Ahmed Zeeshan Khan, Comsats

INTERNSHIP REPORT
Nishat Textile Mills Limited
7, main. Gulberg 3, Jail Road Lahore
Presented by:
Ahmed Zeeshan Khan
CIIT/FA09-MBA-005/LHR
Submission date:
30-08-2010
Presented to:
Mr. Waseem Anwar
Assistant Professor
COMSATS INSTITUTE OF INFORMATION AND

TECHNOLOGY
Department of Management Sciences.
Jinnah campus Defense road, off rewind road Lahore
Ph No. 35321090, 39203101 Ext. 215
Comsats Institute of Information and Technology, Lahore 1

PART
ONE

Executive summary:

NISHAT has grown from a cotton export house into the premier and prestigious
business group of Pakistan with five listed companies, focusing at four basic
businesses; includes Textiles, Cement, Banking and Power Generation. Today,
Nishat is being considered to be at par, competing at its best with multinationals
performing locally in terms of its quality products and skilled full management
NISHAT Mills Limited is a Pakistan based co. indulged in the business of textile
manufacturing and of spinning, combing, weaving, bleaching, dyeing, printing,
stitching/apparel, buying, selling and otherwise dealing in yarn, linen, cloth and
other goods related to. And fabrics made from raw cotton, synthetic fiber and
cloth. The NISHAT GROUP is also engaged in power generation and its
accumulating, distributing and supplying.
I recently have been through my internship in Nishat Mills Limited, in which I got
training from sales tax department. The internship basically revolved around the
rebate or refund of sales tax. The system, the style of working & the commitment
of the employees in NML is really exemplary.
The distance between success & failure is dependent upon performance,

performance up to the mark, or a bit below average, & NML has always tried for
the best. & this is the only reason. It is known to be one of the prosperous
business giant in Pakistan. Well despite all these optimist points of Nishat Mills
Limited, I felt some roam where the improvement and hard work can immensely
boast up the efficiency of NML.
In the report I have tried to cover a very brief review about all I have been
through. I tried to touch every point as per the instructions made by my instructor.
It includes bunch of assorted words related to the Textile industry in Pakistan and
vision of its industry, detailed SWOT analysis. Afterwards I put all in it that I have
learned in the whole six week training, which is all about the Textile
Terminologies or industrial jargons. And process of taxation. I have made it
possible to transfer each and every thing that I have learnt there.
I have all my practical efforts in the form of this manuscript that’s the asset for my
future career.

PART
TWO

Dedicatio n
This Report is dedicated to

my parents who have
encouraged and supported
me in the field of study.
May ALLAH bless them!

(Aamin)
ALLAH, who made me able to

what alone I could not think
of.

PREFACE
Comsats is one of the leading universities in Pakistan. Management

department is the heart of this University. This institute is rendering
invaluable services to the Pakistan nation by producing outstanding
students who have aims to change the world. I myself feel proud as being
a part of that superb and prestigious institute and feel proud of my
mentors, because of their versatile teaching style and enormous
knowledge, as well as their scholastic approach.
Preparing students to face the world confidently and courageously,
Comsatsarranges an internship Programs during summer. The objective
of this program is to give practical exposure about our studies. It is also
helpful for understanding the organizational environment that how to deal
with professionals. For this purpose, I joined Nishat Textile mills Limited,
which is one of the largest Organizations in Pakistan. During my internship
span of 6 weeks, I got chance to work in sales tax Department and got
information about the working and documentation. I tried my level best to
include every thing, which I learned and observed there. This report
contains the details about the functions of Departments, of NISHAT Mills
Limited. This report is prepared in such a way that reader gets full
overview of NISHAT Mills Limited.

ACKNOWLEDGEMENT
.
All praises and thanks for almighty Allah who is entire source of knowledge and
wisdom to mankind. And whose uniqueness, oneness and wholeness, gave me
enough courage, knowledge and ability to accomplish this project.
Thanks are also due to last Prophet Hazrat Muhammad (peace be upon him),
through whom almighty Allah communicated knowledge to mankind and who is
forever a torch of guidance and knowledge for whole humanity.
I am thankful to my honorable professor, Waseem Anwar.
Who provide me a chance to enhance my knowledge by sending me to Nishat
Mills Limited, Lahore.
I really praise to the great efforts of my instructors (sales tax officers.
Mr. Rizwan,
Mr. usman,
Mr. sidique,
Mr. Salman.
Mr. Azam Janjua (GM f & A) and his P.A Mr. Illiyas.
Their constant encouragement made the successful accomplishment of this

Project. He guides me in each and every step in this project.
And also Staff of COMSATS institute, I again extended my deep gratitude and
heartiest thanks to all of them whose creativity, experience, wisdom, skill,
constructive criticism, scholastic approach and valuable suggestions guided me
throughout the preparation of this report.

PART
THREE

INTRODUCTION
When Pakistan came into being there were just sixteen textile mills, out of which
only 12 were operating. Then ALLAH almighty helped to grow the count upto 70
in 1957 as the result of industrial revolution, development took place. Now at
present there are 596-textile mills out of which 442 are in operation. The export
revenue of textile industry puts in a huge share to the GDP of Pakistan.
Since long, Pakistan is known to be the single crop economy i.e. cotton and
textile that claims the elephant share in terms of the contribution in the national
economy of Pakistan.
Despite efforts to bring in diversification in country's overall economic get-up the
textile sector continues to be the most important segment of the national
economy. Its share in the economy, in terms of GDP, exports, employment,
foreign exchange earnings, investment and revenue generation being altogether
pushed the textile industry to the heights by being the only single largest lifeline
of economic growth of country.
Ignoring harsh and hard above borders economic conditions, Pakistan's textile
industry has proved to be the knights by coming out of the international crisis in a
optimist manner.
Textile Imports of Pakistan
Import related to textile machinery and equipment has boasted up since 1997-98
when a bumper cotton crop was cashed out and the Textile Industry booked
humongous profits due to lower input cost. In the last five years more than Rs9
billion have been put into the industry as local investment for the import of
spinning related machinery.
NISHAT is one of the major buddy while discussing in terms of importing Textile
Machinery. from almost all developed countries. It is predicted that an additional
Rs10 billion would be required for Balancing, Modernization and Replacement
(BMR) in the spinning sector during the next three years for producing superior
quality yarn besides several units are in various stages of installation in Karachi
also. These facilities would improve value-addition in fabrics, besides increasing
the volume of fabrics and quality garments exports from the country. Textile is
the only sector where investment has been substantial and regular during past
three years. The most encouraging factor of this investment is diversity. The
entrepreneurs, who earlier concentrated on Spinning and Weaving, have now
established compact units adding state-of-the-art finishing units and knitting
machines to add value to their products. The latest addition to this is the setting
up of denim cloth producing units.At present, the export competitiveness of the

textile industry can be improved by aggressive marketing techniques and quality
improvements which have to be taken care of micro-level that is each textile unit
should make its own independent efforts to sell its products in different
international markets.
All the individual textile units should implement the ISO 9001 program for quality
standard and ISO 14000 for environmental standards to counter the threat of
globalization.
Textiles Exports from Pakistan
Textiles constitute a major exporting sector for Pakistan, which accounts for
about 60% of the country’s total foreign exchange earnings. The major export
items are yarn, gray Cloth, finished cloth, towels and bed sheets and their major
customers are the USA, EU, Japan and Hong Kong. Many textile exports take
place under quota arrangements With the EU and the United States. Gray cloth
constitutes roughly 16-18% of total cloth Exports from Pakistan.
Nishat gray cloth exports account for roughly 20 % of Pakistani gray cloth
exports. The Firm has been exporting to the USA for many years, and has only
recently started to export to EU countries.
In Pakistan, the cotton crop season runs approximately from August to March.
Prices are generally high at the start of the season in August/September, and fall
later on as supply increases. Following income tax law, the fiscal year runs from
October to September for textiles sector.
As a result global scenario has changed. Government and the corporate textile
sector adjusted their policies to achieve maximum benefits of free trade. So, local
structure of the corporate culture, investment pattern and fiscal and monetary
policies were significantly changed.
CHALLENGE:
To get maximum outcome from quota free regime, all out maxima efforts are
needed to boost textile exports and heap up access to the international markets.
In the context of boosting the exports, the State Bank of Pakistan has introduced
three facilities based schemes for the benefits of exporters which are, Foreign
Currency Export Financing Scheme (FCEFS),
Political Risk Guarantee Scheme (PRGS)
Export Guarantee Scheme (EGS).
The bank would provide 210 days credit facility to exporters for South America as
compared to 120 days credit facility to other markets

COMPANY INFORMATION
BOARD OF DIRECTORS:
Mrs Naz Mansha (CEO)
Mian Raza Mansha
Mian Hassan Manshan
Mr. Muhammad Nawaz Tishna (NIT)
Mr. Faisal Ehsan Eilahi
Mr. Khalid Qadeer Qureshi (Chief Financial officer)
Mr. Rana Muhammad Mushtaq
Mr. Muhammad Azam
Rana Muhammad Mushtaq
Mr. Muhammad Ali Zeb
CORPORATE DEPARTMENT:
Mr. Khalid Mahmood Chohan
Company Secretary
AUDITORS:
Riaz Ahmad and Company
Chartered Accountants
LEGAL ADVISOR:
Mr. M. Aurangzeb Khan, Advocate,
Chamber No. 6, District Court, Faisalabad.
BANKERS TO THE COMPANY:

ABN AMRO Bank
Albaraka Islamic Bank B.S.C (E.C)
Allied Bank of Pakistan Limited
Askari Commercial Bank LTD
American Express Bank
Citi bank N.A.
Crecent commercial Bank.
Faysal Ban LTD.
HBL
Habib Bank A.G.ZURIC
United bank LTD
Union Bank
The hong kong & shangai Banking corporation
Standard Chartered Bank
PICIC commercial Bank LTD
NIB bank LTD

National Bank LTD
KASB Bank LTD
Meezan Bank LTD
MILLS:
Niashatabad, Faisalabad
(Spinning, Processing, Stitching units &
Power Plant)
12 K.M. Faisalabad Road, Shiekhupura

(Weaving units & Power Plant)
21 K.M Ferozepur Road, Lahore.
(Stitching unit)
5 K.M. Nishat Avenue off 22 K.M Ferozepur Road,

Lahore
(Dyeing & Finishing Unit and Power Plant)
20 K.M. Shiekhupura Faisalabad Road, Froze Watwan

(Spinning Unit)
REGISTERED OFFICE &SHARES DEPARTMENT
Nishat House,
53, A, Lawrence Road, Lahore.
Tel: 042-6367812-16
Fax: 042-6367414
LIAISON OFFICE:
1st Floor, Karachi Chamber
Hasrat Monani Road, Karachi.
Tel: 021-6367812-16
Fax: 021-2412936
HEAD OFFICE:
7, main Gulberg, Lahore.
Tel: 042-5716351-9
Email: nishat@nishatmills.com
Site: www.nishatmills.com

QUICK INTRODUCTION:
A short intro for NISHAT group can be that the owners, which includes
MIAN MASHA who has three sons named as
MIAN RAZA MANSHA
MIAN UMER MANSHA
MIAN HASAN MANSHA
Their businesses are

MCB Bank
DGK cement
ADAM JEE insurance
NISHAT power
NISHAT hotel
PAKISTAN aviator
NISHAT mills
AKD developers
KLASS textiles (owned by MANSHA’s daughter in law)
I worked in NISHAT mills LTD, which had textile being core business, it has the
following departments
H.R
Marketing
Exports
Finance
Accounts
Planning
Production
Store
Purchases
Sales tax, Rebate, Income tax
I remained under training in the above BOLD letters, sales tax & rebate
department.
Now, onwards I’ll present in words, something regarding NISHAT textiles, as per
my raw knowledge.

NISHAT MILLS LIMITED
NISHAT MILLS LIMITED whose short symbol. Used in stock market is (NML)
commenced business in 1951 at partnership basis, which afterwards was
converted into private limited co. in 1959. then In 1961, the company went public
and emerged as listed co, on the Karachi stock exchange’s board,
NML initially started with weaving. NML as a weaving unit with 500 semi-
automatic looms; which then in later days, climbed to 10000 spindles,
As it was the very first step to by laying the foundation on nation’s largest textiles
composite project
Composite project at Nishat mills limited Faisalabad covering 98 acre of land
deemed to provide all business related production process under one roof i.e.
spinning, weaving, processing, stitching and power generation.
The Founder
A man of vision, courage and integrity, Mian Mohammad Yahya was born in
1918 in Chiniot. In 1947 when he was running a leather business in Calcutta, he
witnessed the momentous that swept the indo-pak sub-continent and resulted in
the emergence of Pakistan. Like many of his contemporaries, he also migrated to
the new country to help establish its industrial base. Here is a brief story of
success through sheer hard work and an undaunted spirit of enterprise.
Beginning with a cotton export house, he soon branched out into ginning, cotton
and jute textiles, chemicals and insurance. He was elected Chairman of All
Pakistan textile Mills Association (APTMA), the prime textile body in the country.
He died in 1969, at the age of 51 having achieved so much success in so short
period.
The Chairman
Today Mian Mohammad Mansha, the chairman of Nishat Group, like his father,
continues the spirit of entrepreneurship and has led the group to become a multi
dimensional corporation, with wide ranging interests.
Nishat has grown from a cotton export house into the premier business group of
the country with 5 listed companies, concentrating on 4 core business, Textiles,
Cement, Banking, and Power Generation. Today, Nishat is considered to be at
par with multinationals operating locally in terms of its quality products and
management skills.

Firmly believing in ‘Growth through Professional Management’ our corporate
culture is based on decentralization, delegation of authority, encouraging the
acceptance of responsibility and inculcating quality consciousness.
It is our conviction that every successful organization is a reflection on the

commitment, dedication, and team spirit of its employees, and Nishat is no
exception. Our people are all imbued with the spirit, a fact manifested in our rapid
growth and low turnover
Nishat continue to strive to be a better group today than what they were
yesterday, for their customers, for their shareholders, for their investors, for the
environment, for the community and for their employees, for it is with them that
Nishat has achieved so much success in last fifty years.

MISSION STATMENT
To provide quality products to customer and explore new Markets to

promote/expand sales of the company through good Governance and faster a
sound and dynamic team, so as to achieve Optimum price of products of the
company for sustainable and equitable Growth and prosperity of the company
VISON STATMENT
To transform the company into a modern and dynamic yarn,

Cloth and processed cloth and finished product manufacturing Company with
highly professionals and fully equipped To play a meaningful role on sustainable
basis in the economy of Pakistan To transform the company into a modern and
dynamic power generating Company with highly professionals and fully equipped
to play a Meaningful role on sustainable basis in the economy of Pakistan.
Quality Policy
We work together as a team for implementation and continual improvement of

total quality system in order to achieve satisfaction of our internal and external
customers.

Textile Vision 2010
An open market driven, innovative & dynamic Textile Sector which is:-
Internationally Integrated.
Globally Competitive
Fully equipped to exploit the opportunities created by the MFA Phase out
and this enables Pakistan to be amongst the Top Five Textile Exporting
Countries not only in Asia all over the world with the tremendous Textile
companies
Down the hill Scenario
Represented a situation where only the historic export

growth rates in textile sub-sectors were maintained. The overall average export
growth for the textile sector after analysis was finalized at 6% per annum.
Par Scenario
Envisaged increase in unit price realization of yarn, fabric,

textile made-ups and garments with an attempt to maintain the market share in
each individual market. It also suggested penetration in the non-quota markets
along with increased share of synthetic and blended yarns, fabrics and garments.
The overall export growth in this scenario was estimated at 12% per annum.
Up the hill Scenario
the most ambitious of the scenarios that not only adopted

the apparel sector as the engine of textile export growth but also recommended
diversification in products that hold greatest potential but unfortunately have been
neglected e.g. woven garments, sports wear, specialized industrial garments,
and women wear. Besides broadening of export product portfolio with extra push
in synthetic and man-made fibers, fabrics and garments

PART
FOUR

NISHAT GROUP OF COMPANIES
*The Nishat Group* Mian Muhammad Mansha Yaha is the captain of this
marvelous ship having around 30 companies on board. Mansha, owner of
Muslim Commercial Bank as well, is now setting up a billion rupee ($ 17 m)
paper sack project too. He is one of the richest Pakistanis around. Nishat Group
was country's 15th richest family in 1970, 6th in 1990 and Number 1 in 1997.
Mansha is on the board of nearly 50 companies. originally they are Chinioti by
clan, Mansha is married to Yousaf Saigol's daughter.
The history of NISHAT Group travels back to 1951, when Mian Muhammad
Yahya gave the foundation stone to NISHAT Mills Limited.
This man of vision, courageous and full of integrity, Mian Mohammad Yahya was
born in 1918 in Chiniot. In 1947 when he was running leather business in
Calcutta, he witnessed by the mountainous changes that swept away the Indo-
Pak subcontinent.
This is story of success started from scratches and reached the heights through
sheer hard work and an undaunted and provoked spirit of proactive enterprise.
By sticking to his cotton export house, he in no time branched out in to ginning,
Cotton and jute textiles,
Chemicals and insurance.
As he became a famous personal, 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 span of time.
After almost five decades of flawless success, NISHAT group of companies 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 is composed of it four
main planted and well routed pillars four core business namelyTextiles
Power Generation
Banking
Cement

TEXTILES
The textile business is further subdivided into 2-textile division:
Nishat Faislabad
Nishat Chunian
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!
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.
BANK
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.

Nishat Mills.
NISHAT MILLS LTD, FAISALABAD

NISHAT DYEING AND FINISHING, LAHORE
NISHAT FABRICS, BHIKHI
NISHAT SPINNING, FEROZE WATTOAN
NISHAT SEWING, LAHORE
PRODUCT LINE
Products line of Nishat mills limited consists of following items,
BEDDING
• Sheet sets
• Quilt cover sets
• Bed spreads
• Comforters
• Bed skirts
• Oxford pillow cases
• Blanket covers
• Sleeping bags
CURTAINS & ACCESSORIES

• Embroidered curtains
• Pencil pleat tape curtains
• Pinch pleat lined & unlined curtains
• Tab top & rod pocket curtains
• Assorted pelmets and window dressings
• Oxford cushion covers
• Frilled and piped cushion covers
• Frilled, piped and pleated tie backs
TABLE, FURNITURE & KITCHEN ACCESSORIES

• Tea cozy
• Table mats and Table cloth and napkins
• Aprons
• Kitchen gloves
• Pot holders
• Chair pads with circle tacks
• Couch cove

TEXTILE CAPACITY
Production process consists of spinning, weaving, processing, and finishing. The
processing includes dyeing, engraving. The textile capacity of the group is the
largest in the country. An addition of 20000 new spindles, 100 new air jets looms
and new dyeing plant has increased the existing capacity of 24000 spindles, 740
looms and dyeing and finishing capacity of 5 million meters. The group is the
largest exporter of textile products from Pakistan for more than a decade.
Export Oriented Organization

Nishat mills limited are an export oriented organization. Nishat mills limited
exports more than 90% of its products which includes top of the list, the Far East,
Europe and United States
Major competitors
NISHAT’s competitors are
Crescent
Chenab
Arzoo
Alkarms
Sitara
Kohinoor
Amtex
But main competitors of Nishat Mill are
“Crescent Textile Mills”
“Chenab Textile”

Management of Nishat Mills Limited
Nishat Mills Limited employees are highly qualified professionals and have a
young, energetic and dedicated and focused team of highly skilled professionals
who have a lot of knowledge to their credit
Managers are responsible for the task assigned to them in their departments and
also have to match whether their respective department is achieving the
projected efficiency level or not.
There are at least three basic requirements for a successful company and the
managers of Nishat Mill Limited are made to think on these lines:
It must provide a product (good or service) that suits best to the

company’s capabilities and for which there is a sufficient market.
It must provide the product with consistent quality at a level that appeals to
intended customers and satisfy their needs.
It must provide a product at a cost that always an adequate profit and a

reasonable sale price.
INTERNATIONAL STANDARD OF ORGANIZATION (ISO)

NISHAT mills limited have achieved the goal, ISO 9001 and ISO 9002 certificate
in 1997. In order to achieve there are requirements, which should cater the
following,

MANAGEMENT RESPONSIBILITIES
Management responsibilities includes the following,
Quality policy
According to the ISO 9001 and ISO 9002, it is utmost responsibility of
management to devise policies that provide quality products to customers. Nishat
is working hard to ensure that they produce quality products.
Customer expectation
It is essential that customer expectation should be fulfilled. It is the responsibility
of management to do so. Since Nishat is an export-oriented organization so
utmost attention is paid to meet customers’ need and requirements.
Resource management
Utilization of resources play crucial role in the success or failure of organization.
If resources are effectively utilized, they become cause of success for
organization. Nishat is effectively using its resources and thus has achieved ISO
9001 and ISO 9002. In the financial year of 1999-00, it declared dividend of 26%,
which is highest so far. This performance shows that Nishat mills limited have
sky-high goals. Human resource management also exists. They have ensured
that, right man is placed at right job and also at the right time. Various training
programs are offered for upgrading the skills of staff.
Responsibility and authority

Nishat is fairly decentralized organization. Middle level management makes most
of decisions and matters are decided in a friendly environment. Nishat cares a lot
for its staff. Orders are not dictated but they are made with effective participation
from staff.
Management representatives

Nishat governing body is highly talented. Board of directors include professional
of great repute. They are committed toward achieving a good name for Nishat
mills limited.
QUALITY SYSTEM
System Procedure
ISO 9001 requires that there should be proper system for each work.
Standardization of work is necessary for achieving effective certification.
Standard Operations
Nishat mills limited have established a quality control lab, which ensures quality
products to their customers. Objective at Nishat is to provide only quality
products to their customers. That’s why they achieved quality certification like
ISO 9001.
Quality Planning
Effective planning is required for the success of organization. If plans are well
planned, they bring success to firms. For this production and planning
department has been established.
Work Instructions
Instruction should be provided for better handling of job, and it is exactly in its
true spirit followed at Nishat mills limited.
CONTRACT REVIEW
Reviews
Sometimes contracts are reviewed, that reviewing must be in proper manner.
Contract should be given keeping in view of interest of the company.

Amendments
If the amendments are made in the contract, they should be made with
authorized person. And management should be fully informed with that.
Quality record
For the storage of record, there should be proper arrangements. Each item in
accounts should be properly coded and placed. Cash should be paid by
cheques.
DESIGN CONTROL
Design and Development Planning

For designing of products, there should be specific arrangements. Department of
design planning should be established, if the enterprise want to achieve quality
certificate like ISO 9001 and ISO 9002.
Design review
Design should be reviewed once made by the firms. This design should have
some characteristics that should be in accordance with the business practices.
Verify Validity of Design

Once design is complete, the competent authority should verify it.
CUSTOMER DATA CONTROLE

It is the perquisite for ISO 9001 that proper customer data should be there. This
is to provide customers list if required by the top management.
CONTROLE OF COUSTOMER SUPPY PRODUCT

There should be proper control over customer’s products.

PRODUCT IDENTIFICATION AND TRACABILITY
Product should be clearly identified and traceable. It should have some
characteristics that distinguish it from others. It should not be similar with other
products in terms of its name, logo etc.
INSPECTION
There should be proper inspection of stores so that every thing functions
according to manners prescribed by certificates.
CORRECTIVE AND PREVENTING MEASURES

There should be check and balances. If the mistakes are made, there should be
proper systems so that they are identified and corrected. Preventing methods
should be there.
INTERNAL AUDIT
There should be strong internal audit. So all discrepancies should be disclosed.
In order to get ISO 9001 there should be separate internal audit department.
TRAINING PROGRAMES
OTI, on job Training programs should must be introduced to upscale the skills of
vibrant employees. On the job training programs should be provided so that
workers get knowledge about work.
STATISTICAL TECHNIQUES
Several combinations of statistical tools are required for the betterment of
controlling the affairs of organization. They should must be available to achieve
quality awards. Introduction of information technology, automation of factory,
Internet and computer technology are shining features in achieving ISO 9001 and
ISO 9002.

PART
FIVE

SOME IMPORTANT POINTS OUT
OF
MEMORENDUM OF ASSOSIATION .
MEMORANDUM OF ASSOCIATION
The name of the company is NISHAT MILLS LIMITED.

The Registered office of the company shall be situated in the Province of
Punjab, Pakistan.
The objectives for which the company is established are as follows:
“Goals”
. To acquire and take over as a going concern the business rights, liabilities
and undertaking of the NISHAT MILLS, a firm belonging to:
Mohammad Yakub
Mohammad Shafi
Abdul Hamid
Mohammad Fafiq
Mohammad Yaha
Mohammad Ayoob
Mohammad Farooq
Haji Maula Baksh

And to carry on the same business in whole or in part, or in extended form
and pay for the same in cash, shares or otherwise and with a view thereto, to
enter into the agreement referred to Clause 3 of the Company’s Articles of
Association and to carry the same into effect with or without modification.
To carry on the business of textile manufacturers and of dyeing, bleaching

printing, combing, preparing, spinning, weaving, manufacturing, selling,
buying and otherwise dealing in yarn. Linen, cloth and other goods and
fabrics made from raw cotton, silk, flax, jute and materials.
To purchase, sell, exchange and deal in cloth, yarn, cotton in process, raw
cotton, jute, wool, silk, hemp, and other fibrous. Also drugs chemicals, dyes,
metal, stores and other articles and things.
To purchase, import, export, sell, comb, prepare, spin, weave, dye and
otherwise deal in cotton, flax, jute hemp, wool, silk, and all or any fibrous and
other allied products.
To import, export, buy, sell or otherwise deal in all kinds of textile machinery
and equipment, their spare parts and accessories and to manufacture and
deal in articles of all kinds required for the manufacturers of yarn, silk, wool,
linen and cloth and other allied products.
To carry on the business of manufacturers, importers, exporter, buyers,

sellers and dealers in waterproof material and fabrics, Pauline, American
Clothe, floor cloth and imitation leather, rubbers and allied goods.

To promote and establish working of woolen, cotton or spinning and weaving
mills, khaddies or otherwise, carding, raising, machining and finishing of all
cotton, silken and woolen goods, articles and yarns.
To carry on business of dealers and importers of chemicals of all sorts.
To carry on business as general merchants, contractors, agents, importers,

exporters, factors and warehousemen except managing agents.
To carry on all kinds of contracts of Government, locals bodies and other

authorities.
To employ experts to investigate and examine the condition, prospects, value,

character, and circumstances of any business, concerns and undertakings
and generally of any assets, property or rights.
To receive fixed and other deposits, accepts the business of a banking

company.
To draw, make, accept, endorse, discount, execute and issue promissory

notes, bills of exchanges, bills of lading, warrants, debentures, and other
negotiable or transferable instruments.
To invest and deal with any money of the company in such form as may be
though expedient.
To pay all the preliminary expenses of any kind and incidental to the
formation and incorporation of the company out of the funds of the company.
To distribute any of the company’s property among the members in specie or

in any manner thereof.

To issue any shares of the company at par or at a premium or debentures at
premium or at a discount.
ARTICLES OF ASSOCIATION
OF
Actually the main purpose of including memorandum and articles of
association is to get knowledge about company internal management and
affairs, various matter like appointment of directors, their remunerations,
disqualifications, company seal, winding up of company, accounts of
company are frequently discussed. It also sets the boundary wall for the
company.
PRELIMINARY
The regulations in Table “A” in the first schedule of the company’s ordinance,
1984 shall not apply to the company except as reproduced herein.
In these articles, unless the context or the subject matter otherwise requires:
Articles mean these articles as originally framed or as from time to time

altered in accordance with law.
Board means a meeting of directors duly called and constituted or as
the case may be the directors assembled at a board.
Company means NISHAT MILLS LIMITED.
Director’s means the directors for the time being of the company or as
the case may be, the directors assembled at a board.
Month means calendar month according to the English calendar.

Office means the registered office for the time being of the company.
Ordinance means the company’s ordinance, 1984 or any modification
or re-enactment thereof for the time being enforce.
Register means, unless the context otherwise requires, the register of
members to be kept pursuant to Section 147 of the ordinance.
Seal means the common seal of the company.

Section means section of the ordinance.
Special resolution means the special resolution of the companies
defined in section 2(1) (36) of the ordinance.
Words importing masculine gender include the feminine gender.
Words importing singular number include the plural number and vice
versa.
Expression referring to writing shall, unless the contrary intention
appears, be construed as including references to printing, lithography,
photography and other method of representing or reproducing words in
a visible form.
Words importing person shall include bodies corporate.
The head notes are inserted for convenience and shall not affect the
construction of these articles.
Unless the context otherwise requires words or expressions contained
in these articles shall bear the same meaning as in the ordinance.
1. BUSINESS
The directors shall have regard to the restriction on the commencement of

business imposed by section 146, if and so far as, those restrictions are
binding upon the company.

111. SHARES
No shares shall be offered to the public for subscription except upon the term
that the amount payable on application shall be the full amount of the nominal
amount of the shares.
TRANSFER OF SHARES
The instrument of transfer of any share in the company shall be executed
both by the transferor and transferee, and the transferor shall be deemed to
remain holder of the share until the name of the transferee is entered in the
register in respect thereof. No transfer shall be made to an infant or person of
unsound mind.
ALTERNATION OF SHARE CAPITAL
The company may, from time to time, by ordinary resolution increase the
share capital by such sum, to be divided into shares of such amount, as the
resolution shall prescribe.
GENERAL MEETING
The statutory general meeting of the company shall be held within the period
required by section 157.
NOTES AND PROCEEDING OF GENERAL MEETING

Twenty one days at the least (exclusive of the day on which the notice is
served or deemed to be served but inclusive of the day for which notice is
given) specifying the place, the day and the hour of meeting and, in case of
special business, the general nature of that business, shall be given in the
manner provided by the ordinance for the general meeting, to such persons
as are, under the ordinance or the regulations of the company, entitled of

receive such notices from the company, but the accidentally omission to give
notice to or the non- receipt of notice by , any member shall not invalidate the
proceedings at any general meetings.
VOTES OF MEMBERS
Subject to any rights or restriction n for the time being attached to any class
or classes of shares, on a show of hands every member present in person
shall have one vote except for election of directors in which case the
provisions of section 178 shall apply. On a poll every member shall have
voting rights as laid down in section 160.
In case of joint holders, the vote of the senior who tenders as a vote, whether
in person or by proxy, shall be accepted to the exclusion of the votes of the
other joint holders, and for this purpose seniority shall be determined by the
order in which the names stand in the register.
A member of unsound mind, or in respect of whom an order has been made

by any court having jurisdiction, in lunacy, may vote, whether on show of
hands or on a pool, by his committee or other legal guardian, and any such
committee or guardian may, on the pool, vote by proxy.
On a poll votes may be given either personally or by proxy. Provided that

nobody corporate shall vote by proxy as long as a resolution of its directors in
accordance with the provision of section 162 is enforce.
DIRECTORS

The numbers of the directors and the names of the first directors shall be
determined in writing by a majority of the subscribers of the memorandum of
association, so, however, that such number shall not in any case be less than
seven.
DISQUALIFICATION OF DIRECTORS
No person shall become a director of the company if he suffers from any of

the disabilities or disqualification mentioned in section 187 and, if already a
director, shall cease to hold such offers from the date he so becomes
disqualified or disabled. Provided however that no director shall vacate his
office by reason only of his being a member of any company which has
entered into contracts with, or done, any work for, the company but such
director shall not vote in respect of any such contract or work, and if he does
so vote, his vote shall not be counted.
ELECTION AND REMOVAL OF DIRECTORS
At the first annual general meeting of the company all the directors shall stand
retired from office, and directors shall be elected in their place in accordance
with section 178 for a term of three years.
A retiring director shall be eligible for re-election.
The number of directors determined by the board shall be elected to office by

the members in general meting in the following manner;

A number shall have such number of votes as it equal to the product of
the number of voting shares held by him and the number of directors to
be elected.
A member may give all his votes to a single candidate or divide them
between more than one of the candidates in such manner as he may
choose.
THE SEAL
The directors shall provide a common seal of the company which shall not be
affixed to any instrument except by the authority of a resolution of the board
or by a committee of directors authorized in that behalf by the directors, and
two directors or one director and the secretary of the company shall sigh
every instrument to which the common seal is affixed.
DIVIDENDS AND RESERVE
The company in general meeting may declare dividends but no dividend shall
exceed the amount recommended by the directors.
The directors may from time to time pay to the members such interim
dividends as appear to the directors to be justified by the profits of the
company.
No dividends shall be paid otherwise than out of profits of the year or any
other undistributed profits.
The directors may carry forward any profits, which they may think prudent not
to distribute, without setting them aside as a reserve.

A transfer of shares shall not pass the right to any dividend declared thereon
before the registration of the transfer.
If several persons are registered as joint-holders of any share, any one of

them may give effectual receipt for any dividend payable on the share.
Notice of any dividend that may have been declared shall be given in the
manner hereinafter mentioned to the persons entitled to share therein.
ACCOUNTS
The directors shall cause to be kept proper books of account as required

under section 230.
The directors shall keep the books of account at the office on at such other
place as the directors shall think fit and shall be open to inspection during
business hours.
NOTICES
The company shall give notice to members and auditors of the company and
other persons entitled to receive notice in accordance with section 50.
SECRECY
Every directors, manager, advisor, auditors, trustee, member of a committee,

officer, servant, agent, accountant, or other person employed in the business
of the company shall, if so, required by the directors before entering upon his
duties sign a declaration pledging himself to observe a strict secrecy
respecting all transactions of the company with its customers and the state of
accounts with individuals and in matters relating thereto, and shall be such
declaration pledge himself not to reveal any of the matters which may come

to his knowledge in the discharge of his duties except when required to do so
by the directors or by any general meeting or by any a court of law and except
so far as may be necessary in order top comply with any of the provisions in
these presents.
RECONSTRUCTION
On any sale of the undertakings of the company the directors or the

liquidators on a winding up may, if authorized by a special resolution, accept
fully paid shares, debentures or securities or any other company, either then
existing or to be formed for the purchase in whole or in part of the property of
the company, and the directors (if the profits of the company permit) or the
liquidation (in a winding up) may distribute such shares or securities, or any
other properties of the company amongst the members without realization, or
vest the same in trustees for them, and any special resolution may pro-vide
for the distribution or appropriation of the cash, shares or other securities,
benefits or property, otherwise than in accordance with the strict legal rights
of the members or valuation of any such securities or property at such price
and in such manner as the meeting may approve, and all holders of shares
shall be bound to accept and shall be bound by any valuation or distribution
so authorized, and wave all rights in relation thereto save only such statutory
rights (if any) as are, in case the company is proposed to be or is in the
course of being wound up, incapable of being varied or excluded by these
presents.
WINDING UP

If the company is wound up, the liquidator may, with the sanction of a special
resolution of the company and any other sanction required by law, divide
amongst the members in specie or kind the whole or any part of the assets of
the company (whether they shall consist of property of same kind or not) and
may, for such purpose, set such value as he deems fair upon any property to
be divided as aforesaid and may determine how such divisions shall be
carried out as between the members or different clauses of members. The
liquidator may, with the like sanctions, vest the whole or any part of such
assets in trustees upon such trust for the benefit or the contributories, as the
liquidator with the like sanction, shall think fit but so that no member shall be
compelled to accept any shares or other securities whereon there is any
liability.
INDEMNITY
Every officer or agent for the time being of the company may be indemnified
out of the assets of the company against any liability incurred by him in
defending any proceedings, whether civil or criminal, arising out of his
dealings in relation to the affairs of the company, accept those brought by the
company against him in which judgment is given in his favor or in which he is
acquitted, or in connection with any application under section 488 in which
relief is granted to him by the court.
ARBITRATION
Whenever any difference arises between the company on the one hand and
any of the members, their executors administrators or assigns on the other
hand, touching the true intent or construction or the incident or consequences
of these articles or of the statutes, or touching anything there or thereafter
done, executed, omitted or suffered in pursuance of these articles or of the
statutes or touching any breach or alleged breach of these articles, or to
these articles or to any statue affecting the company or to any of the affairs of

the company, every such difference shall, as a condition precedent to any
other action at law be referred in conformity with the arbitration act, 1940, or
any statutory modification thereof and any rules made there under, to the
decisions of an arbitrator to be appointed by the parties in difference or if they
cannot agree upon a single arbitrator to the decision of two arbitrators of
whom one shall be appointed by each of the parties in difference, or in the
event of the two arbitrators not agreeing, then of an umpire to be appointed
by the two arbitrators, in writing, before proceeding on the reference and such
decision shall be final and binding on the parties.

PART
SIX

ORGANIZATIONAL STRUCTURE
Board of Directors
Company Secretary
Chief Executive
Director Director Director Director

Finance Marketing Processing Purchase
Chief Executive
G.M. G.M. G.M. G.M. Legal G.M. Chief G.M. Director Director
Finance Weave Stitching HRM Advisor Purchase Engineer Export spinning process
& ing
accounts

GM MARKETING
Incharge fair Deputy Deputy Manager Assistant

price shop Manager Waste Manager
Quality
AM quality Assistant manager Assistant

Assistant waste
control manager sales
manager
DIRECTOR
PROCESSING
Manager processing Manager folding
.
Dy. Manager Dy. Manager Dy. Manager folding
processing printing processing dying

GM, SALES
Sr. Asst. Asst. manager Asst. manager

manager sales sales
Sales officer Sales officer Sales officer
Asst. sales Asst. sales Sr. computer

officer officer programmer
Computer
programmer
Sr. GM (F & A)
REBATE DEP SALES TAX INCOME TAX

DEP DEP
Assistant AM sales tax Assistant manager

tax
manager rebate
2 Rebate 3 sales tax 4 Tax officers

officers officers

PART
SEVEN

Brief Description of Different
Departments
In company’s office there are followings types of departments.
Purchase Department
Export Department
Accounts& finance Department
M.I.S (Management Information System)
Before starting the discussion regarding the departments, some important documents,
used in sales finance (sales tax, rebate) department.
Exporters Document:
L.C: letter of credit (contract between buyer and seller) given by bank
Banker Document:
Form E: for bank related to the amount inwards. ( foreign currency is converted into
PKR)
Customs Document:
Shipping bills. Actually are for the clearing agents. Who takes care for the IN or OUT of
exported or imported stuff. And work for the company to get the payments released from
National taxation department.
Shipping line:
Bill of lending. This document is essential. its mandatory to be presented before
releasing the containers from the ports
NOTE:
exporter document is generated after getting L.C ( marketer gets order and gives to the
exporter)
exporter can get benefits by the government’s sales tax department.
1- sales tax return as refund

2- rebate (duty drawback)
3- R & D ( duty drawback of last year)

Purchase Department.
Purpose
The actual purpose of purchase department is to maintain the desirable level of
stocks required at all the production units, main offices etc, so that working
finance or ideal funds do not get freeze and stuck up in the form of undue huge
purchases or a situation where shortage of stock or required raw material,
stationary etc may arise, which may cause or hurt to disastrous. Mill should not
stop due to non-availability of raw material or store and spares.
The additional responsibilities of this department are to keep a check at
following.
Checking quantity of purchased goods.
Checking rates of purchased goods.
Checking quality of purchased goods.
Procedure
In the first phase, requirement are collected as per need from all the
departments. The demands then go to higher authorities to ensure the
authenticity. They scrutinize that the goods, which are demanded, actually
required.
once approved. Department asks for different quotation from the selected
suppliers. After making an analytical decision in this regard, purchase order is
placed. Purchase order actually declares the terms and conditions of order and
eventually deal between the parties. The supplier will send the goods followed
with the delivery order.
When goods received the goods the purchase department will make a goods
receipt note holding the name of goods and it quantity. The supplier will send the
commercial invoice or sales tax invoice according to the product and finally
purchase department will make a store purchase voucher, which provides the
evidence of transaction.

Accounts Department
There are four sections, discussed in details,
Costing section
Payroll section
Receivable section
Payable section
Account payable section

Mainly it deals with supplier, contractors, creditors, to whom payment is to b
given by NISHAT mills limited.
For this work A person assigned as assistant manager heads account payable
section. Accounts officer and assistant account officer work under him. Before
the payment is given to supplier or contractors, the followings are mandatory
Sales tax invoice

Inward gate pass
Good inspection note
Delivery challan
1. Sales tax invoice

.
Invoice is presented, which is usually composed of the amount of sales tax
deducted etc. this invoice usually contain the following column.
Sr no quantity particulars amount rate of sales tax amount

total
2. Inward gate pass

its an integral supporting part. When purchases are done, from outsiders, entry is
recorded at their entry. Pass is issued by the concerned authorities. Account
payable department requires a copy of inward gate pass. Most important thing to
NOTE:
remember, that it deals only with the quantity. It has no concerned with quality.
Inward gate pass no is checked by
1) Gate clerk
2) Security officer
3) Store auditor

3. Goods inspection note
this department inspects the goods to know whether they are according to the
asked specification. Then a document of good inspection note is prepared.
Goods inspection note should be received within a day, a copy of purchase order
is given to payable department, when goods are received the concerned
department (issuing purchase order)
4. Preparation of checks
Once the invoices are received and checking their accuracy finally account
payable department fills up the cheques. Chief controller of NISHAT mills limited
signs the cheques. NISHAT mills limited have a flawless computerized system so
items are identified and coded. Every party is allotted certain codes and entry is
been made in, on spot when they take place.
Entries in books of accounts

Party hands over the bill, when once its approved. Out of that, Two vouchers are
prepared,
J.V (journal voucher)
Expense account (debit) Amount

Party account (credit) Amount
Expense debited due to incurrence of certain expense. Party is credited because

payment is going to be made.
B.P.V (bank payment voucher)
Party account (debited) Amount

Bank (credited) Amount
Tax Amount
Tax is deducted. At source under the section 50 of the income tax ordinance
1979.

FUNCTIONS
Basically the function of account department is to book a proper record of

transaction and to maintain the accounts.
Procedure
At first step account department records transaction by different type of vouchers
as per nature of transaction. Vouchers are provided as evidences of transaction.
As I mentioned before, the books of NISHAT MILLS are computerized and

ledgers are also prepared in computer, so vouchers are sent to computer
operator for posting.
Here a daily print out of all entries is being checked in order to check the
accuracy and then posting made to respective ledger.

FINANCE DEPARTMENT
Purpose
The basic purpose of finance department is to ensure the readiness of funds

availability for production like major operations and specially better allocation of
these funds.
Functions
The most important duty or function as being the finance manager. That is to
arrange different types of loan as per company’s requirement, for example:
Long-term loan
Leasing
Short-term loan
One of the important duties performed by this department of finance is to prepare

loan proposals.
LOAN PROPOSAL
Nishat mills limited produce working capital or funds out from inner and outer
parties.
Inside parties are shareholders, where as outsiders are banks and various loan
providing agencies.
Points to remember
Some points kept in mind before making a loan application are a must, and are
given below
Loan amount
Date of expiry
Rate of interest (important consideration)
Securities
Nishat mills limited in following forms offer the securities,

Pledge of cotton
Mostly or frequently offered security is cotton. Usually loan is obtained from bank
after pledge of cotton. Bulk of cotton is purchased in the season so to avail the
benefit of huge quantity.
Mortgage of factory premises
Factory premises are also mortgaged with bank. Sometimes buildings and
factory machinery are mortgaged with bank.
Registered mortgage
In this type of mortgage, deed is registered in the register of ownership and

further sale is not allowed. Court fee is paid in this type of mortgage, this is opted
when client is new and his track record has not been established.
Personal guarantee of directors and chief executive
Personal guarantee of company chief executive Mrs. Naz Mansha is also offered.
Bank before sanctioning loan to Nishat mills limited ask for certain type of
guarantee by it directors. So directors give personal guarantee to the bank that
its loan will be secured enough, they take the responsibility.
Management Information System
Management information system makes the financial analysis regarding the

operation of business. By the calculation of different ratios and other procedures
of analysis, they indicated the reasons if the company is not showing progress
and also recommend the method by which the weakness of company can be
removed. They also make the forecast about the future and then suggest that
how the company can make improvements in future.
If the company wants to start a new project it is MIS, which prepare its feasibility
report.

EXPORT DEPARTMENT
Functions & Procedure

This department is mainly responsible for the export of
Yarn, grey cloth and processed fiber like apparel. Stitched clothes, and ready
made items, discussed in part 1
This department is bound to maintain and to do the needful work for the
preparation of all the legal requirements and essential documents involved in the
export of yarn, grey cloth and processed fiber.
This department starts working from getting purchase order to deliver the
shipment to the buyer.
The export department performs 3 major functions,
SHIPMENT OF YARN, GREY CLOTH & PROCESSED FIBER.
After receiving packing list from shipping department, export departments starts
its main functions.
The export department prepares the some documents to ensure the timely
shipment,
The most commonly documents are:
Letter of credit (L\C)

Bill of exchange
Commercial invoice
Export declaration form.
Certificate of origin
Packing list
Customs invoice
Textile declaration form
Inspection certificate
Shipping bill/bill of lodging/air way bill
Manufacture’s certificate
Form “E”
In some special cases, some other documents as and when required by the
buyer are also prepared like;
Certificate of child labor

Certificate of forced labor

Letter Of Credit
The import and export of goods throughout the world is now usually arranged by
documentary letter of credit. The importer requests his bank to open LC in the
favor of exporter. The bank in pursuance of that request issues LC is favor of
exporter. The LC is a promise or guarantee by the bank to honor bill of exchange
drawn by exporter, provided the conditions of letter of credit are fulfilled.
Definition
“Letter of credit is an undertaking by a bank to meet the drafts drawn by

exporter”
“Letter of credit is the conditional undertaking on the request of the

importer/buyer”
“A written undertaking by the bank of importer” i.e. issuing bank at the

request of buyer or importer to make payments at sight or at
Parties of Letter Of Credit
Four parties are involved in the payment of the goods,
Buyer
Buyer bank
Beneficiary
Advising bank.
Form E
E stands for export. When Nishat mills limited exports yarn or processed fiber,
form E is taken from the bank. In which bank describes quantity and price of
goods exported. Nishat mills limited obtain FORM E from Credit Agricol
Indosuez, Citi Bank etc.
Packing list
It explains goods, and their respective quantity which are packaged. This packing
list is sent to the shipping company.

Shipping bill/ bill of lading/ airway bill/ railway receipt.
When goods are exported by means of sea, five copies of bill of lading are
prepared. and If the goods are sent by air, air way bill is prepared. When the
goods are sent through railway, railway receipt is prepared.
Company carrying goods issues bill of lading. It describes nature of goods

exported their value.
• Date of shipment
• Date at which ship will reach the destination
• Shipping bill no
• M.R nos
It is mate receipt number. When captain of ship receives goods and place it in
ship he issues a mate receipts numbers.
Commercial invoice
Invoice can be of following types;
1. Cost and freight
2. FOB (freight on board)
If we deduct freight from cost and freight, we get FOB value. Cost and freight
means this cost also covers the freight charges from port to importers godown.
FOB value includes charges only up to port.
Shipping Documents
After receiving these documents, the Shipping Documents must be submitted
within three working days. .
The following documents are submitted which are the proof of shipment.
1. Invoice
2. Bill of Lading
3. E Form
4. DE Form “2” & Form ED-I
Invoice
Invoice indicates the particulars of contract, size of commodity, quantity, quality,

price and packing.
Bill Of Lading: (B/L)
B/L Indicates the exporter’s name; notify party, quantity, and quality, and
destination, port of issue and date of issue of exported items. The shipping
company issues it.

E-FORM
E- Form is submitted under foreign exchange regulation Act 1947.
DE FORMS 2 & FORM ED-I

This form indicates the bank name, demand loan No., type of commodity,
contract L/C Nos. shipment date, amount of shipping goods, sales contract No.,
issue date, amount, date of obtaining finance and %age of commission.
EXPORT PROCEEDS REALIZATION CERTIFICATE

If amount is paid by own sources then after the amount is received the exporter
has to send EPRC to SBP.

PREPARATION OF IMPORT DOCUMENTS
Performa Invoice / Indent /Contract

Shows applicant’s name, Export country to import country, payment mode by L/C
(type) e.g. irrevocable & unrestricted L/C at sight,
Shipment time e.g. within 2 months after receipt of L/C,
Place of delivery e.g. C&F Karachi by vessel e.g. Validity until August 01, 2001,
items, description, quantity, unit price, total amount in words and numbers
Covering Letter
This ensures and shows the detail and price of the imported items.
Application for Opening of Letter of Credit

In which request is made from bank to open L/C for the attached Performa
invoices.
Form I
Application for permission under the Foreign Exchange Regulation Act, 1947 is
made to purchase foreign exchange for payment of imports.
Appendix-B
This certificate is given to the bank for chemical export
Appendix-G
This certificate is given in addition to appendix-G for import of spare parts &
machinery.
Applications and Agreement for Commercial Letter of Credit

This document is given by Bank, which includes;
Type of letter of credit
Beneficiary & amount
Applicant & advising bank
Transshipment/carriage doc
To be presented within 15-21 days after the date of issuance of the shipping
document(s)
Insurance Arrangements
Insurance of goods are made against the damages. This amount consists of
total amount of goods plus 10% cushion.

L/C Opening
1) Application
2) Performa Invoice
3) Insurance Cover Note
4) Form I
5) Appendix-G.
Import Documents / L/C Retirement

When L/C is reached to the bank then bank demands the amount of L/C from
importer.
L/C Retirement Doc. and B/L

These documents are given to the clearing agent for clearing the consignments.
Then he requires the cheques of the amount of custom and other charges/duties.
Then the required amount is to be sent for costing in the Costing Section to
check the exemption.
Bill of Entry
In which every concerned party gives its remarks and stamped one copy and is
sent to the SBP, one copy is sent to the custom department and the Company
itself retains one copy.
L/C’S PARTICULARS
L/C type, no. & Amount
Date & Place
Favoring party
Applicant
Signed commercial invoices indicate the value not more than L/C’s value.
Full set of clean “on Board” marine Bill(s) of lading
Insurance buyer’s care declaration of each and every shipment is to be
advised to Insurance Co.
A - Copy of insurance declaration to accompany the original documents.
Packing list requirements

CLAIM FOR REBATE.
Rebate is actually a “duty draw back”. The duty which an importer pays to
government for the product that is re exported after some process, then
government pays back some of its part. This pay back of duty is called rebate.
Export Rebate Department

The export rebate department is charged with the responsibility of drawing duty
back. Government of Pakistan is providing relaxation/incentives for the export of
textiles product, for example different rates are for different categories of export
cloth and mentioned. These rates are subject to change and modifications
Functions
Function of export rebate department start with exporting cloth or cotton made
items to abroad. if these items are included in that list on which duty can be
withdrawn under the orders of federal government then export documentations
department sends relevant
Documents to the export rebate so that claim could be filed properly. Remember
no rebate is claimed on cotton export.
Documents used in department

In order to claim rebate following documents are sent to customs house,
• Bill of lading
• Packing list
• Goods dispatch report
• Commercial invoice
• Bill of export
• Form E
• Bank credit advice OR export proceed realization certificate
Bank issues EPRC when payment is received from the importer bank. In this way
LC is retired from. But when LC involves some span of time say it is usance LC
60 days after or 90 days, we may request ANNEXURE B, bank issues it when
payment has not been received from the importer on the basis ANNERURE B
claim for rebate can be made.
Usually bank issues ANNEXURE A when payment is received from the importer
bank on this basis claim for rebate could be filed. Since Nishat is large group it
has a established track record, so bank feel no hesitation is issuing ANNEXURE
B in favors of Nishat mills limited so that claim could be filled.
SR2 NUMBER
When case is filed custom authorities issue SR2 number. Application for duty
draw back is made U/S 21 and 37 of customs act 1969.

Issuance of cheques
After verification of export transaction custom authorities accept the duty draw
back case and according to rules issue cheques. Rates of duty draw back are
different for different exported items. Cloth on which more processing is
performed greater is the rate of duty drawback.

Some extra knowledge and Working of sales tax, rebate department in squeezed
form:
REBATE:
Rebate is calculated through two methods.
Manually
Through computer
In manual system. Original invoices and documents are required at the moment.
Documents are sated up well before.
This includes original shipping bills.

Commercial invoices
Bill of lading
Where bill of lading is of two types. One is ticketed or can b said as negotiable.
And the other one is non-negotiable.
Commercial invoice is of exporter

G.D or good declaration is for the custom department
Bank has a document named Form E.
and EPRC (export proceed realization certificate)
bill of lading is for the shipment department
Packing list.
Now if we talk about the computerized way of calculating rebate. We would need
a sales tax certificate. And its done by the exporter. This after wards is widrawn
from government with the help of clearing agent.
Note: when we get EPRC and then send to government after calculation. It get
converted to SR2 form.
well the system of rebate was manual before 2006. But after that era was
changed to IT stuff. Now when shipment is done. On spot the company has to fill
the rebate document. It’s the requirement of government.
SALES TAX:
sales tax which is paid. Is calculated through computed systems. And after that
computed generated amounts are taken out. Which FBR sends to the company.
Of different parties.
With the help of all these items. Inventory stock statement is prepared.
This can be explained through an equation.
That is
opening balance (from balance sheet) + purchases ( manufacturing for export
and locals) – exports = sales tax payable amount.

Active tax payer
• Always purchase from the active tas payer because in near future
active tax payer will only be allowed to import and export
• Sales tax input credit/adjustment allowed only if purchases are made form
the active tax payer
expense for income tax will only be admissible if purchases are made from
active tax payer
• Only active tax payers will be able to participate with procurement tender
• Only active taxpayers will be able to operate as clearing agent, shipping
agent etc.
Note:
Clearing agents are related to customs.
Shipping agents are: couriers, carriers, banks
Insurance companies etc

PART
EIGHT

SWOT ANALYSIS
Now we shall conduct SWOT analysis for NISHAT mills limited.
Conducting an internal strategic-management audit is to come to some

conclusion, that some internal as well external factors are stuck with NISHAT.
This strategy-formulation tool summarizes and evaluates the major strengths and
weaknesses in the functional areas of a business. And with some deep study,
opertunities and threats to such kind of organization are presented below.
Strengths of NISHAT mills limited
 Export-oriented organizations
 Highly skilled labor
 Talented marketing managers
 Qualified finance staff
 Professionalism in the employees
 Corporate culture
 Sound policies
 Strong group
 Successful history
 Computer information system
 Availability of raw material at cheaper rate
 Products are technologically competitive
 Innovative products
 Customer orientation
 Efficient production system
 International standards for employee’s welfare
Weakness of NISHAT mills limited
 Rely on foreign customers

 Dual data organization, more time taking
 High cost of production
 ·Centralized decision making
 ·Weak image in the international market
 ·Small international market share
 ·Less promotional activities

 ·Lack of benefits and rewards for the employees
These are only few weaknesses in NISHAT textiles, over and all it is a successful
organization.
Key opportunities available to Nishat mills
 In 2005 when all quota barriers were lifted (quota free exports)
 Increase demand of Pakistan cotton-made products
 Growth through advertisement
 To use information technology
 Expand product lines
 Capture new market segments around the world
 Reduce the cost by proper utilization of resources
 Hire more well-educated and experienced person
Key threats to NISHAT textiles
 Intensive competition
 WTO
 Child labor propaganda by various NGOs
 Political instability in Pakistan
 Mostly operating in overseas market
 New Entry of competitors
 Buyer needs demands changes
 Political instability
 Changed of government policies
 Globally Economic instability

PART
NINE

MARKETING & COMPETETIVE
STRATEGY
Competitive strategy
The past year has been tough for the textile industry as competition is steadily
and margin of profits is becoming smaller day-by-day. Our competitors from Asia
have come up in a big way with lower prices resulting from lower overhead,
cheaper and better raw materials and machinery.
Countries like China, Indonesia, India and Bangladesh played an active role in
the fabric market. Improvement in quality and production capability was the main
area of concentration.
Market for Yarns and Grey fabrics was diversified to increase the customer base
and reduce dependency on the Far East. In this effort business with Malaysia,
Korea, Taiwan, UK and South America was initiated in case of Yarns.
A new spinning unit of 21,672 spinning has also commenced, which caters to the
weaving units in Sheikhupura.
In case of Grey Fabric market business was initiated in South Africa, North
America, Japan, Italy, France, and Sri Lanka etc. Product range was also
increased to cater to the differing needs of the buyers. Fancy and special items
like Dobby Designs, Bedford Cords, and Cavairy Twills and stretch fabrics were
developed which are being sold at premium prices.
NML has constantly updated machinery, replacing old machines with new ones
upgrading the existing set-up, leading to better efficiencies and quality products.
NISHAT has established its name in new markets be creating specialized fabrics,
designs and also by providing our customers with efficient service and excellent
quality.
Leaving behind the traditional way of doing business and in our journey towards
excellent it has consistently expanded its buyer base and explored the different
markets around the world.
Keeping in view demand of the World market, NISHAT Mills Ltd pursued its
strategy of value addition and reducing the dependency on Grey Fabrics and
Grey Yarn.

Having the foresight to assess that in coming year’s value addition will be the
thing of the future, NISHAT Mills Limited worked towards the achievement of its
goal of future increasing its capability in value addition.
The export of processed fabric and made-Ups has shown market improvement
as compared to last year. In Europe, NISHAT has made the most growth in the
year 1999.
It has placed us successfully in the middle to upper end of the market. Our
strength in Europe is the curtain division.
This included yarn dyed dobbies, engineered confections, different finishes and
embellished products. The plan is to continue with this winning strategy and at
the same time we are trying to find new clients in the high end.
We are also exploring business opportunities in countries like Spain and France
where NISHAT has very little business at the moment.
North America is the star market for Nishat; it’s a new market for it after breaking
up the exclusive arrangement with our previous sale set-up. The quota is coming
down in 2005 and we have started to prepare for it internally as well as for the
external environment. Bedding is the bulk of the home textile business.
NISHAT is in the process of updating its machinery to cater the needs of the
wider width fabric requirement for USA bedding business. Nishat is also taking
up the social accountability issues very seriously, which are so dear to the
American consumers. Lot of big brand US companies have visited us and are
discussing the possibilities of a joint venture.
The opportunities are limitless, we have to review and analyze them very
thoroughly to associates with the right people in the long run. In the short term
we are building a small amount of quota, which will give us recognition as a
bedding supplier.
NISHAT is very strong in non-quota categories like curtain and table linen. These
categories are best served with new product development (NPD). NISHAT will
coordinate the effort for NPD by all markets to optimize results. NISHAT has
achieved the highest sales in 1999-2002 for North America market.
On top NISHAT has developed more direct and closer relationship with our end
customers. Oceanic has been our most lucrative and mature marker. In business
terms it is our “cash cow” market.
Primarily due to being a non-quota market it had no real limitations in this market.
Despite economic problems in that region, it has maintained our sales figures in

the year under review. This market is a good design source for other markets,
which is helping us to maintain our print volumes.
Middle East market is composed of South Africa and the new emerging markets
like the UAE, Egypt, Saudi Arabia, and Jordan etc. NISHAT has dedicated new
staff with fresh energy for the emerging market.
They have successfully broken the ground and we have very strong faith that
these markets will give us good volumes in the near future. We are also targeting
printed apparel business for the first time. The latest addition is the most
ambitious Apparel Dyeing plant setup near Lahore, which has started its
production.
The effectiveness and productivity of this plant will be further enhanced, as

NISHAT Mills Ltd moves towards becoming a more vertically integrated
organization.
Our dyed fabric has already established its name in the market. It is being
exported to some of the leading brands of the world.
NISHAT has increasing its profitability by working efficiently, procuring better raw
material and most importantly kept a very close association with its costumers.
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.
NISHAT has provided its staff with better working environment and facilities,
which enhanced efficiency and out put.
At NISHAT, it is prospering due to our professional commitment toward

excellence and giving the best results at all times and against all odds. Its
marketing and production teams co-ordinance at all times and it focus remains
on maintaining its position as the market leader in the textile sector of Pakistan.

Marketing strategies
Marketing strategies includes,
Meeting with buyers

Company profile
Buyer visits
Free sample
Contact with agents
R& D for marketing
Through Internet
Yellow pages
APTMA buyer dictionary
Intranet
1. Meeting with buyers
Marketing manager meets with buyer, introducing Nishat products to prospective

buyer. This strategy helps manager to understand the needs and requirements of
buyers as well as marketing people are aware of current trends of market.
Through negotiation you win the sympathy of buyers and business for the
company.
2. Company Profile
Nishat mills limited has also published it profile introducing its key products to
customer. This booklet is send to various agencies dealing in purchase of cotton,
fabrics and made-ups. This strategy helps to introduce the company in out side
world. Various broachers are also published.
3. Buyers Visit
Sometimes buyer’s visits are arranged to familiarize them with products, Nishat is
offering for their valuable customers. Theses visits are crucial for the growth of
the company because they help in introducing products to others and also win a
lot of business for the company. Nishat marketing department frequently invites
buyer to show them excellent production process and quality productions.

4. Free Samples
This strategy is widely used to boost up exports. Free samples are delivered to
customers to show how best our products are? Free sample is useful techniques
in winning the loyalty of customers. When new product is made, free samples are
sent to loyal customer to show firms concern for them. Customer’s satisfaction is
a important aspect because customer is a person who gives meaning to
company.
5. Contacts with Agents
Nishat mill limited is an export-oriented organization. More that 85% of its sales
constitutes exports. So to capitalize foreign market, Nishat has long list of its
agents working in foreign market. This strategy is useful when company is not
able to communicate with buyers; it can hire services of agents who for
commission introduce their products in market. Relationships with distributors or
agents are recognized as critical success factors so lot of importance is paid to
agents who are valuable asset of firm.
6. R & D for Marketing

Research and development is key to success. Some organizations feel that they
cannot survive without R & D. Nishat is one of these organizations. Organizations
finances research and development projects using either % age of sales of
method or financing as many projects as possible.
Following are some research and development techniques
a. Through Internet
Nishat has recognized the importance of information technology in business field
and very quick to capitalize this opportunity. It has launched its website which
tells buyers about Nishat products.
b. APTAMA buyer’s dictionary

All Pakistan textile mills association publishes a directory, which includes
prospective buyers. This dictionary is published regularly. Marketing department
carefully analyses it and find buyers for its quality products.
c. Intranet
Through computers, products are introduced and customers are accessed.
4 Ps of Nishat Mills Limited

Product
Promotion
Price
Place

1. Product
Product includes product line,
Product Line
BEDDING
Sheet sets
Quilt cover sets
Bed spreads
Comforters
Bed skirts
Oxford pillow cases
Blanket covers
Sleeping bags
Curtains & Accessories
Embroidered curtains
Pencil pleat tape curtains
Pinch pleat lined & unlined curtains
Tab top & rod pocket curtains
Assorted pelmets and window dressings
Oxford cushion covers
Frilled and piped cushion covers
Frilled, piped and pleated tie backs
Table, Furniture & Kitchen Accessories

Tea cozy
Table mats
Table cloth and napkins
Aprons
Kitchen gloves
Pot holders
Chair pads with circle tacks
Couch cove
2. Promotion
NISHAT mills limited run advertising and promotion campaign on large scale.
The promotion of products can be classified into two ways,
Direct Marketing
Indirect Marketing
Direct Marketing
Promotional activities include presentations, free samples.
(a) Presentations
These are given to customer in a hotel at Karachi.

(b) Free Samples
Free samples are also provided so that customer may get an idea about the
quality and excellence of Nishat mills limited.
(c) Agents
Direct marketing is done through agents. In each country a display center has
been established names as CMD Company (concept marketing design). In
Germany, products of Nishat mills limited are displayed in an exhibition
(Frankfurt).
(d) Territorial Manager Tours
Territorial manager tours are also arranged. These tours are arranged to find
new buyers in foreign market.
Indirect marketing
(a) Chain stores
Companies in foreign countries make product from Nishat mills limited but sell
them on their own name. This is another way to increase fir sales by increasing
the number of chain stores.
Territorial managers are required to submit their reports at the end of their tours.
3. Pricing
Before setting prices of products various elements are kept into mind.
Customer is of utmost important. If customer is old, his track record is good and
enjoys a favorable repute so profit margin may be reduced. Prices area
determined on cost basis by adding certain percentage of profit. This is highly
sensitive area. In 2005 when all quota barriers would be lifted, so pricing would
become a crucial factor.
4. Place
As mentioned earlier, Nishat mills limited has its agents in each exporting
country. Place includes, channels from producers to final consumers.
Placement of Order
Sometime buyer asks for sample, when it is accepted the buyer places the order.
Marketing department issues sales contract that contains the below mentioned
details. After signing the contract the buyer opens L/C in the favor of the seller,
after the opening of the L/C the marketing department plans for the production
and arranges the shipment.
Now we shall discuss contents of sales contract in details,
Specification of goods
Quantity
Price
Contract amount

Quantity
In the sales contract, the quantity is written in yards. Different kinds of fabrics are
produced so quantity is expressed sometimes in yards and sometime in meters.
Price
Now comes very important content of sales contract i.e. price. In case of foreign
buyer price is normally written is US dollar. It depends on the negotiation
between buyer and seller and if they agree that price will be shown on US dollar,
it is US dollar.
Unit price is also written. It is very important to mention whether it is FOB value
or C&F
Shipment Details
Shipment details address basic questions, whether partial shipment is allowed or
not?
Transshipment is allowed or not? In how many days, ship will reach buyers
country?
Terms & Conditions

The buyers and sellers decide terms of shipment mutually. Matters regarding
insurance, freight, carriage, value of goods exported, packing charges, certificate
of origin and any additional conditions are set by importers and exporter.
Coordination between production planning & marketing department
Coordination between production planning & marketing department is essential.

Nishat was the pioneer in establishing production-planning department. The
production staff carries out all the orders that are obtained by the marketing
personnel. In fact there is very close relationship between production planning
and marketing department.
Director
Director
In production planning following things are done; spinning
process
ing
More detailed Marketing Strategies

Textiles industry faced many challenges during the year 1998-99 throughout the
world. Inflation and decline in purchasing power resulted in decline in demand,
which increased the competition to a greater extent. In spite of the above facts
Nishat mills ltd, had been successful in maintaining its market position and
growth.

Diversification Strategy
Market yarn is diversified to increase the customer base. Under this,
diversification program, business with Malaysia, Korea, Taiwan and UK have
been initiated. Product range is also increased to cater for the different needs of
increased number of buyers production volume is also increased by
concentrating on coarse counts with a result of increase in volume from 90-95
containers per month to around 115 containers month.
Market Development
In order to reduce their dependence on a few markets especially FAR EAST,
new markets were developed for tray cloth. This diversification not only reduced
their dependence on Hong Kong but also gave those better profit margins at
times when Hong Kong market was very depressed. Under this market
diversification, they started business with SOUTH AFRICA, AUSTRALAS,
TAIWAN, and SRILANKA, ITALY etc.
Contacting Old Customers

The business with some of the old buyers in Europe was also revived during this
period after intensive efforts. This revival gave both good volumes and better
profit margins.
New And Innovative Product Development

They have developed fancy and special items like Cavalry Twills, Bedford Cords
and dobby items, which are being sold at premium prices. They keep on
modernizing their equipment in order to maintain the high quality of their
products.
More Quality Conscious

With the increase of competition, they have become more quality conscious. In
order to achieve their quality standards, they are maintaining better quality by
getting yarn from pre-approved sources, tighter fabrics inspection in folding and
providing service to their customers.

PART
TEN

Financial Analysis of the
Company
NISHAT PVT. LIMITED

BALANCE SHEET
FOR THE YEAR ENDED 2009
2009 2008 2007 2006 2005
EQUITY AND LIABILITIES
CAPITAL AND RESERVES

1,597,857,0 1,597,857,0 1,452,597,0 1,452,597,0 1,597,857
Share Capital 00 00 00 00 ,000
23,549,323,0 28,566,041,0 19,659,812,0 11,353,517,0 28,566,041,
Reserves 00 00 00 00 000
Accumulated profit - - - - -
25,147,180,00 30,163,898,00 21,112,409,00 12,806,114,00 30,163,898,0
Total Equity 0 0 0 0 00
SHAREHOLDERS EQUITY
NON CURRENT LIABILITIES
1,047,794,0 1,773,820,0 2,982,353,0 2,796,512,0 1,773,820
Loan term finances 00 00 00 00 ,000
liabilities against
assets subject to 33,031,00 61,643,00
finance lease - - 0 0 -
1,047,794,00 1,773,820,00 3,015,384,00 2,858,155,00 1,773,820,0
0 0 0 0 00
CURRENT LIABILITIES
Trade and other 1,141,227,0 926,593, 960,436, 812,216, 926,59
payables 00 000 000 000 3,000
Interest/ mark up 201,847, 131,744, 151,236, 88,449, 131,74
on loans 000 000 000 000 4,000
short term 9,175,518,0 5,018,664,0 4,315,708,0 4,284,815,0 5,018,664
borrowings 00 00 00 00 ,000
Current portion of 926,025, 1,341,565,0 1,342,771,0 711,164, 1,341,565
long term liabilities 000 00 00 000 ,000
Provision for 276,988, 230,807, 281,382, 356,689, 230,80
000 000 000 000 7,000

income tax
11,721,605,00 7,649,373,00 7,051,533,00 6,253,333,00 7,649,373,0
0 0 0 0 00
CONTIGENCY
AND
COMMETMENTS - - - - -
TOTAL EQUITY 37,916,579,00 39,587,091,00 31,179,326,00 21,917,602,00 39,587,091,0

AND LIABILITIES 0 0 0 0 00
ASSETS 2009 2008 2007 2006 2005

NON-CURRENT ASSETS
Property, Plant 10,647,310,00
0 10,586,159,0 10,611,353,0 9,151,096,0 2,429,954
and Equipment 00 00 00 ,944
Capital Work in 13,321,088,00
0 15,672,980,0 10,793,026,0 5,003,177,0 57,60
progress 00 00 00 8,750
Loan term loans-
secured and 8,122 9,523 6,377 4,890
deposits ,000 ,000 ,000 ,000
Loan term loans-
secured and 10,541, 9,342 10,130, 12,022, 23,82
deposits 000 ,000 000 000 0,007
23,987,061,00 26,278,004,00 21,420,886,00 14,171,185,00 2,511,383,7
0 0 0 0 01
CURRENT ASSETS
stores, spares
parts and loose 490,229, 422,428, 471,520, 424,827, 1,249,572
tools 000 000 000 000 ,742
4,103,648,0 3,106,436,0 3,003,174,0 2,897,392,0
stock in trade 00 00 00 00
1,329,027,0 831,653, 1,026,884,0 877,358, 1,150,579
Trade Debts 00 000 00 000 ,738
Short term 7,129,154,0 8,118,459,0 4,350,146,0 2,173,530,0 109,13
investments 00 00 00 00 8,820
loans and 403,295, 411,270, 418,794, 424,533, 245,25
advances 000 000 000 000 5,091
Short term deposit 30,400, 26,395, 30,525, 39,180, 13,49
and prepayments 000 000 000 000 7,444
370,013, 322,839, 407,147, 388,598,
others receivables 000 000 000 000 -
Cash and bank 73,752, 69,607, 50,250, 520,999, 56,52
balances 000 000 000 000 8,131
13,929,518,00 13,309,087,00 9,758,440,00 7,746,417,00 2,824,571,9
0 0 0 0 66
TOTAL ASSETS 37,916,57 39,587,09 31,179,32 21,917,60 5,335,9

9,000 1,000 6,000 2,000 55,667
NISHAT PVT. LIMITED

PROFIT & LOSS A/C
FOR THE YEAR ENDED 2009
2009 2008 2007 2006 2005
SALES
19,267,6 17,180,1 16,417,35 11,374,63 7,461,
COST OF SALES 33,000 92,000 8,000 0,000 055,757
(16,298,85 (14,335,25 (13,701,62 (9,239,73 7,091,
7,000) 4,000) 6,000) 1,000) 114,328
GROSS PROFIT
2,968,7 2,844,9 2,715, 2,134, 14,552,1
76,000 38,000 732,000 899,000 70,085
DISTRIBUTION
COST
ADMINISTRATIVE (961,7 (928,7 (663,67 (510,24
EXPENSES 11,000) 78,000) 1,000) 6,000) -
OTHER (398,7 (320,2 (264,80 (175,04 54
OPERATING 57,000) 02,000) 7,000) 0,000) ,689,456
OTHER
OPERATING (110,7 (91, (78,68 (70,97 27
INCOME 81,000) 758,000) 9,000) 8,000) ,986,950
5,806,8 671, 277,96 621,56 111,
73,000 275,000 1,000 9,000 644,873
4,335,62 (669,463 (729,20 (134,69 194,32
4,000 ,000) 6,000) 5,000) 1,279
OPERATING
PROFIT
7,304,4 2,175,4 1,986, 2,000, 14,746,4
00,000 75,000 526,000 204,000 91,364
FINANCE COST
share of profit in
associated (907,4 (819,2 (755,05 (407,69 127,
companies 32,000) 67,000) 4,000) 6,000) 260,241
527,39 440,84 13
- - 4,000 6,000 ,544,903
(907,4 (819,2 (227, 33 140,
32,000) 67,000) 660,000) ,150,000 805,144
PROFIT BEFORE TAXATION
6,396,96 1,356,20 1,758,86 2,033,35 14,887,29
8,000 8,000 6,000 4,000 6,508
TAXATION
(258,0 (145,0 (126, (166, 85
00,000) 00,000) 000,000) 000,000) ,046,149
PROFIT AFTER
TAXATION
6,138,9 1,211,20 1,632,86 1,867,35 14,972,34
68,000 8,000 6,000 4,000 2,657

1. RATIO ANALYSIS
2. ADVANTAGES OF RATIO ANALYSIS
3. LIMITATION OF RATIO ANALYSIS
4. TYPES OF RATIO ANALYSIS
I. LIQUIDITY RATIO
II. TURNOVER RATIO
III. PROFITABILITY RATIO
IV. LEVERAGE RATIO
RATIO ANALYSIS
The term "accounting ratios" is used to describe significant relationship
between figures shown on a balance sheet, in a profit and loss account, in a
budgetary control system or in any other part of accounting organization.
Accounting ratios thus shows the relationship between accounting data.
Ratio analysis is very important while measuring the performance of the

business. These ratios are carried out from the Income statement and balance
sheet. Many parties including management, investors and Government are
interested in these ratios. The purpose of analysis is to measure the performance
of the company and financial health of the organization.
Advantages of Ratios Analysis
Ratio analysis is an important and age-old technique of financial analysis. The
following are some of the advantages of ratio analysis:
Simplifies financial statements:

It simplifies the comprehension of financial statements. Ratios tell the whole
story of changes in the financial condition of the business
Facilitates inter-firm comparison:
It provides data for inter-firm comparison. Ratios highlight the factors

associated with successful and unsuccessful firm. They also reveal strong firms
and weak firms, overvalued and undervalued firms.
Helps in planning:
It helps in planning and forecasting. Ratios can assist management, in its

basic functions of forecasting for Planning, co-ordination, control and
communications.
Makes inter-firm comparison possible:
Ratios analysis also makes possible comparison of the performance of

different divisions of the firm. The ratios are helpful in deciding about their
efficiency or otherwise in the past and likely performance in the future.
Help in investment decisions:
It helps in investment decisions in the case of investors and lending decisions

in the case of bankers etc.
Limitations of Ratios Analysis
The ratios analysis is one of the most powerful tools of financial management.
Though ratios are simple to calculate and easy to understand, they suffer from
serious limitations.

Limitations of financial statements: Ratios are based only on the information
which has been recorded in the financial statements. Financial statements
themselves are subject to several limitations. Thus ratios derived, there from, are
also subject to those limitations. For example; non-financial changes though
important for the business are not relevant by the financial statements. Financial
statements are affected to a very great extent by accounting conventions and
concepts. Personal judgment plays a great part in determining the figures for
financial statements.
Comparative study required: Ratios are useful in judging the efficiency of the
business only when they are compared with past results of the business.
However, such a comparison only provide glimpse of the past performance and
forecasts for future may not prove correct since several other factors like market
conditions, management policies, etc. may affect the future operations.
Ratios alone are not adequate. Ratios are only indicators, they cannot be
taken as final regarding good or bad financial position of the business. Other
things have also to be seen.
Problems of price level changes: A change in price level can affect the validity
of ratios are calculated for different time periods. In such a case the ratio analysis
may not clearly indicate the trend in solvency and profitability of the company.
The financial statements, therefore, be adjusted keeping in view the price level
changes if a meaningful comparison is to be made through accounting ratios.
Lack of adequate standard: No fixed standard can be laid down for ideal
ratios. There are no well accepted standards or rule of thumb for all ratios which
can be accepted as norm. It renders interpretation of the ratios difficult.
Limited use of single ratios: A single ratio, usually, does not convey much of a
sense. To make a better interpretation, a number of ratios have to be calculated
which is likely to confuse the analyst than help him in making any good decision.

Personal bias: Ratios are only means of financial analysis and not an end in
itself. Ratios have to interpret and different people may interpret the same ratio in
different way.
Incomparable: Not only industries differ in their nature, but also the firms of
the similar business widely differ in their size and accounting procedures etc. It
makes comparison of ratios difficult and misleading.
Ratio Analysis
Ratio analysis involves the methods of calculating and interpreting financial

ratios to access the firm’s performance and status. The basic inputs to ratio
analysis and firm’s income statement and balance sheet for the periods to be
examined.
TYPES OF RATIO ANALYSIS
Two types of Ratio Analysis are generally carried out,
1. Cross Sectional Approach, in this approach, the effectiveness of business

is compared with the competitors business of the same period.
2. Most companies use the Time Series Analysis in which the performance
of company over a period is measured.

Ratio Analysis categories:
A) Liquidity
B) Turnover
C) Profitability
D) Leverage
LIQUIDITY RATIOS:
Liquidity ratios are the ratios for testing short term solvency or financial
position of a business. These are designed to test the ability of the business to
meet its short term obligation promptly. A class of financial metrics that is used to
determine a company's ability to pay off its short-terms debts obligations.
Generally, the higher the value of the ratio, the larger the margin of safety that
the company possesses to cover short-term debts
Current Ratio:
Current ratio may be defined as the relationship between current assets and
current liabilities. This ratio is also known as "working capital ratio". It is a
measure of general liquidity and is most widely used to make the analysis for
short term financial position or liquidity of a firm. It is calculated by dividing the
total of the current assets by total of the current liabilities.
Limitations of Current Ratio:

This ratio is measure of liquidity and should be used very carefully because it
suffers from many limitations. It is, therefore, suggested that it should not be
used as the sole index of short term solvency
1. It is crude ratio because it measure only the quantity and not the
quality of the current assets.

2. Even if the ratio is favorable, the firm may be in financial trouble,
because of more stock and work in process which is not easily convertible into
cash, and, therefore firm may have less cash to pay off current liabilities.
3. Valuation of current assets and window dressing is another problem.
This ratio can be very easily manipulated by overvaluing the current assets. An
equal increase in both current assets and current liabilities would decrease the
ratio and similarly equal decrease in current assets and current liabilities would
increase current ratio.
current ratio current assets/current liabilities

year 2009 2008 2007 2006 2005
1.1 1.7
Nishat 1.38 1.24 0.37
9 4
Liquidity or Acid Test or Quick Ratio:
Liquid ratio is also termed as "Liquidity Ratio”,” Acid Test Ratio" or "Quick
Ratio". It is the ratio of liquid assets to current liabilities. The true liquidity refers to
the ability of a firm to pay its short term obligations as and when they become
due
(current assets-stock)/current
quick ratio liabilities
year 2009 2008 2007 2006 2005
0.9 0.7 0.3
Nishat 0.84 1.33
6 8 7
Turnover/ Activity ratios:
Activity ratios are measures of how well assets are used. Activity ratios --
which are, for the most part, turnover ratios -- can be used to evaluate the
benefits produced by specific assets, such as inventory or accounts receivable.
Or they can be use to evaluate the benefits produced by all a company's assets
collectively.
These measures help us gauge how effectively the company is at putting its
investment to work. A company will invest in assets – e.g., inventory or plant and

equipment – and then use these assets to generate revenues. The greater the
turnover, the more effectively the company is at producing a benefit from its
investment in assets
Inventory days.
The number of day’s inventory is also known as average inventory period and
inventory holding period. A high number of days inventory indicates that their is a
lack of demand for the product being sold. A low days inventory ratio (inventory
holding period) may indicate that the company is not keeping enough stock on
hand to meet demands. The number of days inventory and inventory turnover
ratios are included in the financial statement ratio analysis spreadsheets
highlighted in the left column, which provide formulas, definitions, calculation,
charts and explanations of each ratio.
Inventory Days = Inventory / Cost of
Inventory Days Sales*365
Year 2009 2008 2007 2006 2005
80.0 114.4
Nishat 91.90 79.10
0 6 -
Debtors Turnover Ratio or Receivables

Turnover Ratio:
Debtor’s turnover ratio indicates the velocity of debt collection of a firm. In

simple words it indicates the number of times average debtors (receivable) are
turned over during a year.
Debtor's day Trade debtors/Credit sales*365

year 2009 2008 2007 2006 2005
25.1 17.6 22.8 28.1 56.2
Nishat
8 7 3 5 9
Creditors / Accounts Payable Turnover

Ratio
This ratio is similar to the debtor’s turnover ratio. It compares creditors with
the total credit purchases. It signifies the credit period enjoyed by the firm in
paying creditors. Accounts payable include both sundry creditors and bills
payable. Same as debtor’s turnover ratio, creditor’s turnover ratio can be
calculated in two forms, creditors’ turnover ratio and average payment period.

Trade Creditors/Credit
Creditors days Sales*365
year 2009 2008 2007 2006 2005
21.6 19.6 21.3 26.0 45.3
Nishat
2 9 5 6 3
Total Assets Turnover Ratio.
The total assets turnover ratio measures the use of all assets in terms of
sales, by comparing sales with net total assets. This interactive tutorial walks you
through the calculations as well as where on the financial statements to find the
numbers.
Sales/ Total
Formula Assets
year 2009 2008 2007 2006 2005
0.5 0.4 0.5 0.5 1.4
Nishat
1 3 3 2 0
Fixed Assets Turnover Ratio:
Fixed assets turnover ratio is also known as sales to fixed assets ratio. This
ratio measures the efficiency and profit earning capacity of the concern. Higher
the ratio, greater is the intensive utilization of fixed assets. Lower ratio means
under-utilization of fixed assets
Formula Cost of sales / Fixed Assets
year 2009 2008 2007 2006 2005
1.5 1.3 1.2 1.0 2.9
Nishat
3 5 9 1 2
Profitability Ratios:
Profitability ratios (also referred to as profit margin ratios) compare

components of income with sales. They give us an idea of what makes up a
company's income and are usually expressed as a portion of each dollar of sales.
The profit margin ratios we discuss here differ only by the numerator. It's in the
numerator that we reflect and thus evaluate performance for different aspects of
the business: The gross profit margin is the ratio of gross income or profit to

sales. This ratio indicates how much of every dollar of sales is left after costs of
goods sold.
Gross Profit (GP) Ratio:
Gross profit ratio (GP ratio) is the ratio of gross profit to net sales expressed
as a percentage. It expresses the relationship between gross profit and sales.
Formula Gross profit/Sales*100

year 2009 2008 2007 2006 2005
15.4 16.5 16.5 18.7 4.9
Nishat
1 6 4 7 6
Operating Profit Ratio:
Operating ratio is the ratio of cost of goods sold plus operating expenses to
net sales. It is generally expressed in percentage. It measures the cost of
operations per dollar of sales. This is closely related to the ratio of operating
profit to net sales.
Formula Operating Profit Margin = Operating profit /Sale*100

year 2009 2008 2007 2006 2005
37.9 12.6 12.1 17.5 7.5
Nishat
1 6 0 8 6
Net Profit/ (Loss) after Tax:
Net profit ratio is the ratio of net profit (after taxes) to net sales. It is expressed
as percentage
Net profit before

Formula tax/Sales*100
year 2009 2008 2007 2006 2005
33.2 7.8 10.7 17.8 9.4
Nishat
0 9 1 8 5

Return on Assets:
Where asset turnover tells an investor the total sales for each $1 of assets,
return on assets [or ROA for short] tells an investor how much profit a company
generated for each $1 in assets. The return on assets figure is also a sure-fire
way to gauge the asset intensity of a business. Companies such as
telecommunication providers, car manufacturers, and railroads are very asset-
intensive, meaning they require big, expensive machinery or equipment to
generate a profit. Advertising agencies and software companies, on the other
hand, are generally very asset-light (in the case of a software companies, once a
program has been developed, employees simply copy it to a five-cent disk, throw
an instruction manual in the box, and mail it out to stores).
Net Income / Total

Formula Assets*100
year 2009 2008 2007 2006 2005
16.1 3.0 5.2 8.5 14.8
Nishat
9 6 4 2 1
Return on Capital Employed (ROCE) Ratio:
Capital employed and operating profits are the main items. Capital employed
may be defined in a number of ways. However, two widely accepted definitions
are "gross capital employed" and "net capital employed". Gross capital employed
usually means the total assets, fixed as well as current, used in business, while
net capital employed refers to total assets minus liabilities. On the other hand, it
refers to total of capital, capital reserves, revenue reserves (including profit and
loss account balance), debentures and long term loans.
Profit before interest and taxation / Capital Employed

Formula *100
year 2009 2008 2007 2006 2005
24.4 4.2 7.2 12.9 (30.48
Nishat
2 5 9 9 )
Return on Equity Capital (ROE) Ratio:
In real sense, ordinarily shareholders are the real owners of the company.
They assume the highest risk in the company. (Preference share holders have a

preference over ordinary shareholders in the payment of dividend as well as
capital. Preference share holders get a fixed rate of dividend irrespective of the
quantum of profits of the company). The rate of dividends varies with the
availability of profits in case of ordinary shares only. Thus ordinary shareholders
are more interested in the profitability of a company and the performance of a
company should be judged on the basis of return on equity capital of the
company. Return on equity capital which is the relationship between profits of a
company and its equity, can be calculated as follows.
Equity share capital should be the total called-up value of equity shares. As
the profit used for the calculations are the final profits available to equity
shareholders as dividend, therefore the preference dividend and taxes are
deducted in order to arrive at such profits.
[(Net profit after tax − Preference dividend) / Equity

Formula share capital] × 100
year 2009 2008 2007 2006 2005
24.4 4.0 7.7 14.5 2.6
Nishat
1 2 3 8 2
LEVERAGES RATIOS:
A company can finance its assets either with equity or debt. Financing
through debt involves risk because debt legally obligates the company to pay
interest and to repay the principal as promised. Equity financing does not
obligate the company to pay anything -- dividends are paid at the discretion of
the board of directors. There is always some risk, which we refer to as business
risk, inherent in any operating segment of a business. But how a company
chooses to finance its operations -- the particular mix of debt and equity -- may
add financial risk on top of business risk Financial risk is the extent that debt
financing is used relative to equity. Financial leverage ratios are used to assess
how much financial risk the company has taken on. There
are two types of financial leverage ratios: component percentages and
coverage ratios. Component percentages compare a company's debt with either
its total capital (debt plus equity) or its equity capital. Coverage ratios reflect a
company's ability to satisfy fixed obligations, such as interest, principal
repayment, or lease payments.
Debt to Equity Ratio:
Debt-to-Equity ratio indicates the relationship between the external equities or

outsiders funds and the internal equities or shareholders funds. It is also known

as external internal equity ratio. It is determined to ascertain soundness of the
long term financial policies of the company.
Total Long Term Debts / Shareholders

Formula Funds
year 2009 2008 2007 2006 2005
0.0 0.0 0.1 0.2 0.0
Nishat
4 6 4 2 6
Debt Service Ratio or Interest Coverage

Ratio:
Interest coverage ratio is also known as debt service ratio or debt service
coverage ratio. This ratio relates the fixed interest charges to the income earned
by the business. It indicates whether the business has earned sufficient profits to
pay periodically the interest charges.
Net Profit Before Interest and Tax / Fixed Interest

Formula Charges
year 2009 2008 2007 2006 2005
1.6 2.3 4.9 5.5
Nishat 7.05
6 3 9 4
Investments / Share Holder Ratios:
Relationship of gains from investments (including realized capital gains)

resulting from insurance operations to earned premiums.
Earnings Per Share (EPS) Ratio:
Earnings per share ratio (EPS Ratio) are a small variation of return on equity
capital ratio and are calculated by dividing the net profit after taxes less
preference dividend by the total number of equity shares.
Formula Profit after tax/No. of shares
year 2009 2008 2007 2006 2005
7.5 10.2 12.8 5.1
Nishat 38.42
8 2 6 7

Earnings Yield.
The earnings per share for the most recent 12-month period divided by the
current market price per share. The earnings yield (which is the inverse of the
P/E ratio) shows the percentage of each dollar invested in the stock that was
earned by the company.
Earning Per Share / Market Price Per Share
Formula * 100
year 2009 2008 2007 2006 2005
44.6 5.8 9.7 16.9 9.7
Nishat
9 7 5 2 9
Market Value of Share

year 2009 2008 2007 2006 2005
85.9 104.8 76.0 52.8
Nishat 129.20
7 0 0 0
PRICE EARNING RATIO (P/E RATIO):
Price earning ratio (P/E ratio) is the ratio between market price per equity
share and earning per share. The ratio is calculated to make an estimate of
appreciation in the value of a share of a company and is widely used by investors
to decide whether or not to buy shares in a particular company.
Market price per equity share / Earnings
Formula per share
year 2009 2008 2007 2006 2005
2.2 17.0 10.2 5.9 10.2
Nishat
4 4 5 1 1

PART
ELEVEN

Learning as internee
It was an exemplary experience that I have performed with sincere devotion and
commitment. I have an interest in industry that’s because industry especially
Textile industry is the back bone of the national economy. But one thing I want to
share that it was not game of finger tips, that it looks like, it was tough and had
complications in its process but the overall it was nice and great experience. My
earnings and learning I am going to share regarding my internship in sales tax
and rebate department.
· First I met Mr.Illiyas the P.A of GM A & F he introduced me to the floor, all 5-6
people, afterwards he asked Mr. Rizwan to take me under his training. He is the
sales tax officer; he started with some brief introduction about the NISHAT group.
And then he came to introduce some
New products in NML.

Product lines,
Different business.
Rules and regulations
Timings
He told me about the actual work of the department, I discussed about the
accounts and finance practices going on in the international Textile market.
I learnt that every problem is solved with a systematic process like from the root
of the problem.
I also performed some task in the rebate department like how to calculate the
rebate amount, how to follow the parties, whose invoices are missing. What is
the procedure of purchasing, how to keep the records of transactions, how to file
a return.
I tried to learn about the total procedure and required of the documents and
dealing coordinating with tax department, record room, all the record is saved.
During my internship I learnt about the disciplines to maintain in such an
organization, then I was a part of internal audit. Went through cross checking,
monitoring, ticking, feeding, rechecking, informing. Reporting of short data.
Gathered knowledge about important and necessary document for exports and
other operations.
I learnt about the minimum pay scale. The ways of training. And what are the
procedures of the NISHAT about HR matters.
The success ritual, history tellers,
Duties
My duties kept on changing. I worked in four phases.

1st was to do with the pervious years works. That was related to the internal audit.
The payments of sales tax were blocked.
2ndly I was to work with a sales tax officer with whom I was assigned to calculate
the sales tax amount through the formulae
3rdly I was the most experienced internee, so I was to ensure what the new
comers are doing, and was to work for the preparation of missing invoices, and to
prepare a report of the suppliers to whom the company has to peruse.
4thly I was to work on computer. That was my final week. And got the experience
regarding feedings and all.
New Knowledge Acquired
Had knowledge about the real time work. Came to know that it’s not that easy to
sustain and maintain dignity in job. Had knowledge about the practical work of
the subject I have studied up till now regarding commerce.
Problems Encountered
Problem were not really so immense cause of my believe in hard work and
instant adaptability. And the cooperative attitude of 70 % of the staff.
How Experience Impacts your Career
Top of all, I came to know how to apply for any job, I went through interviews,
had experience to cope up with already working people being a fresh candidate.
Knowledge about on job Politics, gained confidence to communicate, participate
anticipate, how to be proactive. How to over come the management dilemma.
How to take good decision at an appropriate time, and all the experiences have
made impressive impact at my career, which was not really exposed to the real
time world.

Conclusion
　
NISHAT Mills Limited is one of the leading groups in Pakistan. The system, the
management style, the policies & centralized decision making environment is
really remarkable. This report is basically an attempt to identify the areas which
need to be improved.
In this era of technology, the “Information” is the key to success in the business.
This means that the successful businessman will be who will have the right
information at the right time. This comment leads to the conclusion that the
Information Sharing Process should really be improved.
　
The overall analysis is indicating that the company’s progress has mainly
attained through dedication of employees. The effectiveness of its management,
their willingness to take advantage of opportunities and face challenges of
changing economic picture, this all contributes to the very much improved and
sound position of company. This is really appreciable for the devotion and hard
work of all the employees of the company
　
　
Recommendations for Improvements are:
· At present facility of bonus is given only to production staff but such incentives
should also be given to Head office Staff.
· Special incentives should also be given to Head on Eid and on other special
days should be given to the workers.
· Medical facilities are given in mill but such facilities should also be given to
management.
· Different training courses should be arranged for the up lifting and improving the
quality of work for employees
· They provide transportation facility to only female employees I think male
should also be provided with conveyance convenience. This will create the
easiness for workers and reduce the wastage of time.
· There is also a problem of work overload for the employees and it should be
control properly so that the employees are motivated.
· Employees should be paid extra for the work which they done after working
hours.

Ahmed Zeeshan Khan, Comsats

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INTERNSHIP REPORT

Nishat Textile Mills Limited

7, main. Gulberg 3, Jail Road Lahore

COMSATS INSTITUTE OF INFORMATION AND

Comsats Institute of Information and Technology, Lahore 1

Comsats Institute of Information and Technology, Lahore 2

Comsats Institute of Information and Technology, Lahore 3

The distance between success & failure is dependent upon performance,

Comsats Institute of Information and Technology, Lahore 4

Comsats Institute of Information and Technology, Lahore 5

This Report is dedicated to

May ALLAH bless them!

ALLAH, who made me able to

Comsats Institute of Information and Technology, Lahore 6

Comsats is one of the leading universities in Pakistan. Management

Comsats Institute of Information and Technology, Lahore 7

Their constant encouragement made the successful accomplishment of this

Comsats Institute of Information and Technology, Lahore 8

Comsats Institute of Information and Technology, Lahore 9

Textile Imports of Pakistan

Comsats Institute of Information and Technology, Lahore 10

Textiles Exports from Pakistan

Comsats Institute of Information and Technology, Lahore 11

BANKERS TO THE COMPANY:

Comsats Institute of Information and Technology, Lahore 12

12 K.M. Faisalabad Road, Shiekhupura

5 K.M. Nishat Avenue off 22 K.M Ferozepur Road,

20 K.M. Shiekhupura Faisalabad Road, Froze Watwan

REGISTERED OFFICE &SHARES DEPARTMENT

Comsats Institute of Information and Technology, Lahore 13

Their businesses are

Comsats Institute of Information and Technology, Lahore 14

Comsats Institute of Information and Technology, Lahore 15

It is our conviction that every successful organization is a reflection on the

Comsats Institute of Information and Technology, Lahore 16

To provide quality products to customer and explore new Markets to

To transform the company into a modern and dynamic yarn,

We work together as a team for implementation and continual improvement of

Comsats Institute of Information and Technology, Lahore 17

Down the hill Scenario

Represented a situation where only the historic export

Envisaged increase in unit price realization of yarn, fabric,

Up the hill Scenario

the most ambitious of the scenarios that not only adopted

Comsats Institute of Information and Technology, Lahore 18

Comsats Institute of Information and Technology, Lahore 19

Cotton and jute textiles,

Chemicals and insurance.

As he became a famous personal, He was elected Chairman of all Pakistan

After almost five decades of flawless success, NISHAT group of companies is

Comsats Institute of Information and Technology, Lahore 20

The textile business is further subdivided into 2-textile division:

Comsats Institute of Information and Technology, Lahore 21

NISHAT MILLS LTD, FAISALABAD

CURTAINS & ACCESSORIES

TABLE, FURNITURE & KITCHEN ACCESSORIES

Comsats Institute of Information and Technology, Lahore 22

Export Oriented Organization

But main competitors of Nishat Mill are

“Crescent Textile Mills”

Comsats Institute of Information and Technology, Lahore 23

It must provide a product (good or service) that suits best to the

It must provide a product at a cost that always an adequate profit and a