VISION STATEMENT OF Nishat Textile Mills

“To transform the company into modern & dynamic yarn,

cloth & 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 modern & dynamic power
generating company with highly professionals and fully
equipped to play a meaningful role on sustainable basis in
the economy of Pakistan.”

Proposed Vision of Nishat Textile Mills

To compete in the global market through value creation and

technology."

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 MISSION STATEMENT OF NISHAT MILLS LTD.

“To provide Quality products to customers & explore new

markets to promote/expand sales of the company through good
governance & foster a sound and dynamic team, so as to
achieve optimum prices of products of the company for
sustainable and equitable growth & prosperity of the company.”

PROPOSED MISSION STATEMENT OF NISHAT MILLS LTD.

“We aim to achieve Zero faults (7) in yarn clothes and apparel
manufacturing (2,6) by considering cost effective technology (4),
corporate social responsibility issues (8) and horizontal
management system to encourage entrepreneurial ideas (9) in
order to explore sales and market opportunities (5) keeping in
mind customer preferences (1) in global market (3).”

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Explanation:

The essential components of Mission statement cater different points which are
as follows:

(7) Self concept

Nishat Textile Mill is reaching zero faults by controlling individual elements in
process and improves productivity and the benefit is that the Mill is giving better
products and services by an addition of 20000 new spindles. This distinctive
feature gets competitive edge over other companies.

(2) Product and services

The major products produced by Nishat Mill Ltd. are yarn clothes and Nishat
linen.

(4) Technology
Nishat Textile Mill has efficient information system which helps in making
decisions to allocate financial resources in order to cut down the cost of major
operations and enhance the computer based services.

(8) Concern for public image

The firm is functioning like good corporate citizen and also having an efficient
system for the disposal of waste. Nishat Textile Mill also established in-house
training for unskilled labor so that they may be trained on stitching machines and
quality of work in stitching floors.

(9) Concern for employees

Nishat Textile Mill has decentralized system and it also involves employees in
decision making and problem solving challenges. It helps to motivate, encourage
and compensate employees according to the working conditions.

(5) Concern for survival and growth

Nishat textile mill done its operations in a way that it would be profitable and also
share its profits fairly with stakeholders, shareholders, employees etc

(1) Customers
Nishat textile mill develops customer’s loyalty and trust by fulfilling their needs
and facilitating them with different services.

(3) Market
Nishat Textile Mill is an export oriented company and not only competing globally
but also doing its operations in local market too.

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INTRODUCTION

When Pakistan came into being there were only 16 textile companies out of which
only 12 were in operation. It grew to 70 in 1957 as industrial development took
place. Now days there are 596 textile mills out of which 442 are in operation. The
export revenue of textile industry contributes a large share to the GDP of
Pakistan. (Google.com: history of textile mills)

We are doing our project on Nishat textile mills. The brief snapshot of NML is to
manufacture spins, combs, weaves, bleaches, dyes, prints, stitches, buys and
sells textiles. It deals in yarn, linen, cloth and other goods and fabrics made from
raw cotton, synthetic fiber and cloth. The Group's plants are located at
Faisalabad, Sheikhupura, Lahore and Feroze Watwan.

Textile exports from Pakistan

Textile constitutes 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 clothes, towels & bed sheets
& their major customers are USA, EU, Japan & Hong Kong & now UAE also.
Many textile exports take place under quota arrangements with the EU & the
United States. Gray cloth roughly accounts 16-18% of total cloth.

Exports from Pakistan

Nishat mills’ Gray cloth exports account for roughly 20% for Pakistan. The firm
has been exporting to USA for many years & has recently started export to EU
countries & Middle Eastern countries.

In Pakistan the cotton crop season runs approximately from August to March.
Prices are generally high from August to September & fall later on as supply
increases.

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COMPANY INFORMATION

Board of Directors

• Mian Hassan Mansha

• Mr. Fayaz Ahmad Longi (NIT)
• Mr. Muhammad Bilal Sheikh (PICIC)
• Mr. Aftab Ahmed Khan
• Mr. Khalid Qadeer Qureshi
• Mr. Muhammad Azam
• Rana Muhammad Mushtaq
• Mr. Muhammad Ali Zeb
• CHIEF EXECUTIVE
Mrs. Naz Mansha
• CORPORATE DEPARTMENT
Mr. Muhammad Azam
• Company Secretary
Mr. Khalid Mahmood Chohan
• Senior Manager corporate
• 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

• Allied Bank of Pakistan Limited
• American Express Bank

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 • Askari Commercial Bank Limited
• Credit Agricole Indosuez
• Citibank N.A.
• Deutsche Bank
• Emirates Bank International P.J.S.C
• Faysal Bank Limited
• Habib Bank Limited
• Habib Bank A.G. Zurich
• Mashreq Bank P.S.C.

Mills:

• Nishatabad, Faisalabad
(Spinning, Weaving, 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)

Nishat Group of Companies

• Nishat Mills Ltd., Faislabad

• Nishat Dyeing and Finishing, Lahore.
• Nishat Fabrics, Bhikhi.
• Nishat Spinning, Feroze Watwan.
• Nishat Sewing, Lahore

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CIIT LAHORE CAMPUS 7
Present Status of Nishat

The history of Nishat dates back to 1951, when Mian Mohammad Yahya founded
Nishat Mills. After almost half a century of undaunted success, Nishat Group is
among the leading business houses of the country and ranks among the top 5
groups in terms of assets and sales revenue.

The group has its roots firmly planted into four-core businesses namely.
1. Textiles
2. Power generation
3. Banking
4. Cement

The textile business is further subdivided into 2 textile divisions;

 Nishat Faisalabad
 Nishat Chunian

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.

History of NISHAT MILLS LIMITED

NISHAT MILLS LIMITED (NML) commenced business in 1951 as a partnership

concern, which was converted into private limited company in 1959. In 1961, the
company went public and was listed on the Karachi stock exchange, the only
stock exchange in the country at that time.

NML started out as a weaving unit with 500 semi-automatic looms; later 10000
spindles were added, laying the foundation on nation’s biggest textiles composite
project. Composite project at Nishat mills limited Faisalabad covering 98 acre of
land is providing all 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

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the new country to help establish its industrial base. His is a 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 5 core business, Textiles,
Cement, Banking, and Power Generation & Insurance companies. Today, Nishat
is considered to be a part with multinationals operating locally in terms of its
quality products and management skills.

Firmly believing in ‘Growth through Professional Management’ the corporate

culture of NML is based on decentralization, delegation of authority, encouraging
the acceptance of responsibility and inculcating quality consciousness.

It is the conviction of NML that every successful organization is a reflection on the

commitment, dedication, and team spirit of its employees, and Nishat is no
exception. The employees of NML 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.

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EXTERNAL AUDIT
The purpose of the external audit is to develop a finite list of opportunities that
could benefit the firm and should protect from the threats. It is the comparison of
a company with its competitors. To compete the highly competitive environment
Nishat performs EFE and the CPM to check its competitive edge and the
compatibility in the market.

Following are some key external forces:

1) Economic Forces

Key Pakistani Economic Variables to Be Mentioned

Propensity of people to spend Value of the Rupees in world Market

Interest rates Imports/ export factors
Income differences by region and consumer
Inflation rates groups
Money Market rates Price fluctuation
Consumption patterns Monetary policies
Unemployment Trends Fiscal policies
Tax rates Trade policies

i) Propensity of people to spend

It tells us about the purchasing power of customers. Nishat is targeting the upper
class from Pakistan and the business 2 business dealing globally.

ii) Interest rates

The interest rates in the country are higher which discourages the small investors.
It directly influences negatively the Nishat Textile Mills.

iii) Inflation rates

The inflation rate is high in Pakistan which ultimately affects the Nishat Textile
Mills.
iv) Consumption patterns

v) Unemployment Trends
High Unemployment in Pakistan and also become a gap while dealing to its
suppliers and others.
vi) Tax rates
The tax rates are high as compared to the other countries but there is a low wage
rate in Pakistan which helps Nishat in making products at a better and
competitive price.

vii) Value of the Rupees in world Market

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The value of PKR is very less in the global developed countries which affect
NISHAT Mills while trading globally in the form of Currency conversion.
viii) Income differences by region and consumer groups
The society of Pakistan is divided into 3 major economic group’s i-e, Upper class;
middle class; lower class. Out of which Nishat textile mills is focusing on the
Upper class and some portion of the middle class.
ix) Price fluctuation
There is a great fluctuation because of more than 200% increase in the prices
within few years (2008-2010). It will affect the Nishat textile mills by damaging the
competitive price margin the global world of competition.

2) Social, cultural, demographic and environmental forces

Social, cultural, demographic and environmental forces

Attitudes toward customer
Per Capita Income service
Availability of retailing, manufacturing,
and services businesses Social Responsibility
Attitude towards work • Recycling
Buying Habits • Waste Management
Ethical Concerns • Air Pollution
• Water Pollution

3) Political, Governmental and legal forces

Political, Governmental and legal forces

Government regulations Level of Govt. Subsidies
Changes in Tax Laws Legislation on equal Employment
Special Tariffs Import/export regulations

4) Competitive forces

i. Competitive Intelligence Programs

ii. Cooperation Among Competitors

iii. Market Commonality and Resource Similarity.

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 EFE MATRIX

EFE MATRIX OF NISHAT TEXTILE MILLS

Key External Factors Weight Rating Weighted Score

OPPORTUNITIES
1 Opportunity to increase Target market 0.08 2 0.16
2 Quality and Guaranteed Fabrics 0.08 3 0.24
3 Opportunity to expand product line 0.05 3 0.15
4 International Fair Trade Certificate (IFTC) 0.15 4 0.6
Increase demand of Pakistani Cotton Made products in
5 Overseas Market 0.1 4 0.4

THREATS
6 Electric Power Plants 0.2 4 0.8
7 Political Instability 0.1 2 0.2
8 Low Market Share in Overseas Market 0.08 3 0.24
9 Least Advertising 0.05 1 0.05
10 Limited Retailing Outlets 0.11 1 0.11
TOTAL 1 2.95

Nomenclature:
• It is used to evaluate the external opportunities and threats
• Opportunities come before threats.
• Opportunities often receive higher weights than threats.
• The sum of all the weights assigned must lie between 0-1
• Rating should be done w.r.t. their industry (1-4) i-e; excellent to worst.
• Multiply each factor’s weight by its rating to determine a weighted Score
• The weighted score should not be more than 4.0

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 COMPETITIVE PROFILE MATRIX

COMPETITIVE PROFILE MATRIX

NISHAT TEXTILES CHENAB GUL AHMED
WEIGHTS MILLS MILLS FABRICS
Critical Success Factors Weight Rating Score Rating Score Rating Score
1 Advertising 0.15 1 0.15 3 0.45 3 0.45
2 Product Quality 0.2 4 0.8 3 0.6 3 0.6
3 Price Competitiveness 0.2 3 0.6 2 0.4 3 0.6
4 Financial Position 0.15 4 0.6 2 0.3 3 0.45
5 Global Expansion 0.15 4 0.6 1 0.15 1 0.15
6 Market Share 0.15 3 0.45 2 0.3 4 0.6
TOTAL 1 3.05 2.2 3

Nomenclature:
• In this competitive profile matrix a firm identifies its major competitors and
its particular Strengths and weaknesses.
• Multiply the weights with rates of companies and write score in the next
column.
• Assign weights with respect to the importance. As advertising is not much
important for Nishat Textile mills because of their B2B business dealing.
• Take 2-3 competitors against the company like we choose gul ahmed
fabrics and Chenab textile mills.

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INTERNAL AUDIT

INTERNAL FACTOR EVALUATION MATRIX

Introduction

IFE matrix is a summary step in conducting an internal strategic management

audit is to construct an Internal Factor Evaluation (IFE) Matrix. This strategy
formulation tool summarizes and evaluates the major strengths and weaknesses
in the functional areas of a business, and it also provides a basis for identifying
and evaluating relationships among those areas.
The IFE Matrix together with the EFE matrix is a strategy-formulation tool that
can be used to evaluate how an organization or a company is performing in
regards to identified internal strengths and weaknesses of an organization or a
company. The IFE matrix method conceptually relates to the Balanced Scorecard
method in some aspects.
The IFE matrix consists of following attributes mentioned below.

Internal Factors

Internal factors are extracted after deep internal analysis of the company.
Obviously every company has some weak point and strong point that’s the
reasons internal factors are divided into two categories namely strengths and
weakness.

Strengths
Strengths are the strong areas or attribute of the company, which are used to
overcome weakness and capitalize to take advantage of the external
opportunities available in the industry.

Weakness
Weakness are painful for the company means these are the weak factors which
needs to be improve in future otherwise if they exposed to the competitors they
can take the advantage of it.

Rating

Internal weakness are further divided in two categories namely minor weakness
and major weakness same goes of the strengths (minor strength and major
strength)
There are some important points related to rating in IFE matrix.
• Rating is applied to each factor.
• Major weakness is represented by 1.0

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 • Minor weakness is represented by 2.0
• Minor strength represented by 3.0
• Major Strength represented by 4.0

Weight

The weight range from 0.0 means not important and 1.0 means important, sum of
all assigned weight to factors must be equal to 1.0 otherwise the calculation
would not be consider correct.

Weighted Score

Weighted score value is the result achieved after multiplying each factor rating
with the weight.

Total Weighted Score

The sum of all weighted score is equal to the total weighted score, final value of
total weighted score should be between range 1.0 (low) to 4.0(high). The average
weighted score for IFE matrix is 2.5 any company total weighted score fall below
2.5 consider as weak. The company total weighted score higher then 2.5 are
considering as strong in position.

Steps to develop IFE Matrix

• List key internal factors as identified in the internal audit process. Use a
total of from ten to twenty internal factors, including both strengths and
weaknesses. List strengths first and then weaknesses. Be as specific as
possible, using percentages, ratios, and comparative numbers.
• Assign a weight that ranges from 0.0 (not important) to 1.0 (all important)
to each factor. The weight assigned to a given factor indicates the relative
importance of the factor to being successful in the firm’s industry.
Regardless of whether a key factor is an internal strength or weakness,
factors considered to have the greatest effect on organizational
performance should be assigned the highest weights. The sum of all
weights must equal 1.

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• Assign 1 to 4 rating to each factor to indicate whether that factor
represents a major weakness (rating = 1), a minor weakness (rating = 2), a
minor strength (rating = 3), or a major strength (rating = 4). Note that
strengths must receive a 4 or 3 rating and weaknesses must receive a 1 or
2 rating. Ratings are thus company based, whereas the weights in Step 2
are industry based.
• Multiply each factor’s weight by its rating to determine a weighted score for
each variable.
• Sum the weighted scores for each variable to determine the total weighted
score for the organization.

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Internal Factor Evaluation Matrix for Nishat Mills

Internal Factor Evaluation Matrix

KEY FACTORS Weight Rating weighted score
STRENGTHS
lowest employee turnover 0.15 4 0.6
Highly experienced professionals 0.08 3 0.24
Decentralized organizational structure 0.1 3 0.3
Efficient information system 0.05 3 0.15
Good financial position/strong group 0.08 4 0.32
Location of plants 0.06 4 0.24
Highest capacity of production 0.2 4 0.8
WEAKNESS
Less advertising focus 0.1 2 0.2
Maintenance of Imported machinery 0.1 1 0.1
High production cost 0.08 1 0.08
1 3.03

Discussing the NISHAT MILLS IFE MATRIX the sum of weighted score shows
that company has strong internal position. Now elaborating each strength and
weakness will tell that why and how it has been rated and what the company is
doing that makes it strong internally. The factors are explained below:

STRENGTHS

• Lowest employee turnover is one of the most attractive strength and its
rating is 4 which mean company is having a great policy for this strength.
Nishat mills employee turnover is almost equal to zero this is due to their
good incentives and compensations for their employees. The environment
of the company is very good and this helps the employees grooming
Nishat gives free medical and provide transport to their employees.

• Highly experienced professionals are hired. The rate given to this

strength is 3 which mean company is doing quite well for this strength.
Well experienced people are hired at top levels. They are not
compromising in this because their top management has hold of the
company.

• Decentralized organizational structure is also one more strength which

shows efficiency of the company. This is rate 3 and it is due to the friendly

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 and empowering environment of Nishat. Employees are given preference
and they are motivated in decision making. Top management takes in
account middle and lower level employees also and hence this company is
considered in top companies of the country.

• Efficient information system of Nishat mills has made us rate as 3. For

any company now a day its information technology should be very efficient
because this is an IT era. Nishat has very good information system to
handle its customer as it deals most in B2B so they have good concern to
this field.

• Good financial position/strong group is rate as 4. As everyone knows

that Nishat Mills is of Mansha group which is also in other businesses like
MCB bank and in insurance business. So this group has good financial
position in the market and has good credit rating which can help them in
any new investment and this strength is most important for any company
as there is competition in the market.

• Location of plants is also rate as 4 which mean that this strength is

handled by Nishat mills efficiently. Nishat plant location s close to each
other e.g. one is in Ferozpur road and dyeing section in chunian etc. so
this helps them reduce their transportation cost and managing their plants
easily.

• Highest capacity of production is rate as 4 because Nishat has 13600

spindles in their production which raises its capacity and this is and
important and excellent strength rather than its competitors. Nishat this
policy has made us to rate it the most.

WEAKNESSES

• Less advertising focus is rate as 2. Nishat is an export oriented company

so they less focus on advertisement. We have rated it as 2 because before
Nishat don't have any policy for their advertisement but now they have
focused on its advertisement department which can be seen by print media
advertisement of Nishat linen.

• Maintenance of Imported machinery is rated as 1. As Nishat Mills uses

imported machinery in their production so their maintenance is costly. For
instance if any spare part is needed so they have to import it and this can
be costly for them as our country's have instable environment. Nishat mills
don't have any good policy to handle this weakness so we have
considered it 1.

• High production cost for Nishat Mills is another weakness which should
be handled but Nishat doesn't have much policy for it so we have rated as

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 1. They make quality yarn product so their cost is also high. The imported
machinery, spindles etc made it costly.

Marketing strategies of NML

Today textile industry is facing big challenges. 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.

NML has adopted different marketing strategies over the years to sustain its
better position in the economy of Pakistan. These strategies are described below.

 Diversification strategy
 Market development strategy
 Contacting old customers
 New & innovative product development
 Improved quality products

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 a month.

Market Development

In order to reduce their dependence on a few markets especially FAR EAST, new
markets were developed for grey cloth. This diversification not only reduced their
dependence on Hong Kong but also gave better profit margins at times when
Hong Kong market was very depressed. Under this market diversification, they
started business with South Africa, Australia, Taiwan, Srilanka, Italy etc.

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Contacting Old Customers

The business with some of the old buyers in Europe was also revived during this
period after intense 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.

Improved Quality Products

With the increase of competition, Nishat Mills 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. They also import cotton from
Australia which is known best for its Quality. NML has its cotton fields too which
produce premium quality cotton.

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FINANCIAL ANALYSIS of NML

LIQUIDITY RATIOS

Current Ratio = Current Assets

Current liability

2008 2009
Current Ratio 0.73:1 0.86:1

Interpretation
This ratio tells us about short- term solvency of the organization or it is the direct
evaluation of a company’s liquidity. Current ratio shows the availability of the
ready current assets to meet the short- term liabilities of the organization. The
current ratio shows stable increase due to excessive cash available to company.
But overall company is not I very good position as it is having only 0.86 asset
against a single liability.

Quick Ratio = Current Assets-Inventory

Current liability

2008 2009
Quick Ratio 0.34:1 0.38:1

Interpretation
This ratio tells the extent to which a firm can meet its short term obligations
without relying upon the sale of its inventories. The trend of 0.34 to 0.38 shows
that currently company is in better position to meet its short term obligations.

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LEVERAGE RATIOS

Debt-to-total Asset Ratio = Total Debt

Total Assets

2008 2009
Debt-to-total Asset Ratio 26% 25%

Interpretation
This ratio tells the percentage of total funds that are provided y creditors. The
trend showing that this percentage is reduced from 26 to 25% in previous year i.e.
the amount of assets increased over the debt.

Debt-to-Equity Ratio = Total Debt

Stakeholders Equity

2008 2009
Debt-to-Equity Ratio 39% 40%

Interpretation
This ratio tells the percentage of total funds that are provided y creditors versus
owners. The trend showing that this percentage is increased from 39 to 40% in
previous year.

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Log term Debt-to-Equity Ratio = Log term Debt
Stakeholders Equity

2008 2009

Log term Debt-to-Equity Ratio 5% 12%

Interpretation
This ratio tells the balance between debt ad equity I a firm’s log term capital
structure. As debt is cheaper than equity, so, the ratio is showing good
performance of the company.

ACTIVITY RATIOS

Inventory Turnover Ratio = Sales

Inventory of Finished Goods

2008 2009
Current Ratio 4.7 5.8

Interpretation
This ratio shows whether a firm holds excessive stocks of inventories and
whether a firm slowly selling its inventories compared to the industry average.
Trend of increasing from 4.7 to 5.8 shows that company is currently increased its
inventory level.

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Fixed assets Turnover Ratio = Markup Interest
Fixed assets

2008 2009
Fixed Assets Turnover Ratio 0.62 1.03

Interpretation
Fixed asset turnover indicates the efficiency with which the company uses its
assets to generate sales. Generally, the higher a company’s fixed asset turnover,
the more efficiently its assets have been used. This ratio is showing an increase
from 0.62 in 2008 to 1.03 in 2009 which is good for company.

Total assets turnover = sales

Total Assets

2008 2009
Total Assets Turnover Ratio 0.49 0.76

Interpretation
Total asset turnover indicates the efficiency with which the company uses its
assets to generate sales. Generally, the higher a company’s total asset turn over,
the more efficiently its assets have been used. The ratio for company is very
good.

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Account Receivable Turnover ratio = Annual Credit Sales

Account Receivable

2008 2009
Account Receivable Turnover Ratio 51.9 73.9

Interpretation
The ratio tells the average length of time it takes a firm to collect credit sales, the
trend of increased length is not good for the company.

Average Collection Period = Account Receivable

Total Credit Sales

365

2008 2009
Average Collection Period 5 days 70 days

Interpretation
The ratio tells the average length of time it takes a firm to collect on credit sales.
The tend of increased length of 5 days to 70 days is not good for the company.

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PROFITALITY RATIOS

Gross Profit Margin = Sales-Cost of Goods Sold

Sales

2008 2009
Gross Profit Margin 14.35 18.23

Interpretation
The ratio tells the total margin available to cover operating expanses and yield a
profit. The increasing trend from the last year is good sign for the company.

Net Profit Margin = Net Profit

Sales

2008 2009
Net Profit Margin 31.23% 6.54%

Interpretation
This ratio tells the after-tax profits from the sales of goods. The declining trend
from 31.23% to only 6.54% is giving ad effect to the company’s name.

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Return on Total Assets = Net Profit after Tax X100

Total Assets

2008 2009
Return on Total Assets 15.19% 4.95%

Interpretation
Turn on total assets measures the firms overall effectiveness in generating profit
with its available assets. The higher the company’s return on total assets, the
better it is. The return on total assets is showing a decrease from 15.15% in 2008
to 4.95% in 2009 which is not a good sign for the company.

Return on equity = Net income X100

Shareholder equity

2008 2009
Return on Equity 23.1% 8.1%

Interpretation
The return on equity indicates the equity utilization of the company to produce
profits. The ratio tells the shares holders about their expected profit on their equity
in a business. The ratio indicates sharply decreasing trend of net profit from
23.1% in 2008 to 8.1% in 2009. This sharply decrease in the return on equity is
not a favorable point for the organization and its shareholders. It shows that
company has suffered a loss.

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Earning per share Ratio = Net income
No. of shares outstanding

2008 2009
Earning Per Share 36.86 6.81

Interpretation
The company earnings per share are generally of interest to present or
prospective stockholders and to management. The earning per share represents
the number of Rupees earned on behalf of each outstanding share. The earning
per share decreased from 36.86 in 2008 to 6.81 in 2009, which is not favorable
for the company.

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 SWOT MATRIX

Here is the SWOT Matrix of NISHAT Mills Ltd. The input of this matrix has been
extracted from IFE, CPM, & EFE matrices. It comprises of four strategies which
are
i. strengths/opportunity strategies (SO strategies)
ii. weakness/opportunity strategy (WO strategies)
iii. strengths/threats strategy (ST strategies)
iv. weakness/threats strategy (WT strategies)

This matrix is presented as follows:

STRENGTHS WEAKNESS
lowest employee turnover Less advertising focus
Highly experienced professionals Imported machinery
Decentralized organizational structure High production cost
Efficient information system
Good financial position/strong group
Location of plants
Highest capacity of production

OPPORTUNITIES SO strategies WO strategies

Designer wear garments for Concentrate on electronic advertising
Opportunity to increase Target market gents(S5,O1,O3) domestically(W1,O1)
Quality and Guaranteed Fabrics Open retail outlets in gulf (S5,O1)
Opportunity to expand product line
International Fair Trade Certificate
Increase demand of Pakistani Cotton
internationally

THREATS ST strategies WT strategies

Open retail outlets in suburbs
Political Instability areas(S5,T4) Advertising internationally (w1,T2)
Increase machine handling training for
Low Market Share in Overseas Market More domestic production(S7,T3) employees(W2,T1)
Focus more on export oriented
Limited Retailing Outlets
Shortage of electricity supply

Strengths & opportunity strategies:

Our first strategy proposed by us to the company by taking into account strength
# 5 & opportunity # 1 & 3 is designer wear garments for gents. We have made
this strategy because the company is making ladies outfits right now. They are
not in gents garments profession. Company can invest for expanding its product
line because it has strong financial back ground.

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Our second strategy by taking into account strength # 5 & opportunity # 1 is open
retain outlets in gulf countries. The company can increase its target market by
increasing its number of retail stores in gulf countries because a lot of Pakistanis
live in those countries so it would be beneficent for the company to increase its
target market.

Opportunities & Weaknesses strategies (WO strategies)

The strategy by taking into account opportunity # 1 & weakness # 1 is

concentrate on electronic advertising domestically. We have proposed this
strategy because Nishat has a threat of strong advertising by its competitors Gul
Ahmad & Chenab textiles but Nishat is not in electronic media. By concentrating
on electronic advertising the can compete by increasing their target market. The
main reason for electronic advertising is customers have televisions & internets in
their homes, they can easily know about its products.

Strengths & threats strategies (ST strategies):

The first strategy we made by considering strength # 5 & threat # 4 is open retail
outlets in suburb areas. Nishat has limited retailing outlets where every
customer cannot go. It has an opportunity of strong group i.e Mansha group &
good financial history. This company can invest in opening retailing outlets in
suburbs areas & can earn more profits by reaching more customers.

The second strategy by considering strength # 7 & threat # 3 is more domestic

production. As Nishat is an export oriented organization its 90% products are
exported. But there are other international brands also in other countries which
are competitors of Nishat that is why the company should increase its domestic
production. Nishat can easily do this because it has 173000 looms; the highest
textile capacity of any textile mill in Pakistan.

Weaknesses & threats strategies (WT strategies):

The first strategy we propose to NISHAT by taking into account weakness # 1 &
threat # 2 is advertising internationally. Nishat as an export oriented
organization should increase its advertising in foreign markets. By increasing its
advertising focus can get high market share in overseas markets.

The second strategy by considering weakness # 2 & threat # 1 is increase

machine handling training for employees. If proper training is given to
employees about handling of imported machinery then there will be no impact of
political instability on the company because all spare parts will be imported.

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THE QUANTITATIVE STRATEGIC PLANNING MATRIX
(QSPM)
The quantitative strategic planning matrix is a technique which is designed to
determine the relative attractiveness of feasible alternative actions. This
technique objectively indicates which alternative strategies are best based on
previously identified external and internal critical success factors. It requires good
intuitive judgment.

Left column of a QSPM consists on key external and internal factors and the top
row consists of a feasible alternative strategies. And the left column of it consists
of information obtained directly from EFE Matrix and IFE Matrix. In a column
adjacent to the critical success factors, the respective weights received by each
factor in the EFE Matrix and IFE Matrix are recorded.

The top row of QSPM consists of alternative strategies derived from SWOT
Matrix. The QSPM determines the relative attractiveness of various strategies
based on the extent to which key external and internal critical success factors are
capitalized upon or improved. The relative attractiveness of each strategy- within
a set of alternatives is computed by determining cumulative impact of each
internal and external critical success factor.

Here is given the basic format of the QSPM.

We have developed QSPM Matrix for Nishat Mills by using the six steps as
follows:

Step 1

In the 1st step we made a list of Nishat mills key internal strengths/weaknesses
and external opportunities/threats in the left column of the QSPM. The key
internal success factors include lowest employee turnover, Highly experienced
professionals, Decentralized organizational structure, Efficient information
system, Good financial position/strong group, Location of plants, Highest capacity
of production, Less advertising focus, Maintenance of Imported machinery, High
production cost and key external success factors include Opportunity to increase
Target market, Quality and Guaranteed Fabrics, Opportunity to expand product
line, International Fair Trade Certificate (IFTC), Increase demand of Pakistani
Cotton internationally, Political Instability, Low Market Share in Overseas Market,
Focus more on export oriented, Shortage of electricity supply.

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 Quantitative Strategic Planning Matrix
STRATEGIC ALTERNATIVES
Open retail outlets Open retail outlets in
in gulf suburbs areas

KEY FACTORS Weight AS TAS AS TAS

STRENGTHS
lowest employee turnover 0.15 - - - -
Highly experienced professionals 0.08 2 0.16 2 0.16
Decentralized organizational structure 0.1 1 0.1 2 0.2
Efficient information system 0.05 - - - -
Good financial position/strong group 0.08 3 0.24 2 0.16
Location of plants 0.06 1 0.06 3 0.18
Highest capacity of production 0.2 4 0.8 3 0.6
WEAKNESS
Less advertising focus 0.1 1 0.1 2 0.2
Maintenance of Imported machinery 0.1 - - - -
High production cost 0.08
1
OPPORTUNITIES
Opportunity to increase Target market 0.08 4 0.32 3 0.24
Quality and Guaranteed Fabrics 0.08 3 0.24 2 0.16
Opportunity to expand product line 0.05 2 0.1 3 0.15
International Fair Trade Certificate (IFTC) 0.15 3 0.45 1 0.15
Increase demand of Pakistani Cotton
internationally 0.1 3 0.3 1 0.1
THREATS
Political Instability 0.17 1 0.17 2 0.34
Low Market Share in Overseas Market 0.1 3 0.3 1 0.1
Focus more on export oriented 0.12 3 0.36 1 0.12
Shortage of electricity supply 0.15 1 0.15 2 0.3
TOTAL 1 3.85 3.16

Step 2

In the second step we assign weights to each external and internal factor. These
weights are identical to those in the EFE Matrix and IFE Matrix. The weights are
presented in a straight column just to right to the external and internal critical
success factors.

The weights are given to the internal and external factors as

• Opportunity to increase Target market (0.08)

• Quality and Guaranteed Fabrics (0.08)
• Opportunity to expand product line (0.05)
• International Fair Trade Certificate (IFTC) (0.15)

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 • Increase demand of Pakistani Cotton internationally (0.1)
• Political Instability (0.17)
• Low Market Share in Overseas Market (0.1)
• Focus more on export oriented (0.12)
• Shortage of electricity supply (0.15)
• And key internal success factors include
• Lowest employee turnover (0.15)
• Highly experienced professionals (0.08)
• Decentralized organizational structure (0.1)
• Efficient information system (0.05)
• Good financial position/strong group (0.08)
• Location of plants (0.06)
• Highest capacity of production (0.2)
• Less advertising focus (0.1)
• Maintenance of Imported machinery (0.1)
• High production cost. (0.08)

Step 3

In the third step we examined the SWOT Matrix and identified alternative
strategies that the Nishat mills should consider implementing. Then we recorded
these strategies in the top row of the QSPM, these are open retail outlets in gulf
OR open retail outlets in suburbs areas.

Step 4

In the 4th step we determined the Attractiveness Scores (AS). AS defined as

numerical values that indicate the relative attractiveness of each strategy in a
given set of alternatives. We determined the attractiveness score by examining
each key internal and external factor, one at a time, and asking the question
Does this factor affect the choice of strategies being made?”

The range for Attractiveness Score is 1=not attractive, 2= somewhat attractive,

3=reasonably attractive, 4=highly attractive. But if the answer to the previous
question is no, this will indicate that the respective key factor has no affect upon
the specific choice being made. So, we used dash to indicate that the key factor
does not affect the choice being made.

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The factors which do not have any affect upon the choice being made includes
the lowest employee turnover, efficient information system, maintenance of
imported machinery, and high production cost.

The factors which are not attractive for the choice being made and received AS 1
for the first alternative that is open retail outlets in gulf are decentralized
organizational structure, less advertising focus, political instability, and shortage
of electricity supply. The factors which are not attractive for the choice being
made and received AS 1 for the second alternative that is decentralized
organizational structure, International Fair Trade Certificate (IFTC), increase
demand of Pakistani cotton internationally, low market share in overseas market
and focus more on export oriented. As these factors do not show much
attractiveness for the first alternative, so they all received AS equal to 1.

The factors which are somewhat attractive for the first choice are highly
experienced professionals and opportunity to expand product line, and for the
second choice being made are decentralized organizational structure, good
financial position/strong group, quality and guaranteed fabrics, political instability
and shortage of electricity supply. As these factors have some attraction to the
choices being made like they have highly experienced professionals will be
helpful in marinating the new outlet.

They have the opportunity to expand the product line so can easily capture the
new market. Similarly they have decentralized organizational structure so it will be
easy to communicate throughout the organization for opening a new retail outlet
nationally, they have good financial position so if they launch their product at low
introductory prices will also be effective and later on profitable for them, and as
there is shortage of electricity but they have their own power supply plants so it
will be easy for them to increase their production and cater more customers. As
all these factors are somewhat attractive so, all these receive AS equal to 2.

The factors which are reasonably attractive for the first choice are good financial
position/strong group, quality and guaranteed fabrics, International Fair Trade
Certificate (IFTC), increase demand of Pakistani cotton internationally, low market
share in overseas market and focus more on export oriented and for the second
choice are location of plants, highest capacity of production, opportunity to
increase target market, and opportunity to expand product line.

They have good financial position so if they launch their product at low
introductory prices will also be effective and later on profitable for them; they are
catering upper middle and upper class that are all quality conscious than price
conscious, so opening new retail outlets will be very profitable for them. They are
export oriented and there is high demand of Pakistan cotton made products
internationally, so opening retail outlet in gulf countries will be more beneficial for
them. As all these factors are reasonably attractive for the choices being made so
receive AS equal to 3.

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The factors which are highly attractive for the first alternative are high capacity of
production, and opportunity to increase target market. They have high production
capacity so they can open new outlets in gulf countries and sell their products
there and can capture more market as they are export oriented and financial
strong group so by selling their products at low introductory prices they can
capture mare market area and can get higher profits later on. As these two
factors are highly attractive for the first choice being made that is open retail
outlet in gulf countries.

Step 5

In the fifth step we compute the Total Attractiveness Scores (TAS). (TAS) are
defined as the product of multiplying the weights by the Attractiveness Scores in
each row. The Total Attractiveness Scores indicate the relative attractiveness of
each alternative strategy considering only the impact of the adjacent internal or
external critical success factors. The higher the total Attractiveness Score the
more attractive the strategic alternative (considering only the adjacent critical
success factors).

Step 6

In the final step compute the Sum Total Attractiveness Score. For this we added
Total Attractiveness Scores in each strategy column of the QSPM. The Sum Total
Attractiveness Scores (SATS) reveal which is most attractive in each set of the
alternatives. Higher scores indicate more attractive strategies, considering all the
relevant internal and external factors that could affect the strategic decisions.

The magnitude of the difference between the Sum Total Attractiveness Scores in
a given set of strategic alternatives indicates the relative desirability of one
strategy over another. As the Total Attractiveness Score is more for the first
alternative (open retail outlets in gulf) that is 3.85 than the second alternative
(open retail outlets in suburbs areas) that is 3.4 so, the first alternative choice
being made is the best choice for Nishat mills. So, best choice is to go for open
retail outlets in gulf.

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CONCLUSIONS

• Nishat Textile is considered to be the leading organization in the field of

textile. The name Nishat has become has become a symbol of quality and
standard. The quality of cloth is dependent of textile yarn to finished cloth.
Which is totally imported form various countries. Major machine are
mercerizing machines, sober machine and J-Zimmer that con print cloth
with 12 colors.

• All the sub department of processing like bleaching, dyeing, printing, and
finishing are working under laboratory instructions so laboratory is playing
role of executive in quality control. All the schedules of bleaching, dyeing
printing and finishing are prepared by the laboratory.

• The customer satisfaction is a basic criterion of Nishat Textile. They are

producing good quality products and 80% products are exported. Great
care is taken for export Products regarding. Marketers of Nishat Textile
know the competition in the international market. They put their level best
efforts to satisfy the customer keeping in view the costs of products and
quality.

• Nishat has also a big share in local market. Local marketers are
performing their jobs efficiently to enhance the sales and to satisfy the
customers however in local market quality is lower then export market. So
Nishat has greater capability to preclude what they claim for.

• If we turn to human resource department we see that there are certain

gaps in human resources management of Nishat Textile. This department
is not established and not considered to be very much important. Low
attention is paid to this department by upper level management. There is
lack of human resources planning, lack of recruiting activities lack of job
analysis, compensation and reward system is not very much attractive and
employees are not well motivated in Nishat textile. One good thing of this
department is that the department let the employees follow the rules and
regulations set by the organization strictly. Attendance is strictly checked 7
leaves as well. So there are good and bad both present in the human
resources management of Nishat Textile.

• We developed QSPM Matrix for Nishat Mills by following different steps

like firstly we made a list of key internal and external factors than assign
weights to those factors, identified alternative strategies, computed Total
Attractiveness Scores and in the final we computed Sum Total
Attractiveness Scores and reached at the strategic decision that the best
choice is to go for open retail outlets in gulf.

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• Nishat textile has the ability to produce what their customers want through
excellent machinery and skilled workers in processing department and
qualified marketing staff. But there are problems regarding human
resource management and financial management. Despite having
problems Nishat has good and increasing sales figures that will lead the
organization to prosperity again.

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RECOMMENDATIONS /SUGGESTIONS
Organizations with more or less profitability or unprofitably have problems and
there are always chances of improvements. This is also the condition for Nishat
textile. As problems and difficulties have been identified, now here are some
suggestions that may help the organization to improve.

• In processing department there is a need of skilled workers. There are

certain departments of processing in which employees have been working
since long but there efficiency is not improved and unsatisfactory results
come out sometimes. The skilled labor will not only improve the efficiency
but also will improve effectiveness. There should be chances given to
skilled workers to enter the organization.

• There should be female artists and designers in design department as

females have naturally more esthetical qualities than males. They will
really improve the quality of designs and will introduce more innovative
designs.

• Expanding product lines that will give more variety to people of country
could extend local marketing and ultimately sales would be increased.
There should be more staff in local marketing department to enhance the
sales figure and to capture wide area of local market.

• There is need to increases the staff in this department only three or four
persons are working with all the affairs regarding let the employees abide
by the rules 7 regulation, recruiting, selecting and other activities. This
area should carefully be handle to attract skilled employees and ultimately
to enhance efficiency and effectiveness.

• Job analysis should be done to know what are the jobs needed in the
organization. I know some persons who are doing the job of two or three
persons.

• Compensation and reward system should be brought at higher level in

order to let the employees be motivated and happy. There should be more
fringe benefits for the employees taking into consideration there devotion
skill and experience. This higher level would make the employees more
efficiency & effective.

• There should be little compensation for trainees as well, as they can fulfill
their day to day traveling and food expenses. By doing this trainees will
show more interest, more devotion, more potentials and will work with their
full mental and physical efforts.

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• The first aid and other medical facilities should be provided to the
employees with in the mill area. There is continuous working in the mill and
every time there are chances of any accident or unpleasant incident. So in
order to handle this type of situation the first aid dispensary should be
there with in the mill area.

• As Nishat Mills is export oriented company, have high production capacity,

International Fair Trade Certificate (IFTC), and good financial position,
even if they offer their products at lower introductory prices will be effective
for them and will be more profitable later on. So they should go for open
retail outlets in gulf.

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REFERENCES
1. Web:
• www.nishatmills.com
• www.wikipedia.com
• www.investopedia.com

2. Annual Report, 2009, Nishat Textile Mills Ltd.

3. Marketing Department

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