratios Expenditure on anti-pollution measures Depends on the nature of their study and Profitability their Profitability
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Horizontal Analysis
ASSETS:
2010 (Rupees )
2009 in %
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Non-current assets 1,906,640,987 Property, Plant equipment Intangible assets Long-term investment Long-term deposits Current assets and tools Stock-in-trade Trade debts Loan Advances Trade deposits and payments Short Mark-up accrued Other Internship Report 73 term Investment and 45,560,675 41,794,462 49,793,062 32,572,103 (4,232,387) 9,222,359 103,050,338 772,397,644 157,754,493 187,188,985 1,122,041 125,667,584 loose 8,289,791 92,855,401 746,643,801 229,707,309 142,601,992 5,804,422 523,546 7,088,261 1,612,193 10,194,937 25,753,843 (71,952,816) 44,586,993 (4,682,381) 125,615,238 -----------6,677,598 -8.50 28.31 10.98 3.45 -31.32 31.267 -80.67 23993 ------414.19 1,033,593 and 69,999,586 2,421,340 1,963,229,490 ----------69,999,586 2,421,340 (56,588,503) 1,033,593 ----------------------2.88 100 ---------
85,157,274
2.546
In %
868,988,687
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Reliance Weaving Mills Ltd. Unappropriate profit 63,375,000 8,589,216 988,791,218 36,875,000 16,238,327 1,041,904,545 (276,877,550) 26,500,000 (7,649,111) (258,026,661) -28 71.86 -47 124,134,603 43,259,876 1,174,824,009 123,658,813 1,465,877,301 131,760,351 311,265,908 4,453,875 13,228,877 161,822,805 3.59 30.58 13.77 106.55 -24.76
3,430,009,780 3,344,852,506
21.23
2.546
Total Liabilities
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and Equity
Profit and Loss Account Common size Horizontal analysis 2010 2009 (Rupees) in %
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selling (50,282,001)
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ASSETS:
2009 (Rupees)
2008 In %
Noncurrent assets Property, Plant and equipment Long-term deposits 92,855,401 746,643,801 229,707,309 150,177,167 Current assets Stores, spares loose tools Stock-intrade Trade debts Loan Trade deposits and payments Internship Report 78 and Advances 49,793,062 and 1,612,193 70,523,132 32,572,103 5,804,422 60,515,927 3,021,926 -----------8,434,247 80,312,683 706,726,900 204,540,457 286,804,021 3,893,245 12,542,718 39,916,901 25,166,852 (136,626,854) 1,911,177 (10,722,865) (1,409,733) 70,523,132 31,737,856 15.62 5.65 12.30 -47.64 49.08 -17.72 -46.65 100 37.63 1,963,229,490 2,421,340 2,036,092,537 2,421,340 (72,863,047) --------------3.59 -------3.57
Reliance Weaving Mills Ltd. Tax refunds due Other receivables Short Cash bank balances term and Investment from government
1.88
TOTAL ASSETS
(47,423,863) 1.398
EQUITY AND
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----------102.34 126.46
shares of Rs 837,070,660
Unappropriate1,041,904,545
123,658,813
Noncurrent
Long Finance Deferred
1,174,824,009 124,621,517
term 1,466,364,215 &
(15,702,327) (19,020,360) 14,865,035 8,112,314 (31,745,338) -11.27 -1.59 13.54 23.08 -2.15
liabilities 43,259,876
3,392,763,283 (47,423,863)
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Current liabilities
Current portion of long term liabilities Finance under markup arrangement Trade Interest mark-up accrued and and other payables
Profit and Loss Account Common size Horizontal analysis 2009 2008
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in %
(Rupees in)
Sales Cost of sales Gross profit Other operating income Administrative expenses Distribution costs Other operating expenses Finance costs Profit / (loss) and selling 422,565,625 17,840,572 (48,421,073) (39,031,369) (9,584,861) before (199,406,645 ) 111,765,533 taxation Provision for taxation 257,915,200 20,305,651, (27,691,287) (38,357,316) (7,248,742) (93,157,973) 5 (2,465,079 ) 20,729,786 674,053 2,336,119 106,248,67 29.41 2 28.71 (15,789,023) Earnings per share (20,433,058) 32,196,716 4,644,035 28.81
51.45 49.68
63.84 -12.14
114.05
143,962,249
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Vertical Analysis
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Reliance Weaving Mills Ltd. Non-current assets Property, Plant and equipment Intangible assets Long-term investment Long-term deposits Current assets Stores, spares and loose tools Stock-in-trade Trade debts Loan and Advances Trade deposits and short-term payments Mark-up accrued Other receivables Short term Investment Tax refund due from government Cash and bank balances 3.00 % 22.52 % 4.6 % 5.46 % 0.032 % 0.21 % 0.241 % 3.66 % 1.33 % 1.22 % 2.78 % 22.32 % 6.87 % 4.26 % 0.17 % 0.21 % 0.048 % 0.016 % 1.49 % 0.97 % 55.59 % 0.03 % 2.04 % 0.07 % 58.69 % -------2.04 % 0.07 %
42.27 %
39.14%
8.98 %
7.37 % 85
Reliance Weaving Mills Ltd. Reserves Unappropriate profit 11.52 % 4.83 % 25.33 % 11.81 % 5.84 % 25.03%
Non-current liabilities
Long term Finance and other payables Deferred liabilities
20.76 % 29.56 %
1.102 % 0.48 %
Current liabilities
Trade and other payables Interest and mark-up accrued Finance under markup arrangements Current portion of non-current liabilities 3.75 % 1.65 % 38.97 % 7.45 %
51.81 %
43.82 %
100 %
100 %
Profit and Loss Account Common size vertical analysis 2010 2009
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Reliance Weaving Mills Ltd. Sales Cost of sales Gross profit Other operating income Administrative expenses Distribution and selling costs Other operating expenses Finance costs Profit / (loss) before taxation Provision for Taxation 11.57 % (1.48 %) (1.46 %) (0.178 %) (6.83 %) 10.57 % (1.55 %) (1.25 %) (0.31 %) (6.39 %)
100 %
(89.81 %) 10.19%
100 %
(86.47 %) 13.53%
1.39 %
(0.45 %)
4.61 %
(0.65 %)
0.94 %
3.96 %
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Non-current assets Property, Plant and equipment Long-term deposits 58.69 % 0.72 % 58.76% Current assets Stores, spares and loose tools Stock-in-trade Trade debts Loan and Advances Trade deposits and short-term payments Tax refund due from government Other receivables Short term Investment Cash and bank balances 2.78 % 22.32 % 6.87 % 4.49 % 0.17 % 1.49 % 0.048 % 2.108 % 0.97 % 2.37 % 20.83 % 6.03 % 8.45 % 0.11 % 1.78 % 0.09 % -------0.25 % 60.01% 0.07 % 60.84%
41.24 %
39.92%
7.37 %
7.27 % 88
Reliance Weaving Mills Ltd. Reserves Unappropriate profit 11.81 % 5.84 % 25.02 % 11.64 % 2.85 % 21.76 %
Non-current liabilities
Long term Finance and other payables Deferred liabilities
30.66 % 34.13 %
0.49 %
0.54 %
Current liabilities
Current portion of long term liabilities Finance under markup arrangements s Trade and other payable Interest and mark-up accrued
2008 100 %
(87.49 %) 12.51% 89
100 %
(86.47 %) 13.53%
Reliance Weaving Mills Ltd. Other operating income Administrative expenses Distribution and selling costs Other operating expenses Finance costs Profit / (loss) before taxation Provision for Taxation 10.57 % (1.55 %) (1.25 %) (0.31 %) (6.39 %) 10.98 % (1.34 %) (1.86 %) (0.35 %) (4.52 %)
4.61 %
(0.65 %)
5.42 %
(0.77 %)
3.96 %
4.66 %
INTERPRETATION
Horizontal Analysis Horizontal analysis of 2007 and 2006 at RWML shows that sales increased by 8.92 but CGS increased by 13.21% that show rising prices of raw material. Due to this factor Gross Profit increased by Internship Report 90
Reliance Weaving Mills Ltd. 18%, but firm was able to reduce its operating expenses, financial charges, taxes and to increase other income by considerable amount. This helped to fill gap created by CGS and as result NPAT increased by 74.25%. While looking to balance sheet, fixed assets decreased by 2.88% but long term investments increased by 30%. Investment in stock in trade decreased by 19.18%. Firm account receivable increased that means firm was not good to collect receivable. Cash balance increased by 28.39%. Non-current liabilities decreased by 13% that shows efficiency. But in the short-term liabilities increased to 49%. Horizontal analysis of 2006 and 2005 at RWML shows that sales increased by 51.45% but CGS increased by 49.68% that show rising prices of raw material. Due to this factor Gross Profit increased by 63.84%, but firm was able to reduce its operating expenses, financial charges, taxes and to increase other income by considerable amount. This helped to fill gap created by CGS and as result NPAT increased by 28.71%. While looking to balance sheet, fixed assets decreased by 2.4% but long term investments increased by 30%.
Vertical analysis
In Vertical analysis, CGS size has decreased from previous year that is good sign. Size of gross profit in proportion to sales has increased and that is the case with operating profit as well. But taxes and other charges size has decreased in proportion to sales. But important thing to note is that NPAT has increased by 0.94%, 3.96% and 4.66% in Internship Report 91
Reliance Weaving Mills Ltd. 2007, 2006 and 2005 respectively proportion to sales. Investment in fixed assets look to increased slightly but this factor is due to appreciation mainly and investment in fixed assets has increased but element of depreciation has reduced its value. Long-term investments and long term loans and advances are decreasing slightly in comparison with previous year. Firm has more inventory than previous year. This is because of increase in sales. Trade debts have lesser weight in total assets than in 2007 a compare to 2006 and 2005. Now interesting thing to note is that value of total current assets in total assets has increased by 2% and 4% in proportion to total assets. SHE has increased from 51% in 2007 to 43.82% in 2006 and 43.57% in 2005 that mean owners contribution is equal to that of creditor. Longterm liabilities are decreasing from 34.138% in 2005 to 30.66% in 2006 and 29.56% in 2005.
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Ratios Analysis
Ratio Analysis
We have to analyze firm from five point of view. Liquidity Analysis Activity Analysis Debt Analysis Profitability Analysis 93
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LIQUIDITY ANALYSIS FORMULAS i. Current Ratio = Current Asset Current Liabilities ii. Acid test ratio or quick ratio = Current Asset- Inventory Current Liabilities
ACTIVITY ANALYSIS FORMULAS i. Inventory turn Over = Cost of goods sold Inventory ii. Average Age of Inventory = No. of working days Inventory turn over Internship Report 94
No,
of
working days
PROFITABILITY RATIOS FORMULAS i) Gross Profit Ratio on Sale = G.P Net Sale ii) Gross profit ratio on cost = G.P C.G.S Internship Report 95 x 100 x 100
x100
x100
x100
MARKET ABILITY RATIOS FORMULAS i) Earning Per Share (EPS) = N.P.A.T. - Divto P. share Out Standing Stock ii) Dividend Pay out ratio Internship Report = Dividend P.S x100 96
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CALCULATION OF RATIOS
LIQUIDITY ANALYSIS It shows the firm ability to pay its short-term obligation on time.
CURRENT RATIO
2008 1: 0.74times 2009 1: 0.84times 2010 1: 0.98times
The ratios show that the companys current liabilities and current assets are almost equal. So the co. is in a position to meet its current liabilities on time.
The companys quick ratio has increased. So the company is liquid position is very strong.
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ACTIVITY ANALYSIS
Activity analysis shows the speed through which various current accounts are converted into cash and measures the efficiency of management that how productively it is utilizing assets to generate desire results.
The co. is converting the inventory 6.0times in 2010 into cash against the conversion of 4.8times of 2009 and 3.2times in 2008. It means that the sale of the co. has been increased.
Companys credit collection performance is depended upon L/C by the buyer. So the companys debtor collection period mostly depends upon the opening of letter of credit.
2009 11.50times
2010 12.20times
This ratio shows that the co. is making payment to the creditors within reasonable time period.
PROFITABILITY ANALYSIS
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Reliance Weaving Mills Ltd. The efficiency of the firm can be analyzed through its profits.
Cost of goods sold has remain more or less constant while conversion rate of $ is being higher therefore G.P. is very ideal.
The company profit is increasing with the passage of time. It is because of its 90% exports.
There is little increase in profit of the co. It is because of hiring of new employees which increases the salaries of the co.
RETURN ON ASSETS
2008 2.69% 2009 3.48% 2010 7.49%
MARKETABILITY ANALYSIS
EARNING PER SHARE
2008 Internship Report 2009 2010 102
The shareholders are earning Rs.2.82 against one share in 2010, which is more than in 2009 & 2008.
DIVIDEND DECLARATION
2008 6.7% 2009 7.50% 2010 7.50%
LEVERAGE ANALYSIS
Leverage analysis is used to measure the degree of indebt ness (up to what extent the firm is in debtness).
DEBT RATIO
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Reliance Weaving Mills Ltd. 2008 57% 2009 68.78% 2010 76%
DEBT-EQUITY RATIO
2008 186% 2009 322% 2010 220%
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RWML is paying interest 1.56times in a year, which is greater than previous years.
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Reliance Weaving Mills Ltd. On the basis of analysis it is wise to invest as a short-term supplier of funds in RWML because firms current ratio and quick ratio are in positive. Moreover the firms working capital is positive in both the years.
LONG-TERM INVESTOR
As the firms debt ratio is good in both the years I-e 76%, 72.54% and 68.78% in 2008, 2009 and 2010 respectively.. So, on the basis of this it is wise to invest in RWML as long-term supplier of funds.
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