INTRODUCTION

When Pakistan came into being there was only 16 textile mills out of which only 12 were in operation. It
grew to 70 in 1957 as industrial development takes place. Now a day 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.

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.

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 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 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.

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

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.

National Bank of Pakistan

Standard Chartered Grind lays

Societe General – The French

And International Bank

The Hong Kong & Shangai

Banking Corporation Limited

Union Bank Limited

United Bank Limited

MILLS: Niashatabad, 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)

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: 3rd and 4th Floor E.F.U. House,

6-D, Main Gulberg, Jail Road, Lahore.

Tel: 042-5715646-52

Fax: 042-5715644-5
NUMBER OF EMPLOYEES

Year

1998

1999

2000

2001

No. Of employees

9445

10331

10090

13146

NISHAT GROUP OF COMPANIES

· 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

· Table cloth and napkins

· Aprons

· Kitchen gloves

· Pot holders
· Chair pads with circle tacks

· Couch cove

HISTORY AND 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 business namely

1. Textiles

2. Power generation

3. Banking

4. Cement

I did my internship in the head office of Nishat NDF(nishat dyeing and finish).

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 is an export oriented organization. Nishat mills limited exports more than 90% of its
products mainly to the Far East, Europe and United States.
D.G khan Cement Company limited

In 1992, Nishat group acquired D.G Khan Cement Company LIMITED from the government of Pakistan.
DGKCC is the second largest project of the group and is ideally located in the heart of the Pakistan.
DGKCC Unit No I has a capacity of 2,200 tons per day, a new unit having the capacity of 3,300 ton was
established in 1997, international Finance Corporation and Common Wealth Development Corporation
have finance this unit. With addition of unit NO 2, DGKCC has become the largest manufacture cement
of Pakistan.

Muslim commercial bank

In 1991, Nishat Group ventured into the financial sector through the acquisition of Muslim Commercial
Bank. MCB has the grown ever since and is now the largest in the private sector. MCB has a network of
over 1500 branches employing over 12,000 people

Management of Nishat Mills Limited

Nishat Mills Limited employees are highly qualified professionals and have a young, energetic and
dedicated team of 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 desired 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:

1. It must provide a product (good or service) that suits best to the company’s capabilities and for which
there is a sufficient market.

2. It must provide the product with consistent quality at a level that appeals to intended customers and
satisfy their needs.

3. It must provide a product at a cost that always an adequate profit and a reasonable sale pri
INTERNATIONAL STANDARD OF ORGANIZATION (ISO)

Nishat mills limited have achieved ISO 9001 and ISO 9002 certificate in 1997. In order to achieve this
certificate following requirements should be fulfilled,

(1) MANAGEMENT RESPONSIBILITIES

Management responsibilities includes the following,

i. 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.

ii. 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.

iii. 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.

iv. 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.

v. 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.
(2) QUALITY SYSTEM

I. System Procedure

ISO 9001 requires that there should be proper system for each work. Standardization of work is
necessary for achieving effective certification.

II. 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.

III. 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.

IV. Work Instructions

Instruction should be provided for better handling of job, and it is exactly in its true spirit followed at
Nishat mills limited.

(3) CONTRACT REVIEW

i. Reviews

Sometimes contracts are reviewed, that reviewing must be in proper manner. Contract should be given
keeping in view of interest of the company.

ii. Amendments

If the amendments are made in the contract, they should be made with authorized person. And
management should be fully informed with that.
iii. 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.

(4) DESIGN CONTROL

1. 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.

2. 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.

3. Verify Validity Of Design

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

(5) Customer Data Control

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.

(6) Control Of Customer Supply Product

There should be proper control over customer’s products.

(6) Product Identification and Tracebility

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.
(7) Inspection

There should be proper inspection of stores so that every thing functions according to manners
prescribed by certificates.

(8) 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.

(9) 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.

(10) Training Programs

Training programs should be there to upgrade the skills of employees. On the job training programs
should be provided so that workers get knowledge about work.

(11) Statistical Techniques

Various statistical tools are required to better controls the affairs of organization. They should be
available to achieve quality awards. Uses of information technology, automation of factory, Internet and
computer technology are prominent features in achieving ISO 9001 and ISO 9002.
MEMORANDUM OF ASSOCIATION

NISHAT MILLS LIMITED

I. The name of the company is NISHAT MILLS LIMITED.

II. The Registered office of the company shall be situated in the Province of Punjab, Pakistan.

III. The objectives for which the company is established are as follows:

“OBJECTS”

. To acquire and take over as a going concern the business rights, liabilities and undertaking of the
NISHAT MILLS, LYALLPUR a firm belonging to:

o Mohammad Yakub

o Mohammad Shafi

o Abdul Hamid

o Mohammad Fafiq

o Mohammad Yaha
o Mohammad Ayoob

o Mohammad Farooq

o Haji Maula Baksh

1. 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.

2. 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.

3. To purchase or take on lease or otherwise acquire and work and spinning mills, weaving mills, ginning
factories or presses for pressing merchandise into bales or any other similar concern an the property,
business and goodwill appertaining thereto.

4. 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.

5. To carry on the business of spinners, weavers manufacturers balers and pressers ofall jute, cutting,
jute rejections, hemp, cotton, wool, hair and other fibrous material, and to transact all manufacturing,
curing, preparing, dying, coloring or bleaching processed and mercantile business that may be necessary
or expedient, and to vend the raw material, and manufactured articles.

6. 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.
7. 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.

8. To weave and otherwise manufacture, buy, sell, import, export and otherwise deal in all kinds of cloth
and other goods and fabrics including textile, filted, netted and looped goods.

9. 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.

10. To carry on all or any of the business of silk mercers, silk weavers furriers, haberdashers, hosiers,
manufacturers, importers, and wholesale and retail dealers of and in textiles and gold and silver thread
fabrics of all kinds, milliners, dressmakers, tailors, hatters, clothiers, outfitters, glovers, lace
manufacturers and feather dressers and allied products of every description.

11. To make arrangements for the supply of cotton, wool, flax,, hemp, silk, jute and other fibrous and
similar products for use in the mills run by the company or otherwise, either directly or in cooperation
with any other person and for this purpose to set up farms, estates and other establishments.

12. To purchase, or take on lease for any term of year or otherwise acquire land with or without
buildings thereon at such price or rent and under and subject to such terms and conditions as to title or
otherwise as may be thought fit and to erect, build and construct thereon such factories (ginning or
otherwise), mills warehouses, tanks, chawls, and other buildings, and to purchase take on lease or
otherwise acquire such machinery, engines and apparatus and other property and erect them and such
other therein as may be necessary for the purposed of the company.

13. To manufacture, refine, improve, purchase, sell, export, import, stock, store or otherwise deal in
woolen, cotton, silk, or mercerized articles, goods, yarn or raw material or nay other quality of the same
and to dye it or to manufacture there from articles of hosiery such as socks, stocking, underwear,
outwear, banyans, jersey, mufflers, bands or any other articles of knitting line or embroidery of every
description, beads, tapes, laces or any other goods of similar nature.
14. To erect, manufacture, contract, install, purchase or hire machinery, mills and factories for the
manufacture of starch and other allied products.

15. 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.

16. To carry on all or any of the business of oil from cotton seeds, rape seeds and all other varieties of
seeds and other sorts of oil and any products thereof and the manufacturers and dealers of vegetable
ghee.

17. To carry on the business of dealing and importing rubber in its raw or manufactured state and to
treat, prepare, render marketable and manufacture all articles or rubber including Motor and Cycle
tyres.

18. To carry on business of dealers and importers of chemicals of all sorts.

19. To carry on business as general merchants, contractors, agents, importers, exporters, factors and
warehousemen except managing agents.

20. To transact or carry on all kinds of agency commissio0n and contract business in Pakistan or abroad
and in particular in relation to industrial, manufacturing and financial transactions and to act as agents
of any person, firm, company, Government or local authorities except managing agents.

21. To carry on all kinds of contracts of Government, locals bodies and other authorities.
22. To adopt such means of making known the products and business of the company as may seem
expedient and in particular by advertisement and publicity in the press or otherwise, exhibitions,
publication of books and periodicals and by granting prizes, rewards and donations.

23. To purchase or by any other means acquire and protect, prolong and renew, whether in Pakistan or
elsewhere any patent rights, brevent, invention, licenses, protection, concessions, and the like, which
may appear likely to be advantageous or useful to the company, and use and turn to account and to
manufacture under or grant licenses or privileged, in respect of the same and to spend money in
experimenting upon and testing or in improving or seeding to improve any patents, inventions or rights
which the company may acquire or propose to acquire.

24. 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.

25. To carry on the business of electrical engineers, electricians, engineers, contractors, manufacturers,
constructors, suppliers, of and dealers in electrical and other appliances, cables, wire-lines, dry cells,
accumulate, lamps and works and to generate, accumulate, distribute and supply electricity for the
purpose of light, heat, motive power and for all other purposes for which electrical energy can be
employed and to manufacture and deal in all apparatus and things required for or capable of being used
in connection with the generation, distribution, supply, accumulation and employment of electricity,
including in the term electricity all powers that may be directly or indirectly derived there from or may
be incidentally hereafter discovered in dealing with electricity.

26. To underwrite, subscribe, acquire, invest, hold, sell, exchange or transfer shares, debentures stocks,
bonds, modaraba certificates, participation term certificates, term finance certificate or other securities
issued or guaranteed by any company, constituted in Pakistan or abroad or issued or guaranteed by any
Government, State, sovereign, rulers, commissioners, public body or authority, supreme, local or others
and to exercise and enforce all rights and power conferred by or incidental to the ownership thereof.

27. To borrow raise or secure the payment of money by the issue of debentures, debentures-stock,
bonds, obligations and securities of all kinds, or on personal security or without security, and to frame,
constitute, and secure same as may seem expedient, with full power to make the transferable by
delivery, or by instruments of transfer or otherwise and either perpetual or terminable, and either
redeemable or otherwise on the undertaking of the company or upon and specific property and rights,
present and future of the company.

28. To receive fixed and other deposits, accepts the business of a banking company.

29. To pay for any property or rights acquired by the company, either in cash fully paid shares or by the
issue of securities, or partly in one mode and partly in another and generally on such terms as may be
determined.

30. 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.

31. To establish and support, or aid in the establishment and support of association, institutions, funds,
trusts and conveniences calculated to benefit employees and ex-employees of the company, or its
predecessors in business or the dependents or connections of such persons and to grant pensions and
allowances, and to make payments towards insurance, and to subscribe or guarantee money for
charitable or benevolent objects, or for any exhibition or for any public, general or useful object.

32. To invest and deal with any money of the company in such form as may be though expedient.

33. To acquire and carry on all or any part of the business or property and to undertake any liabilities of
any person, firm. Association or company carrying on any business which the company is authorized to
carry on or possessed of property or rights suitable for any of the purposes of this company and as the
consideration for the same to pay cash or to issue any shares stocks or obligation of this company.

34. To promote and form and to be interested in and to take, hold and dispose of shares and securities
in any other company having objects altogether or in part similar tot those of this company, or carrying
on any business capable of being conducted so as directly or indirectly to benefit this company and to
transfer to any such company all or any of the property, rights and liabilities of this company and to
subsidies or otherwise assist any such company.
35. To appoint such person and/ or firm as may be deemed expedient to be secretaries, managers,
branch managers, or district representatives of the company upon such terms as the company may
determine.

36. To undertake and execute any trust the undertaking whereof may seem desirable and either
gratuitously or otherwise.

37. To procure the company to be registered or recognized in any foreign country or any place.

38. To enter into partnership or arrangement in the nature of a partnership, cooperation or union of
interests, with any person or persons company or cooperation engaged or interested or about to
become engaged or interested in the carrying on or conduct any business or enterprise which the
company is authorized to carry on or conduct or from which the company would or might derive any
benefit whether direct or indirect.

39. To sell or dispose of the undertaking of the company or any part thereof in such manner and for
such considerations as the company may think fit and in particular for shares, debentures stock or
securities or any other company whether promoted by this company for the purpose or not, and to
improve, manage, develop, exchange, lease, dispose off turn to account, or otherwise deal with all or
any part of the property and rights of the company.

40. 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.

41. To distribute any of the company’s property among the members in specie or in any manner thereof.

42. To take part in the formation, management, subsidizing, supervision or control of the business or
operations, of any company or undertaking and for the purpose to act as directors, trustees,
administrators, managers, secretaries or in any other capacity and to appoint and remunerate any
directors, administrators, managers or accountants or other experts.
43. To advance and lend money on the security of assets of all kinds or without security upon such terms
as may be arranged.

44. To give any guarantee in relation to the payment of any loan, debentures-stock, bonds, obligation,
securities and to guarantee the payment of interest thereon or of dividends on any stock or shares of
the company.

45. To constitute any trust with a view to the issue of stocks or securities based on or representing any
shares, stocks, or other assets specially appropriated for the purpose of any such trust and to settle and
regulate, and if thought fir, to undertake and execute any such trusts and to issue, dispose or hold any
preferred, deferred or other special stocks or securities.

46. To cause the company to be registered or recognized in Pakistan or any other country.

47. To issue any shares of the company at par or at a premium or debentures at premium or at a
discount.

48. To remunerate any person or company for services rendered or to be rendered, in placing or
assisting to place or guaranteeing, the placing of or under-writing of any of the shares in the company’s
capital or any debentures, debentures-stock to other securities of the company, or in or about the
formation and promotion of the company or the conduct of its business.

49. To enter into any arrangement with any Government or authority, supreme, municipal, local or
otherwise that may seem conductive to the company’s objects or any of them, and to obtain any such
Government or authority, all right, concessions and privileges which the company may think it desirable
to obtain, and to carryout, exercise and comply with any such arrangements, rights, privileges and
concessions.

50. To carry on various other businesses which in the opinion of the company it is desirable or
convenient to carry on in conjunction with or in lieu of any other business which the company is
authorized to carry on.
51. To do all or any of the above things in any part of the world, and either at principals, agents,
trustees, or otherwise and either alone or in conjunction with others and, by through agents,
subcontractors, trustees or otherwise.

52. To do all such other things as are incidental or the company may think conducive to the attainment
of the above objects or any of them. It is hereby declared that in the interpretation of this clause the
power conferred upon the company by any paragraph, shall not be restricted by reference to any other
paragraph, or by the juxtaposition of two or more objects and that in the event of the any ambiguity in
this clause every paragraph thereof shall be constructed in such a way as to widen not to restrict the
power of the company.

53. To carry on all or any kind of the cement business of manufacturers, sellers, dealers, and
conveniences of all kinds.

o The liability of members is limited.

o The authorized share capital of the company shall be RS. 1500000000 (one billion five hundred million)
divided into 150000000 (one hundred fifty million) ordinary shares of Rupees of 10 each. The company
shall have the power to increase, reduce or reorganize the said capital and divide shares in the capital
for the time being in several classes in accordance with provisions of Companies ordinance, 1984.
ARTICLES OF ASSOCIATION OF NISHAT MILLS LIMITED

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.

1. PRELIMINARY

1. 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.

2. In these articles, unless the context or the subject matter otherwise requires:

a) Articles mean these articles as originally framed or as from time to time altered in accordance with
law.

b) Board means a meeting of directors duly called and constituted or as the case may be the directors
assembled at a board.

c) Company means NISHAT MILLS LIMITED

d) Director’s means the directors for the time being of the company or as the case may be, the directors
assembled at a board.

e) Month means calendar month according to the English calendar.

f) 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.

g) Register means, unless the context otherwise requires, the register of members to be kept pursuant
to Section 147 of the ordinance.

h) Seal means the common seal of the company.

i) Section means section of the ordinance.

j) Special resolution means the special resolution of the companies defined in section 2(1) (36) of the
ordinance.

k) Words importing masculine gender include the feminine gender.

l) Words importing singular number include the plural number and vice versa.

m) 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.

n) Words importing person shall include bodies corporate.

o) The head notes are inserted for convenience and shall not affect the construction of these articles.

p) Unless the context otherwise requires words or expressions contained in these articles shall bear the
same meaning as in the ordinance.

I1. BUSINESS

3. 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

4. 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.

5. The directors shall, as regards any allotment of shares, duly comply with such of the provision of
section 68 to 73 as may be applicable to the company.

6. Every person whose name is entered, as a member in the register shall, without payment, be entitled
to receive within three months after allotment or within forty-five days of the applications for
registration of transfer, a certificate under the seal specifying the share of shares held by him and the
amount paid upon thereon. Provided that, in respect of a share or share held jointly by several persons,
the company shall not be bound to issue more than one certificate, and delivery of a certificate for a
share to one of several jointly holders shall be sufficient delivery.

7. If a share certificate is defaced, lost or destroyed, it may be renewed on payment of such fee, if any,
not exceeding one rupee, and on such terms if any, ads to evidence and indemnity and payment of
expenses incurred by the company in investigating titles as the directors think it.

8. Except to the extent and in the manner allowed by section95, no part of the funds of the company
shall be employed in the purchase of, or in loans upon the security, the company’s shares.

iv. TRANSFER OF SHARES

9. 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.

10. The directors shall not refuse the transfer any time unless the transfer is defective or invalid. The
directors may also suspend the registration of transfers prior to the determination of entitlement or
rights of the shareholders by giving seven days previous notice in the manner provided in the ordinance.
The directors may decline to recognize any instrument unless the certificate of the shares to which it
relates, and such other evidence as the directors may reasonably require showing the right of the
transferor to make the transfer accompanies the duly stamped instrument of transfer.

If the directors refuse to register a transfer of shares, they shall within thirty days after the date on
which the transfer was made lodged with the company send to the transferee and the transferee notice
of the refusal indicating the defect or invalidity to the transferee, who shall, after removal of such defect
or invalidity be entitled to re-lodge the transfer deed with the company.
v. TRANSMISSION OF SHARES

11. The executors, administrators, heirs of nominees, as the case may be, of a deceased sole holder of a
share shall be he only persons recognized by the company as having any title to the share. In the case of
share registered in the name of two or more holders, the survivor or survivors shall be the only person
recognized by the company as having any title to the share.

12. Any person becoming entitled to a share in consequence of the death or insolvency of a member
shall, upon such evidence being produced as may from time to time be required by directors, have the
right, either to be registered as a member in respect of the share or, instead of being registered himself,
to make such transfer of the share as the deceased or insolvent person could have made. But the
directors shall, in either case have the same right to decline or suspend registration as they, would have
had in the case of a transfer of the share by the deceased or insolvent person before the death or
insolvency.

13. A person becoming entitled to a share by reason of the death or insolvency of the holder shall be
entitled to same dividends and other advantages to which he would be entitled if he were registered
holder of the share, except that he shall not, before being registered as a member in respect of the
share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings
of the company.

VI. ALTERNATION OF SHARE CAPITAL

14. 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.

15. Subject to the provisions of the ordinance, all new shares shall, before issue, be offered to such
persons as at the date of the offer or entitled to receive notices from the company of general meetings
in proportion, as nearly as the circumstances admit, to the amount of the existing shares to which they
are entitled. The offer shall be made by notice specifying the number of shares offered, and limiting a
time within which the offer, if not accepted, will be deemed to be declined, and after the expiration of
that time, or on the receipt of an intimation from the person to whom the offer is made that he declines
to accept the shares offered, the directors may dispose off the same in such manner as they think most
beneficial to the company. The directors may likewise so dispose off any new shares which (by reason of
the ratio which the new shares bear to shares held by person entitled to an offer of new shares) cannot,
in the opinion of the directors, conveniently offered under this regulations.

16. The new shares shall be subject to the same provisions with reference to transfer, transmission and
otherwise as the shares in the original share capital.

17. The company may by ordinary resolution:

a) Consolidate and divide its share capital into shares of larger amount than its existing shares.

b) Sub-divide its existing shares or any of them into shares of smaller amount than is fixed by the
company’s memorandum of association, subject, nevertheless, to the provisos, to clause (d) of sub –
section of (1) of section 92.

18. The company may, by special resolution, reduce its share capital in any manner and with, and
subject to, any incident authorized and consent required by law.

19. Subject to the provisions of the ordinance, the directors may accept from any member the surrender
of all or any of his shares on such terms as shall be agreed.

VII. GENERAL MEETING

20. The statutory general meeting of the company shall be held within the period required by section
157.

21. A general meeting to be called annual general meeting shall be held in accordance with the
provisions of section158, within eighteen months from the date of incorporation of the company and
thereafter once at least in every year within in a period of six month following the close of its financial
year and not more than fifteen months after the holding of its last preceding annual general meeting as
may be determined by the directors.

22. All general meetings of the company other than the statutory meeting or an annual general meeting
shall be called extraordinary general meetings.

23. The directors may whenever they think fit, call an extraordinary general meeting, and extraordinary
general meetings shall also be called on such requisition or in default, may be called by such requisition,
as is provided by section 159. If at any time there are not within Pakistan sufficient directors capable of
action to form a quorum, any director of the company may call an extraordinary general meeting in the
same manner as nearly as possible as that in which meetings may be called by the directors.

VIII. NOTES AND PROCEEDING OF GENERAL MEETING

24. 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.

25. All business shall be deemed special that is transacted at an extraordinary general meeting, and also
all that it is transacted at an annual general meeting with the exception of declaring a dividend, the
consideration of accounts, balance sheet and the reports of the directors and auditors, the election of
directors, the appointment of, and the fixing of the remuneration of, the auditors.

26. No business shall be transacted at any general meeting unless a quorum of members is present at
that time when the meeting proceeds to business. Three members present personally who represent
not less than twenty-five percent of the total voting power either on their own account or a proxies shall
be a quorum
27. If within half an hour from the time appointed for the meeting a quorum is not present the meeting,
if called upon the requisition of members, shall be dissolved, in any other case, it shall stand adjourned
to the same day in the next week at the same time and place, and, if at the adjourned meetings a
quorum is not present within half an hour from the time appointed for the meeting, the members
present, being not less than two, shall be a quorum.

28. The chairman of the board of directors, if any, shall preside as chairman of every general meeting of
the company, but if there is no such chairman, or if at any meeting he is not present within fifteen
minutes after the time appointed for the meeting, or he is unwilling to act as chairman, any one of the
directors present may be elected to be chairman, and if none of the directors is present, or willing to act
as chairman, the members present shall choose on of the their member to be chairman.

29. The chairman may, with the consent of any meeting at which a quorum is present (and shall if so
directed by the meeting) adjourn the meeting from time to time but no business shall be transacted at
any adjourned meeting other than in the business left unfinished at the meeting.

30. At any general meeting a resolution put to the vote of the meeting shall be decided on a show of
hands unless a poll is (before or on the declara5ion of the result of the show of the hands) demanded.
Unless a poll is so demanded, a declaration by the chairman that a resolution has, on a show of hands,
been carried or carried unanimously, or by a particular majority or last, and an entry to that effect in the
book of the proceedings so the company shall be conclusive evidence of the face without proof of the
number or proportion of the votes recorded in favor of or agent that resolution.

31. A poll may be demanded only in accordance with the provisions of section 167.

32. If a poll is fully demanded, it shall be taken in accordance with the manner lay down in section 168
and result of the pool shall be deemed to be the resolution of the meeting at which the pool was
demanded.

33. A poll demanded on the election of chairman or on a question of adjournment shall be taken at once

34. In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the
meeting at which the show of hands takes place, or at which the poll is demanded, shall have an
exercise a second or casting of vote.
IX. 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.

35. 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.

36. 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.

37. 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.

38. The instrument appointing a proxy shall be in writing under the hand of the appointer of his attorney
duly authorized in writing. A proxy must be member of the company.

39. The instrument appointing a proxy and the power of attorney or other authority (if any) under which
it is signed, or a materially certified copy of that power or authority, shall be deposited at the office not
less than forty-eight hours before the time for holding the meeting at which the person named in the
instrument proposes to vote and in default the instrument of proxy shall not be treated as valid.

40. An instrument appointing a proxy may be in form.

41. A note given in accordance with the terms of any instrument of proxy shall be valid notwithstanding
the previous death or insanity of the principal or revocation of the proxy or of the authority under which
the proxy was executive, or the transfer of the share in respect of which this proxy is given. Provided
that no intimation in writing of such death, insanity revocation or transfer as aforesaid shall have been
received by the adjourned meeting at which the proxy is used.

X. DIRECTORS

42. 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.

43. Save as provided in section 187, no person shall be appointed as a director unless he is a member of
the company and holds shares of the minimum value of Rs.25000 in his own name, relax able in the case
of directors representing interest of other concerns. A director who is required to hold qualification
shares may act as a director before acquiring his qualification shares but shall, in any case, acquire the
same within in two month of appointment.

44. The remuneration of a director for performing extra services, including holding of the office of
chairman and the remuneration to be paid to any director for attending the meetings of the directors or
a committee of directors shall from time to time be determined by the board of the directors in
accordance with law.

XI. POWERS AND DUTIES OF DIRECTORS

45. The business of the company shall be managed by the directors, who may pay all expenses incurred
in promoting and registering the company, and may exercise all such powers of the company, and may
exercise all such powers of the company as are not by the ordinance or by there regulations, required to
be exercised by the company in general meeting, subject nevertheless to the provisions of the ordinance
or to any of these regulations, and such regulation being no inconsistent with the aforesaid provisions as
may be prescribed by the company in general meeting but no regulation made by the company in
general meeting shall invalidate any prior act of the directors which would have been valid if that
regulation had not been made.

46. The directors may from time to time, by power of attorney under the company’s seal appoint any
person or person to be the attorneys of the company for such purposes and with such powers,
authorities, and discretion (not exceeding those vested in or exercisable by the directors under these
presents) and for such period and subject to such conditions as the directors may from time to time
think fit. Any such attorney (s) may, if authorized by the directors delegate all or nay of the powers
vested in him/ them.

47. The directors shall duly comply with the provisions of the ordinance and in particular with the
provisions in regard to the registration of the particulars of mortgages and charges affecting the
property of the company or created by it, to the keeping of a register of the directors and to the sending
to the registrar of an annual list of members and summary of particulars relating thereto and notice of
nay consolidation or increase of share capital, or sub-division of shares, copies of special resolution and
copy of the register of directors and notifications of any changes therein.

48. The directors shall cause minutes to be made in books provided for the purpose of,

a) All appointments of officers made by the directors.

b) The name of the directors present at each meeting of the directors and of nay committee of the
directors.

c) All resolution and proceedings at all meeting of the company and of the directors and of committee of
directs.

And every director present at any meeting of directors or committee of directors shall sign his name in a
book to be kept for that purpose.

49. The directors shall appoint a chief executive in accordance with the provisions of section 198 and
199. The board shall determine the terms and conditions of appointments of the chief executive.
XII. DISQUALIFICATION OF DIRECTORS

50. 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.

XIII. PROCEEDING OF DIRECTORS

51. The company may meet together for the dispatch of the business, adjourned and otherwise regulate
their meetings, and they think fit. The quorum for a meeting of directors shall not be less than one-third
of their number of four, whichever is greater, questions arising at any meeting shall be decided by a
majority of vote. In case of an equality of vote, the chairman shall have and exercise a second or casting
vote. A director may, and the secretary on the requisition of a director shall, at any time, summon a
meeting of directors to, it shall not be necessary to give notice of a meeting of directors to any director
for the time being absent from Pakistan.

52. The director may elect a chairman of their meetings and determine the period for which he is to hold
office, but, if no such chairman is elected or if at any meeting the chairman is not present within ten
minutes after the time appointed for holding the same or is unwilling to act as chairman, the directors
present may choose one of their number to be chairman of the meeting.

53. The directors may delegate any of their powers not required to be exercised in their meeting to
committees consisting of such member or members of their body as they think fit. Any committee so
formed shall, in the exercise of the powers so delegated, confirm to any restrictions that may be
imposed on it by the directors.

54. A committee may elect a chairman of its meetings, but, if no such chairman is elected, or if at any
meeting the chairman is not present within ten minutes after the time appointed for holding the same
or is unwilling toast as chairman, the members present may choose one of their members to be
chairman of the meeting.

55. A committee may meet and adjourn as it thinks proper, question arising at any meeting shall be
determined by a majority of votes of the members present. In case of any equality of votes, the
chairman shall have and exercise a second or casting vote.

56. All acts by any meeting of the directors or of a committee of directors, or by any person acting as a
director, shall not withstanding that it be after wards discovered that there was some defect in the
appointment of such directors or persons acting as aforesaid, or that they or any of them were
disqualified, be as valid as if every such person had been duly appointed and was qualified to be a
director.

57. A resolution in writing signed by the directors (not being less than one-third of their number or four
whichever is greater) or affirmed by them through telex or telegram shall be as valid and effectual as if it
had been passed at the meeting of the directors duly convened and held.]

XIV. ELECTION AND REMOVAL OF DIRECTORS

58. 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.

59. A retiring director shall be eligible for re-election.

60. The number of directors determined by the board shall be elected to office by the members in
general meting in the following manner;

a) 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.
b) 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.

c) The candidate who gets the highest number of votes shall be declared elected as directors and then
the candidate who gets the next highest number of votes shall be so declared and so on until the total
number of directors to be elected has been so elected.

61. Subject to the provision of the ordinance, the company may from time to time in annual general
meeting increase or decrease the number of directors.

62. Any casual vacancy occurring on the board of directors may be filled up by the directors, but the
persons so chosen shall be subject to retirement at the same time as if he had become a director on the
day on which the director in whose place he is chosen was last elected as director.

63. The company may remove a director but only in accordance with the provisions of the ordinance.

XV. THE SEAL

64. 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.

65. The directors may provide for the use in any territory, district or place not situated in Pakistan, of an
official seal which shall be a facsimile of the common seal of the company, which the addition on its face
of the name of every territory, district or place where it is to be used. The provisions of section 213 shall
apply to the use of the official seal.
XVI. DIVIDENDS AND RESERVE

66. The company in general meeting may declare dividends but no dividend shall exceed the amount
recommended by the directors.

67. 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.

68. No dividends shall be paid otherwise than out of profits of the year or any other undistributed
profits.

69. Subject to the rights of the persons entitled to shares with special rights as to dividends, all
dividends, shall be declared and paid according to the amounts paid on the shares, but if and so long as
nothing is paid upon any of the share in the company, dividends may be declared and paid according to
the amounts of the shares. No amount paid on a share in advance of calls shall be treated for the
purposed of this regulation as paid on the share.

70. Any general meeting declaring a dividend may resolve that such divided be paid wholly or in part by
the distribution of the specific assets and in particular, of paid up shares, debentures, or debentures in
stock of the company or other company or in one or more of such ways.

71. The directors may, before recommending any dividend, set aside out of the profits of the company
such sums as they think proper as a reserve or reserves which shall, at the discretion of the directors, be
applicable for meeting contingencies, or for equalizing dividends or for any other purpose to which the
profits of the company may be properly applied, and pending such application may, at the like discretion
either be employed in the business of the company or be invested in such investments (other than
shares of the company) as the directors may, subject to the provisions of the ordinance, from time to
time think fit.

72. The directors may carry forward any profits, which they may think prudent not to distribute, without
setting them aside as a reserve.
73. Any general meeting may resolve that any money investments, or other assets forming part of the
undivided profits of the company standing to the credit of any reserve or other fund or in the hands of
the company and available for divided

74. (or representing premiums received on the issue of the shares and standing to the credit of the
share premium account) be capitalized and distributed amongst such of the share holders as would be
entitled to receive the same if distributed by way of dividend and in the same proportions on the footing
that they become entitled thereto as capital and that all or any part of such capitalized fund be applied
on behalf of such share holders in paying up in full any unmissed shares, debentures or debenture-stock
of the company which shall be distributed accordingly and that such distribution or payment shall be
accepted by such share holders in full satisfaction of their interest in the said capitalized sum.

75. A transfer of shares shall not pass the right to any dividend declared thereon before the registration
of the transfer.

76. 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.

77. Notice of any dividend that may have been declared shall be given in the manner hereinafter
mentioned to the persons entitled to share therein.

78. The dividend shall be paid within the period laid down in section 251.

79. All dividends unclaimed for six year after having been declared shall be kept in trust by the company
but may invested or otherwise made use of by the directors for the benefit of the company until
claimed.
XVII. ACCOUNTS

80. The directors shall cause to be kept proper books of account as required under section 230.

81. 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.

82. The directors shall from time to time determine whether and to what extent and at what time and
places and under what conditions or regulations the accounts and books or papers of the company or
any of them shall be open to the inspection of members not being directors and no member (not being a
director) shall have any right of inspecting any account and book or papers of the company except as
conferred by law or authorized by the directors or by the company in general meeting.

83. The directors shall as required by section 233 and 236 cause to be prepared and to be laid before the
company in general meeting such profit and loss account and balance sheets duly audited and reports as
are referred to in those sections.

84. A balance sheet, profit and loss account, and other reports referred to in the preceding articles shall
be made out in every year and laid before the company in the annual general meeting made up to the
date not more than six month before such meeting. The balance sheet and profit and loss account shall
be accompanied by a report of the auditors of the company and the report of directors.

85. A copy of the balance sheet and profit and loss account and reports of directors and auditors shall, at
least twenty-one days preceding the meeting be sent to the persons entitled to receive notices of
general meeting in the manner in which notices are to be given as hereinafter provided.

86. Every account of the directors when audited and approved by a general meeting shall be conclusive
except as regards any errors discovered therein within three months next after the approval thereof.
Whenever any such error is discovered within that period the account shall forthwith be corrected and
thenceforth shall be conclusive.
87. The directors shall in all respect comply with the provisions of section 230 to 236.

88. Auditors shall be appointed and their duties regulated in accordance with section 252 to 255.

XVIII. NOTICES

89. The company shall give notice to members and auditors of the company and other persons entitled
to receive notice in accordance with section 50.

XIX. SECRECY

90. 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.

91. No member or other person (not being a director) shall be entitled to enter upon the property of the
company or examine the company’s premises or properties without the permission of a director subject
to articles 82, to require discovery of or any information respecting any detail of the company’s trading
or any matter which is or may be in the nature of a trade secret, mystery of trade, or secret process or of
any matter whatsoever which may relate to the conduct of the business of the company and which in
the opinion of the directors will be in expedient, in the interest of the members of the company, to
communicate.
XX. RECONSTRUCTION

92. 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.

XXI. WINDING UP

93. 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.

XXII. INDEMNITY

94. 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
XXIII. ARBITRATION

95. 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

Director Finance

Company Secretary

Chief Executive

Board of Directors

ORGANIZATIONAL STRUCTURE

NISHAT MILLS LIMIT

Director Purchase

Director Processing

Director Marketing

ORGANIZATIONAL STRUCTURE

NISHAT MILLS LIMITED

G.M. Weave

G.M. Finance

G.M. Export

Legal Advisor

G.M. HRM

G.M. Stitching

Chief Engineer
Director spinning

G.M. Purchase

Director processing

Chief Executive

ORGANIZATIONAL STRUCTURE

NISHAT MILLS LIMITED

Assistant manager waste

Assistant manager sales

AM quality control

Deputy Manager Waste

Assistant Manager

Deputy Manager Quality

Incharge fair price shop

GM MARKETING

Assistant manager

ORGANIZATIONAL STRUCTURE

NISHAT MILLS LIMITED

Director processing

Manager processing

Manager folding

Dy. Manager folding

Dy. Manager processing printing

Dy. Manager processing dying

ORGANIZATIONAL STRUCTURE

NISHAT MILLS LIMITED

G.M LOCAL MARKETING

In charge fair price

Dy. Manager Quality

Sr. assistant manager waste

Assistant manager

Assistant manager fair price

Assistant manager waste

Assistant manager waist

Assistant manager sales

ORGANIZATIONAL STRUCTURE

NISHAT MILLS LIMITED

G.M SALES

Sr. Assistant manager

Asst. manager sales

Asst. Manager sales

Sales officer

Sales officer

Sales officer

Asst. sales officer

Asst. sales officer

Computer programmer
Computer programmer

Part 2

GROUP PERFORMANCE

Playing a crucial role in the private sector, Nishat Group rank among the top five business houses in
Pakistan, in terms of sales and assets. There open and decentralized management structure helps us in
making decision, vital to remain competitive in their businesses. Their team is proud of their
achievement and work together to maintain high standard of quality and service. As a responsible
corporate citizen, they continually strive for the beneficial partnerships with the communities in which
the CARING FOR THE ENVIRONMENT is undertaken.

Nishat Group is playing a leadership role in setting the pace for environmental protection in the country.
To control pollution and provide safe working and living conditions in and around Nishat Mills Limited, a
sophisticated Water Treatment and Disposal System has been installed which removes hazardous
materials from effluents. This system was the first of its kind in the Pakistan.

Different Management Styles at Nishat Mills Limited

1. Personal Development And Training

Junior-level courses are frequently held in-house for personal training. Various courses organized in the
past include the following,

2. Japanese-style Production Management

This course was formulated for supervisors and officers to enhance their management capabilities in
interaction with the lower staff and associates and also to improve the production efficiencies.

3. Executive Development Course

This course was specially designed for middle management to enhance their principle-centered
leadership qualities so that they could meet the emerging challenges of the global world. Neuro-
linguistic programming was part of the course to help the employee in day-to-day activities to improve
proficiency and effectiveness in their attitude and work style.
4. Basic English Language Course

This course was for those staff that is not proficient in written and verbal English language. An external
instructor whose services were especially hired for this purpose conducted the course.

5. Basic Labor laws of Pakistan

Professionals from Labor Department organized this course. The main purpose was to give
acquaintances to the staff of their rights. Wage rates, vacations, working hours, child & bonded labor
etc, were the main topics covered.

6. In-Housing Training School

Nishat mills limited has also established an in-house Training School for unskilled labor so that they may
be trained on stitching machines, and qualify for work in the stitching floors. Unskilled manpower is
hired from the market for training. And during this period they are paid as per the prevailing wage rules.

The Working Environment and Accountability

With the world fast becoming a Global Village and the Internet Information Technology Revolution, the
issues of HUMAN RIGHTS and Working Condition are becoming significant important with each passing
day.

Nishat can pride itself in having one of the most congenial and professional working environments of
any company operating in Pakistan. Nishat is an equal opportunity employer and there is no
discrimination on the basis of sex, caste or creed. All hiring and promotion decisions are taken on merit.
All local laws are adhered to regarding different matters.

Extreme emphasis is placed on worker safety and health. All stitching machines are being equipped with
belt and needle guards. Employees using cloth cutters are required to wear steel mesh safety gloves.

§ Selection & Career ladder

First of all, human resource department selects appropriate people to do the job. These people are
expected to work with full devotion, loyalty etc. management of Nishat believes in healthy competition
among the employees so that workers are promoted on the basis of performance. Management cares a
lot of their employees. Normally young people with great enthusiasm are preferred. Mostly clerical and
middle level management are young people. Average age would be 25 to 30 years.
§ Promotion of Persons at Nishat

On the basis of experience and performance, they are promoted to higher managerial level; at higher
level I have seen various MBA, CA, ICMA and also people who have spend years at Nishat mills limited.
In order to provide incentives to employees at Nishat mills limited, cash rewards are also granted. The
head of the department, on job basis gives bonuses. Normally 10% of salary is bonus in each year.

§ Job Assessment

At Nishat mills limited Performance Appraisal is prepared to check the performance of workers. It is like
ACR (annual confidential report) in the government sector.

The basic Objectives of job assessment are

· Check the overall performance of employees

· Whether the job assigned is fully done or not

· Integrity, honesty

· Loyalty

· Devotion and commitment of the part of employee to achieve organizational objectives

§ Measures To Check Overall Performance

Higher manager to check the performance of employees adopts following measures,

· Standards are established first

· Measure the individual as well as collectively performance

· Compare actual performance with planned

· Taking corrective action

· Reviews of job are made.

· Superior management assesses accuracy of work.

On the basis of performance appraisal awards and rewards or punishments are given.

§ Accountability

Employees have to face inquiries or suspensions, if they are involved in activities which are not
according to the goal of Nishat mills limited. They are often terminated from their jobs, if they are not
performing well. They can be demoted from their ranks. In Nishat mills limited, promotion is granted on
performance basis so they are also accountable if they are performing poorly.

If the employees are not obedient to their superior or involved in unethical activities, they have to face
the circumstances. Severe punishment like demotion, firing and suspensions are given to non-
performing or low-performing employees.

§ Satisfaction Of Employee

Employees have a high morale. Top management is maintaining very cordial relationships with union
leaders. Actually employees feel a part in the organization and its achievements.

Plant location

Plant location is one of the main long-term strategic decisions normally taken by top management.
Nishat mills limited is ideally located in,

Niashatabad Faisalabad.

12- K.M Faisalabad road Shiekhupura.

21- K.M ferozepur road Lahore.

5 - K.M Nishat avenue Lahore.

Off 22.K.M ferozepur road Lahore.

20-K.M Shiekhupura Faisalabad (ferozewatan)

Main factory is located at Niashatabad. It is a composite unit.

Composite unit means all the process i.e. from spinning to stitching takes place under one roof. Product
process includes spinning, weaving, processing, finishing and stitching units.

While at Shiekhupura, weaving process is being carried out. At 21. K.M ferozepur road, Lahore a
stitching unit has been established to meet the customer’s requirements. Finally

20.K.M Shiekhupura Faisalabad road is a spinning unit is working. This unit involves converting cotton
into yarn.

Plant location is critical success factor. It involve huge investment and irreversible. It is either a life long
asset or life long liability because building and other structure once made cannot be moved.

Now we see the appropriateness of Nishat plant location,

NISHATABAD DYING & FINISHING

The history of Nishat mills limited date back to 1951. When Mian Muhammad Yahya founded Nishat
mills limited at NDF. This plant is ideally located at 5 km, NISHAT AVENUE, off 22km, Ferozepur Road
Lahore. Plant was established keeping in view of following considerations,

Ø Availability of cotton

Ø Technical people

Ø Housing and other facilities

Ø Infrastructure

Ø Cost of transportation of labor

Ø Land

Ø Proximity to market

Ø Stitching and its worker

Ø Availability Of Cotton

Since Faisalabad and its surroundings are known for fines kind of cotton so it is easy to acquire to raw
material. Cotton is procured at the start of season to avoid any variation, which may occur in the crop
from time to time, enabling the mills to produce consistent quality all the year. For this purpose a fully
equipped cotton laboratory is established and it is working day and night during cotton seasons to select
the best quality crop to be purchased.

Ø Technical People

Faisalabad is an industry-boosting city. People have technical skills. In order to promote their skills,
government has established various training schools, like TEXTILE COLLEGE FAISALABAD. This college is
providing skilled persons to NISHAT MILLS LIMITED.

Ø Housing And Other Facilities

Satisfaction of employees both manager and worker is necessary and inevitable to achieve organization
goals. To fully exploit the skills of worker Nishat is providing them various facilities. A housing scheme
was introduced. It was named at NISHATABAD COLONY. This colony provides residential facilities to
workers.

Other facilities include in-house training school to upgrade the skills. Seminars/lectures are arranged to
acquire satisfactory results. Its plant location enables it to invite celebrities from Faisalabad chamber of
commerce to share their personal experiences.

Ø Infrastructure

It includes availability of water, gas, electricity, roads (roads from factory to market), disposal of wastage
etc. all the facilities are available there. Road conditions are absolutely perfect for the transportation of
products. Goods can be transported either by road or by railway. There is also a dry port at Faisalabad,
so delivery of finished products becomes very easy. There are certain objective factors, which include

Ø Cost Of Transportation Of Labor

Plant is not far enough from city, infact with increase in population; it has become heart of industrial
area. Cost of transportation of labor/material is low as compared to its competitors.

Ø Land At Reasonable Price

Nishat mills limited started out as a weaving unit with 500 semi-automatic looms. Later on 10000
spindles were added, laying the foundation of nation’s biggest textile composite project. Nishat mills
Faisalabad covers 98 acre. It has quality with adequate provisions for future expansion.

Ø Proximity To Market

Nishat mills limited are export-oriented organizations. The major products are exported to Japan, Far
East, South America, Europe and use. Logistics are available to carry goods. Dry Port., railway and roads
all are in perfect conditions.

Ø Stitching Unit And Its Worker

Stitching unit is not far from city so female workers are not reluctant to work in stitching department.
This is another advantage of plant location.

There are certain subjective factors like emotional sentiment of people. I want to serve my people and I
want to serve my homeland. Frankly speaking capitalist do not believe. They invest money to get return.
Nishat mills limited do not have any subjective factors, which are considered, before location of plant.
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

· Table cloth and napkins

· Aprons

· Kitchen gloves

· Pot holders

· Chair pads with circle tacks

· Couch cove

PRODUCTION UNITS OF NISHAT MILLS LIMITED

The Company’s production facilities comprises of:

v Spinning

v Weaving

v Processing

v Design studio

v Engraving

v Rotary screen printing section

v Finishing section

v Dyeing section

v Inspection and rolling section

v Quality control section

v Production planning section

v Stitching units

v Power generation

Plant Capacity

UNITS

Scale

1998

1999

2000

2001

SPINNING

Kgs
54969

51989

48362

52467

WEAVING

Sq. Mt.

118008

140229

142304

152619

POWER PLANT

KWH

264902

264902

264902

315418

Actual Production
UNITS

Scale

1998

1999

2000

2001

SPINNING

Kgs

53968

50529

46729

50907

WEAVING

Sq. Mt.

107661

128130

130444

140046

POWER PLANT

KWH
182090

189273

174829

179882

Reason for Low Production

Under utilization of available capacity is due to normal maintenance. The generation capacity of power
plant was increased due to installation of gas turbines in last quarter during the year under reference.

Production Machines

No. Of Spindles

176452

178324

166792

153192

172992

No. Of sulzer looms

338

338

388

284

284

No. Of Air jet looms

120
120

180

244

244

No. Of Thermo sole dyeing

No of Rotary printing machine

SPINNING

Nishat Mills Limited initially started business with 10,000 spindles, which later on with the gradual
increase reached 165,800. The entire machinery is from world-renowned manufacturers from Japan. A
China and Europe. For reaching high quality standards, research and development is imperative for
which Nishat Mills has state of the art yarn and cotton laboratories with world class scaling standards.
Cotton is procured at the start of the season to avoid any variation, which, can occur in the crop from
time to time enabling the mills to produce a consistent quality all the year round. For this purpose a fully
equipped cotton laboratory with HVI-900/I and ASIF-N is working day and night during the cotton season
to select the best quality crop to be purchased.
NML spinning is operationally organized into seven spinning units, each with a distinctive product range
and capacity to keep a check on the quality standards, every cone undergoes inspection before packing
to ensure that the buyer gets only the best out of the lot.

NML spinning is thus renowned for being one of the most trusted brand names in the market enjoying
the trust and confidence of the consumer’s world over.

The major production from the spinning is exported to Japan, Far East, South America, Europe and the
USA. In addition the spinning also provides the same high quality yarn to their own weaving mills going
into fabric production.

A Brief Range of Machinery and Production Range is Given Below

A) Machinery Details

Nishat Mills Limited (Faisalabad only) has seven spinning units with a total of 165,880 spindles. Spinning
production capacity for both cotton and Blended yarn is 120 Tons/Day.

Here under are summarized details of spinning machinery:

1) BLOW ROOM

Toyofa-Ohara-Heregeth (Japanese origin with German technology know how)

2) CARD

Trytzschler (German Origin)

Crosrol (U.Korigin)

Toyoda (Japanese Origin)

Howa (Japanese)

3) DRAWING

Toyoda& Howa (Japanese Origin)

Rieter (swiss Origin)

4) COMBER
Toyoda& Howa (Japanese Origin )

Rieter (Swiss Origin)

5) SIMPLEX

Toyda&Howa (Japanese Origine)

6) RINGFRAMES

Toyoda& Howa (Japanese Origine)

FA-507 (Chinese Origin with Germen Drafting)

7) AUTO CORNER

Murata (Japanese Origin)

8) DOUBLE INCH& TWISTING EQUIPMENT

Murata (Japanese Origin)

COUNT RANGE

100% Cotton Carded

From New 12 /1 to Ne32/1

From New 12/1 to New 32/1

All double Yarn in 100% Knotless/ auto-spliced

100%Cotton Combed

From New 12/1 to New 32/1

From New 12/1to New 32/1

All double Yarn in 100% Knotless/auto –spliced

We are also producing finer counts i.e., 42/1 combed and

Above with the bending of imported cotton of longer staple length.

BLENDED YARN

Poly cotton

Poly 52%: cotton 48% carded New 10/1 to Ne30/1

Poly 52%: cotton 48% carded New 10/1 to Ne40/1

Poly 65%: cotton 35% carded New 10/1 to Ne30/1

Poly 65%: cotton 35% carded New 10/1 to Ne45/1

Cotton Rich (CVC)

Poly 45%: cotton 48% carded New 10/1 to New 30/1

Poly 45%: cotton 48% combed New 10/1 to Ne 40/1

Poly 40%: cotton 48% carded Ne 10/1 to Ne 30/1

Poly 40%: cotton 48% cambed Ne 10/1 to Ne 40/1

All yarn made at Nishat Mills Limited is ring spun, for both knitting (waxed or UN waxed) and weaving.

Standard packing 24 cones per carton

Carton Wt. 100 lbs.

Quantity per FCL 39000 lbs. (40ft High cube container)

WEAVING

NML weaving enjoys the reputation for being the market leader in the loom state fabric business in
Pakistan. Their fabrics are not only rated as the top quality but also enjoy a premium for their superior
quality all over the world. Supported by their own in house spinning units, the weaving sector of Nishat
mills limited produces fabric range form light to heavy percales to satin and traditional to twill dobby
items.
Their fabric is well established all over the world with their exports going to the America the Far East,
Africa, Australia Europe and Japan. Besides export they are also supplying grey fabric to their dyeing and
printing units.

NML FAISALABAD:

Machinery: 188 sulzer- Ruti looms

Capacity: Approximately 2.1 million meters per month

Product range 100% cotton and poly cotton fabrics, in plain weaves. Twills, Drills,

Satins (regular /broken &stripped, Bedford cordsm herring bones pique and Rib cords.) This unit has
been producing top qualities fabric for export as well as for consumption of their own processing unit.
Recently awarded the ISO9002 certification, the facility is highly regarded for the production standard
and quality control. This unit is comprised of 188 SULZER- RUTI P7100 Looms and state of the, back up
process, with equally efficient quality control and packing department.

NML SHEIKHUPURA

MACHINERY 96 SULZER-ruti- looms (unit -1)

120 Tsudakoma air jets (unit-2)

60 Tsudakoma air jets (unit-3)

64 Tsudakoma air jets (unit-4)

CAPACITY: 4.5 Million meters per month

PRODUCT RANGE

The products in this unit range are not only the traditional 100% cotton polyester cotton fabrics, but also
in Dobby items, customized to the buyer need.

Established initially by the name of Nishat fabric limited 1992. Subsequently merged into Nishat Mills
Ltd, NML Shiekhupura is one of the most advance unit In the country equipped with the state of art
machinery and back processes, the highly sophisticated labotary also insured total quality control in yarn
purchase and fabric production, and other64 tsudakoma air yet looms have added (unit 4) recently
along with the back process.
Future programs for the unit include the purchase of some new air yet looms, which will be give a boost
to the production capacity and the product the range the unit will also expand subsequently.

PROCESSING

Nishat processing plant with monthly capacity of 3 million meters is one of the largest processing
facilities of Pakistan. With and array of month modern machines, it is the geared to meet the ever
increasing the demand of there client. The processing division has been divided in to different section to
facilitate uninterrupted process flow and to insured quality control at all stages almost 75% chemical
and dyestuff being used is of European origin and independent quality control department with a strong
backing of fully equipped laboratory insured quality standard at all level. The processing plant has
recently been awarded ISO –9001 Certification. Yet another achievement in this regard by Nishat mills
limited.

Bleaching

Sometime cloth is bleached according to customer requirements. Bleaching helps to remove impurity
from the cloth. For this purpose singeing machines are used where cloth is bleached in three steps.

1. Brushing

It helps to remove thread.

2. Singeing

It removes pills by temperature.

3. Chemicals tanks

It is used to remove oily and stain spots on cloth.

At the end cloth is raped on a batch. Polies then bags are used to prevent air penetration. At the end,
batch number, quantity, meters of cloth are written on paper and stocked with batcher.

Desizing
Sometimes cloth is desized according to customers’ requirements. It is used to remove the grey fabric
stiffness of the cloth that helps in bleaching for easy washing.

Scovring

It is done in bleaching machine, it helps to remove artificial spot like oil, grease etc.

PRE-TREATMENT SECTION

Fabric preparation is crucially important, as the successful out come of all subsequently operations is
dependent on it.

At, Nishat, to reduce the natural impurity of cotton and to impart good hydrophilic properties, this
section employees too singing machine and two modern open with width bleaching plants, to give more
luster and strength one chain less mercerizing machine is also in operation. Besides preparing fabrics for
dyeing printing, this section also bleach bacteria killer fabric for Japanese hospital linen and fire
retardant low pill fabric for contract textiles.

MACHINERY

Singeing/Designing vollen weides 118”

Singeing/Designing Kyoto 108

Bleaching plant benninger 95

Bleaching plant Kyoto 95

Mercerising C. Less goller 95

DESIGN Studio

The state of the art design studio, known for producing transparencies of the highest quality,
accommodates a STORK STK image 3000,a CST Ramste lll silicon graphic 02 and STORK Drum scanner
plotter, along with these a team of convention manual color separation artist is also maintained.
Design studio is a sub department of processing. Here cloth design is made. Tracers are there to trace
out different pattern and design of cloth. For each type of color different films are made. Different trace
papers that are sued at Nishat are of Kodak and AGFA. For each color separation, there are positive and
negative films. Positive film is sent for processing. Ink is used to fill scratches and unwanted graphics.

Tracing table is used to examine designs and it helping tracing of design. Germany waterproof ink is sued
to avoid the ink expansion. Digital design studio is also complementary department of design studio.
Where design are made on computer program and using information technology.

ENGRAVING

Technology advancement in the field of rotary printing necessitates upgrading the pre-print line-up.
NML is reputed for the most efficient use of the STORK engraving systems for manual exposing. They are
known for halftone work in single step designing.

Living up to this reputation, they have recently added to their line lf production the “ROTARY WAX JET’
With exposing resolution at 1019dpi and a screen circumference of 640,820 and 9144mm. Engraving at
this high resolution with digital technology enhances the print quality to a great extent and reduces the
existing human error margins to the minimum.

ROTAARY SCREEN PRINTING SECTION

In another step to upgrade the existing machine mix. Anew 3.2m (126”) Regina printing machine, with a
facility to print 16 colors has been installed. This machine with UNICA system successfully combines
production and quality performance at the highest possible level in rotary screen-printing.

NML has a well-trained work force to print extremely intricate and complex toe-on –tone designs.
Monthly printing capacity of the section is about 203 million meters. Besides conventional printing in
pigment and reactive dyes, printing in puff effects, resist and discharge dyestuff is also done.

MACHINERY:

Printing machine Reggiani 126” 16 colors

Printing machine john zimmer 110” 12colours

Printing machine stork 72” 16 colors

Following files are maintained in printing department of Nishat mills limited,

· Process sheet

· Job description specification

· Audit report

· ISO 9001

· Assessment file

· Purchase order

· Work instruction

· Staff document

· Worker document

· Reactive color document

Standard operating procedure

· Customer letters and fax

· Organizational chart

· Technical literature

· Daily production report

FINISHING SECTION

Offering optimal final fabric quality and handle very recently this section has been equipped with a new
generation/ Babco-starter. This machine combines tried and tested drying technology with innovative
electronic control system. Ensuring absolute reproducibility of fabric qualities and full documentation on
the quality control checks.

Besides offering normal finished, this section also full fills the demands for scotch guard protection for
soil release and resist finish, peach skin affect finish (emerizing), Fire Retardant finish, water proofing,
anti crease and easy care finish,
MACHINERY:

Stenter Babcock 130”

Stenter Monforts 110”

Stenter Monforts 95”

Stenter Monforts 73”

Stenter Krantz 95”

Stenter Krantz 73”

Sanforizing M/c monforts 73”

Raising for Flannel sucker &muller118”

Emerizing M/c sucker &muller 71”

Calenders Ramish 110”

DYEING SECTION

Nishat provides quality piece died fabrics in heavy twills to some of the world leading brand names like
Gap, Old Navy, Banana Republic, DKNY, Tommy Hilfiger, CHAPS, and sears, this has been made possible
by using high quality grieve from the mills own weaving units and by using expensive dyestuffs, Highly
trained Chinese technicians keep a close check on all stages of production. Depending upon
specifications, dyeing in reactive, disperse, pigment. Vat and sulphur is possible.

To further enhance their existing dyeing capacity of 1,000,000 meters per month, a designated Apparel
Fabric Dyeing Unit is being set up near Lahore. The machinery and land have been purchased for this
project, which is planned to be operational by the end of year 2000. This unit, which will have a monthly
capacity of 2.5 million mergers, has been designed to give the optimal results due to the custom built
machinery purchased after careful and lengthy consideration of the technical and

Marketing teams

This would certainly give them an edge over their competitors and would be welcome addition in the
ever-changing apparel fabric market. It will help Nishat mills limited to improve its market access and
consequently profitability.
Following files are maintained in dyeing section,

· Training files

· Dyeing files

· Washing file

· Lab to bulk

· Sample received file

· Singeing file

· OK for curing

· Sample status

· Sample letter

· Shortfall file

· Daily stock file

· After curing file

· Folding return file

· Daily attendance register

· Water fall card

MACHINERY

Pad steam Goller 95”

Pad thermosal monforts 95”

Washing range Goller 95”

INSPECTION AND ROLLING SECTION

To roll and pack 100,000 meters per day, this section has 8 rolling Machines; all equipped with photo
censors and inspection frames. Apart from rolling and folding, the primary responsibility of rolling
section is to prevent faulty fabric reaching the customer; the fabric undergoes a100%inspecion system.
To assist in shade checking a data color computer system is also used.

QUALITY CONTROL SECTION

And independent on line quality control section monitors all production operation to the required levels.
The quality control lab is fully equipped to conduct all relevant tests. The staff not only keeps control of
the bulk production, but also is also actively involved in standardization of process routes and operating
procedure.

Quality control lab

Nishat mills limited has not only build an international standard quality control lab to meet customer’s
satisfaction but also to improve their own product quality. Various type of test is conducted at this
quality control lab to improve the quality of products and to meet customer requirements.

Two Types of Cloth Are Required By Customer

1. When Customer Needs Specific Cloth

When customers need specific type of cloth, he sends his own sample whose composition is tested is
laboratory and production is made according to sample.

2. When Marketing Deppt Offers Design

When marketing department officers approaches customers, they show their product quality sample
books to customer. Customers can select any leaf of them and can place order for this type of cloth.
That cloth is already available with Nishat whose production is carried on according to the instruction of
customers.
Quality Control Policy

Nishat mills limited are committed to move things in direction of TQM. Their prime

Objective is comically produce products for the satisfaction of buyers. For this they plan thing ahead,
fresh ideas are developed, make more effective use of time, put the right man in the right place, and
keep on updating the skills of the employee by training.

In the factory, in order to motivate employee and workers toward quality management, many billboards
are they’re containing various statements like,

“Quality has no finish line”

“Quality is degree of excellence”

According to juran “Quality is fitness for use”

“Quality ensures our future”

Tests to Ensure Quality

Following test are conducted in quality control lab,

Counter tests

1) To count warp and weft

2) Count Glass

3) To count ends and picks

4) Weight

5) To measure weight of cloth

6) Cock meter test

It examines dry rub and wet rub

7) Pilling test

It is used to test pilling of cloth

8) Durra test

It is used to examine fastness of cloth

9) Auto wash

It is used to examine change in shade

10) Vasctor

It is used to examine shrinking of cloth

11) Tumble dryer

This test is used to examine dryness of cloth

12) Padder

It is used to examine matching and finishing of cloth.

13) Curring

It is used to examine shade of cloth

14) Light box test

It is used to examine fastness of light on cloth.

15) Presser

It is used to determine pressing of cloth.

16) Visco meter

It is used to measure viscoty of cloth.

17) Inspection table

Here warp and weft and other type of faulth are examined.

18) Chemical analysis

It is used to examine acidity.

19) Spectro photo meter

It is used to examine shading.

20) Perma meter test

It is used to measure passage of air from the cloth.

These types of tests are conducted keeping in view market requirements, weather requirements and
customer demands.

Ø Production Planning Section

To control all production priorities and to load machine on day-to-day basis, a full fledge production
planning cell is in operation. This production planning system is designed to be fine tuned with the
clients needs and thereby ensures responsive handling of all accounts by fore-casting demands from
each client in terms of greige quality and quantity, space on print/ dye machines and space on stitching
machines. Coupled with forecast from their buyers, it makes their system work efficiently. Advantages of
this system include shorter lead times, on time deliveries and less quality hassles.

It is an intermediate party between marketing department and processing department. It issues daily
production program to each processing unit. Daily production reports are received in this department.
New product development letter is also received in this department. Then work is planned accordingly.
Nishat group is pioneer for making production and planning department. Instructions are first given to
production and planning department and then distributed to other processing units. Here various type
of analysis are conducted like,

1) Bleaching production analysis

2) Printing production analysis

3) Dyeing production analysis

4) Finishing

5) Folding

6) Damage trend analysis

7) Monthly maintenance breaks down analysis

Data flex program is used to save the date at production and planning department. First export manager
creates orders from the customer and record specification of that order on a paper. This program is sent
to the production and planning department.

The cloth required is issued against the grey demand letter. First copy is remained in production and
planning department. And second goes to grey stock room. On this letter grey issued is returned. It is
generally more than demanded cloth because some cloth expected to be damage. For this job number is
issued to work. When grey material is issued, lot number is given than production and planning
department issues program according to specification of each processing unit.

STITCHING UNITS

Apart of Nishat plan to have a totally integrated textile sector the stitching unit was set up in 1989.the
unit has a string work force of 400 skilled and semi-skilled workers mainly in cutting, stitching, quality
control, folding and packing department. With an array of 250 modern new generation machines, the
stitching, department has an average capacity to process up to 10,000 bed sets and 2000 curtain pair
per day, approximately 40000 meters of fabric, the assembly line consists of combination of manual and
automated operation designed to provide the required flexibility in its system to allow processing of a
wide product range and versions of its existing product line the units current product line includes bed
sheet, quilt covers, fitted sheet ,cushion cover, valances, datable linen, baby sets, quilted throwovers
and curtains in various specifications and model customized to the requirements of individual market .
In addition, a range of embellished products with piping, bias binding, bulk over lock, decorative
trimming and bourdon stitching is also being offered to customers, facility to handle small volumes of
decorative embroidery is also on line.

Procedure of Conducting Quality Control

Quality control procedures are carried out at every stage during production. From purchasing of
material to cutting and stitching right till folding and packing of the final product, each aspect is
scrutinized and controlled to the international quality standards.

Power Generation

The power generation unit formerly known as Nishat Tek Limited, was the first ever power generation
company in the private sector in Pakistan.

Commercial production sanded in 1992 with three KRUPP-Macungie’s with generating capacity of 5.5
Mw each, Capacity at Faisalabad has since eon increased to 27MW. Supplying power exclusively to
NML.Nishata Tek also establishes a power-generating unit of 6Mw at Shiekhupura to supply power to
sulzer unit lll and Tsudakoma unit ill. It started commercial operation in September 1995.
MARKETING STRATEGY & FUTURE PROSTECTS

Future prospectus of Nishat mills limited are given as under

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 Shiekhupura.

Grey Fabric Market

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. We have constantly updated our machinery,
replacing old machines with new ones upgrading the existing set-up, leading to better efficiencies and
quality products.

Quality control

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.

Value Addition Strategy

Keeping in view demand of the World market, Nishat Mills Ltd pursued its strategy of value addition that
in command reducing the dependency on Grey Fabrics and Grey Yarn. Having the foresight to assessing
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 Market

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.

Social Responsibility

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.

Opportunities

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.

Future Prospectus in Non-Quota Countries

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 Countries

Middle East market is composed of South Africa and the new emerging markets like the UAE, Egypt,
Saudi Arabia, 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.

Position With Regard To Competitors

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.

Market leader in textile sector why?

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

§ Best Working Environment

Nishat has provided its staff with better working environment and facilities, which enhanced efficiency
and out put.
§ Professional Commitment

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 team’s co-ordinance at all times
and it focus remains on maintaining its position as the market leader in the textile sector of Pakistan.

During my internship I also worked in Sales & Marketing department.

Ø MARKETING & SALES DEPARTMENT

In marketing department I learned how the orders are executed from the old buyers and how the new
markets and buyers are discovered than orders are executed. Normally what happen is that the buyers
contacts the marketing department and ask for the sample, if buyer accepts he gives order, Marketing
department than issue a sales contract to the buyer.

Marketing strategies

Marketing strategies includes,

i. Meeting with buyers

ii. Company profile

iii. Buyer visits

iv. Free sample

v. Contact with agents

vi. R& D for marketing

a. Through Internet

b. Yellow pages

c. APTMA buyer dictionary

d. 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

1. Product

2. Promotion

3. Price

4. 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,

Ø Direct Marketing

Ø 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.

Ø 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

§ Shipment details

§ Terms & conditions

1) Specification of Goods

In the sales contract, what goods are intended is written. Nishat is an export-oriented organization and
mainly exports yarn, gray cloths, fabrics and garments. In the sales contract goods are mentioned, if a
number is allotted to them than that number is also written.

2) 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.

3) 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

4) 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?

5) 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.

In production planning following things are done;

· Arrange production after contract

· Select the MILL for production in which the specified yarn of the required quantity can be produced

· Adjust frames according to no. of spindles

· Calculate daily production

· Give expected time of shipment to buyers

· Tell packing people what shipping marks should be on cartons

· Size of carton required by buyer

· No. of cones in one carton required by buyer

In arrangements regarding the shipment following things are done,

· Arrange dispatch from mill after production

· Follow ship terms according to contract

· If any shipment line is nominates, check the freight of that line

· Arrange container of that shipping line

· Negotiation with transporter

· Giving shipment details to buyer

· Fax all documents to buyer before shipment reaches destination.

· Negotiation with shipping company

· Arrangement of container

· Settlement of freight
All these arrangements are made regarding the shipment. When contract is received from the buyer,
marketing department hand over task to production people who arrange all the products according to
the terms of contract. After the production of goods arrangements are made to deliver goods to
importer. Container is arranged.

Malaysia Market

Nishat mills limited also export goods to Malaysia and earn lot of foreign exchange.

During the last six month, shipment to MALAYSIA remains stable. In the month of December, sales
decreases due to intense competition in the market. Overall performance remains satisfactorily.

United States of America

One of the largest markets of the world, this diagram depicts the export to USA.

In USA market there is ups and down because after nine September, scenario is totally different and
policies of American government are not fully supporting Pakistan exporters.

Korea Market

Total sales/exports to Korea are depicted by this graph over the last six month ranging from July to
December.

In the month of July shipment was made to Korea, in remaining month there was no turnover. This is
because Nishat mills found no buyer in that period.

Singapore Market

Following chart depict the total export made to Singapore market.

Marketing department performance remains goods during last six month. Marketing department
successfully cope with opportunities available in Singapore market.
Japan Market

Nishat mills are one of largest exporter in cloth to Japan.

The performance remained good and excellent.

Hong Kong

Hong Kong is another attractive market for Nishat mills limited.

Nishat has very stable customers who believe that they are getting only quality products and they are
assured of quality goods.

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.

Ø 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.

Ø 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.
Ø 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.

Ø 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.

Ø 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.
RATIO ANALYSIS

OF

NISHAT MILLS LIMITED

NISHAT MILLS LIMITED

BALANCE SHEET

AS ON SEPTEMBER 30, -------------

1999

2000

2001

Equity and Liabilities

RS IN (000)

Share capital and reserves

Authorized Capital

1500000

1500000

1500000

Issued and Subscribed and paid up share capital

1113444

1113444

1113444
Capital reserves

1027622

1027622

1027622

Revenue

201518

2428503

2566448

Surplus on revaluation of operating fixed assets

12118

12118

12118

Non Current Liabilities

Redeemable capital

252120

919250

2205907

Long Term Loans

325429

228499
155639

Liability against finance lease

107806

103834

235220

Deferred liability for gratuity

1608

1091

843

Current Liabilities

Current portion of long-term liabilities

562747

242729

768264

Short term finance

4479010

4397584

5001841

Creditors accrued and other liabilities

478364

533645
781352

Worker' participation fund

23247

41587

20959

Provision for Taxation

186884

164068

146087

Proposed dividend

194853

283928

167017

Unclaimed Dividend

5480

6955

9683
Total Liabilities and Owner Equity

10782776

11904857

14222444

Assets

NON-CURRENT ASSETS

1999

2000

2001

Tangible fixed assets

Operating fixed assets

3555922

3679482

6194523

Assets subject to finance lease

371014

243102

467330

Capital work in process

125014

1465706

154009
Long Term Investment

1590552

1390552

1390552

Long Term loans, deposits, prepayments

57151

76963

100136

Current Assets

Stores, spare parts and loose tools

544536

5071128

541611

Stock in Trade

1824542

1410306

1966667

Short term investment

5938

5938

5938
Trade Debts

1290253

1409926

2027613

Advances, deposits and prepayments

660621

478999

377918

Other Receivables

316832

482438

630440

Cash At Bank

440401

754317

365707

5083123

5049052

5915894
TOTAL ASSETS

10782776

11904857

14222444

NISHAT MILLS LIMITED

INCOME STATEMENT

AS ON SEPTEMBER 30, -----------

1999

2000

2001

RS IN (000)
SALES

9436104

10134014

11662457

COST OF GOODS SOLD

7745353

7991952

9605013

GROSS PROFIT

1690751

2142062

2057444

ADMINISTRATIVE SELLING AND GEN EXPESES

497043

545717

710360
OPERATING PROFIT

1193708

1996345

1357084

ADD; OTHER INCOME

68480

102431

116363

EARNING BEFORE INTEREST AND TAX

1262188

1698776

1463447

LESS: FINANCIAL CHARGES

299208

669014

1049756
WORKERS PARTICIPATION FUND

23247

41887

20960

PROFIT BEFORE TAXATION

439733

788175

392731

LESS: PROVISION FOR TAXATION

59719

87788

77769

PROFITAFTER TAX

380014

700387

314962
PROFITABILITY RATIO

FINANCIAL HIGHLIGHTS

1997

1198

1999

2000

2001

PROFIT AND LOSS

(RUPEES IN THOUSAND)

Net sales

8557876

8919459

9436104

10134014

11662457

Gross profit

1622745

1956420

1690751

2145062

2057444
Profit before tax

379589

412273

439733

788175

392731

Profit after tax

324739

344397

380014

700387

314962

CASH OUTFLOWS

Taxes paid

86522

111489

96326

47762

110060

Financial charges paid

820524

789018
836912

652024

941253

Fixed capital expense

342969

644944

386464

1895627

2416093

BALANCE SHEET

Current assets

3161495

4209470

5083122

5049052

5915894

Current liabilities

3925000

4940337

5930586

6070496

6895203
Operating assets

3295763

3265748

3555922

3679483

6194523

Long term loans

8660045

9940818

10782777

11904857

14222444

Share holders equity

3818405

3967949

4153110

4569569

4717514
RATIOS

Current ratio

0.88:1

0.97:1

0.95:1

0.93:1

0.97:1

Gearing ratio

0.27:1

0.29:1

0.23:1

0.29:1

0.42:1

Gross profit ratio

18.96

18.96

18.96

18.96

18.96

Net profit before tax

4.44

4.44
4.44

4.44

4.44

Earning per share

2.92

2.92

2.92

2.92

2.92

Proposed dividend

15

15

15

15

15
PROFITABILITY RATIO

Gross profit ratio

Gross profit

------------- X 100

Net sales

1999

1690751

---------- X 100

9436104

=17.92%

2000

2142062

----------- X 100
10134014

=21.14%

2001

2057444

------------- X 100

11662457

=17.64%

INTERPRETATION

Gross profit ratio is the ratio of gross profit to net sales expressed as percentage .In 1999 the firm
earned a gross profit of 17.92%, in 2000it increased to 21.41%and in 2001 it decreased to 17.64%. The
reason why the gross profit increased in 2000is that sale volume increased by 1.6% as compared to 1999
but cost of goods sold decreased by 8.05%. It is due to management efficiency and effective policies .In
2001the gross profit decrease because sales volume does not increase in correspondence to increase in
cost of goods sold because during this period the rate of inflation and dollar fluctuations was high. The
gross profit is sufficient to recover all operating expenses and to build up reserves after paying all fixed
interest charges and dividend
Net profit ratio

Net profit after tax

---------------------- X 100

Net sales

1999

380014

----------- X 100

9436104

=4.02%

2000

700387

--------- X 100

10134014
=6.91%

2001

314962

------------- X 100

11662457

=2.70%

GRAPH SHOWING GROSS PROFIT IN THE LAST FIVE YEARS

INTERPRETATION

This is used to show over all profitability and hence it is useful to the proprietors. Higher the ratio better
for the organization it shows the firms ability to turn each rupee of sale into net profit. In 1999, N.P was
4.02%, in 2000 it increase to 6.19% and in 2001 it decrease by 4.21% to2.70%. The reason why net profit
decreased in 2001 is that operating expenses has increase by20.38% as compare to 1999. Higher ratio
shows firms capacity to withstand adverse economic conditions. It is also advantageous to survive even
in the case of falling prices and sale volume.
Operating Ratio

Cost of good sold + operating expense

------------------------------------------------ X 100

Net sales

1999

7745353+497043

--------------------- X 100

9436104

=87.35%

2000

7991952+545717

---------------------- X 100

10134014
=84.25%

2001

9605013+710360 ---------------------- X 100

116622457

=88.45%

Interpretation

This ratio shows the operational efficiency of the business. It is consider to be yard stick of operating
efficiency but it should be used cautiously because it may be effected by a number of uncontrollable
factors like sale promotion expenditure, in efficiency of marketing department, general rise in selling
expenses and introduction of better substitute by the competitor. In 1999, operating ratio was 87.35%;
in 2000-it decrease to 84.25% and it again increase to 88.45%. 2001 shows that 87.45% of sales have
been consumed by cost of good sold and operating expenses and 12.55% of sales left to cover interest,
income tax, dividend and firm’s need to retain profit for expansion. This high percentage is due to
above-mentioned factors. In 2000, decrease is due to effective management policies.

Expenses Ratio

Particular expense

------------------------ X 100

Net sales
What do theses ratios signify?

Expense ratio indicates the relationship of various expenses to the sale. The operating ratio reveals the
average total variations in expense. But some of the expenses may be increasing while some may be
falling. It is use to depict the causes of the variation of the operating ratio. Lower the ratio better for the
organization.

Cost Of Goods Sold Ratio

Cost of goods sold ----------------------- X100

Net sales

1999

7745353

------------ X 100

9436104

=82.08%

2000

7991952 ----------- x 100

10134014

=78.6%

2001

9605013 ----------- x100

11662457

=82.36%

Interpretation

This ratio shows how much percentage of sales is the cost of goods sold. Lower the ratio, better for the
organization. In1999, the cost of goods sold ratio was 82.08%, in 2000, it decrease by 3.22% to 78.86%,
in 2001, it again rose to 82.36%. In 2000, the cost of goods sold decrease because of efficient and
effective management policies to control the wastage and loss, overhead etc.
Summary of dividend analysis

Figures in Pakistan Rupees

Quarters are Fiscal Quarters (4th quarter ends in September)

Quarter

EPS

Divs

TTM

EPS

TTM

Divs

Payout

Ratio

1Q1997

n/a

0.000

n/a

0.000

n/a

2Q1997

n/a
 0.000

n/a

0.000

n/a

3Q1997

n/a

0.000

n/a

0.000

n/a

4Q1997

n/a

1.316

2.558

1.316

51.4%

1Q1998

n/a

0.000

n/a

1.316

n/a
2Q1998

n/a

0.000

n/a

1.316

n/a

3Q1998

n/a

0.000

n/a

1.316

n/a

4Q1998

n/a

1.535

2.711

1.535

56.6%

1Q1999

n/a

0.000
 n/a

1.535

n/a

2Q1999

1.340

0.000

n/a

1.535

n/a

3Q1999

n/a

0.000

n/a

1.535

n/a

4Q1999

1.448

1.535

2.788

1.535

55.1%
1Q2000

n/a

0.000

n/a

1.535

n/a

2Q2000

2.628

0.000

n/a

1.535

n/a

3Q2000

n/a

0.000

n/a

1.535

n/a

4Q2000

3.662

2.550

6.290
 2.550

40.5%

1Q2001

n/a

0.000

n/a

2.550

n/a

2Q2001

1.960

0.000

n/a

2.550

n/a

3Q2001

n/a

0.000

n/a

2.550

n/a

4Q2001
 0.870

1.500

2.830

1.500

53.0%

1Q2002

0.170

0.000

3.000

1.500

50.0%

2Q2002

0.280

0.000

1.320

1.500

113.6%

3Q2002

0.460

0.000

1.780

1.500
 84.3%

TM:

Trailing Twelve Months

EPS:

Earnings per share

Divs:

Dividends per share

(A): ALL ITEMS ADJUSTED FOR STOCK SPLITS OR DIVIDENDS - 120:100 RIGHTS ISSUE (14% DIV) IN 2000,
23:20 RIGHTS ISSUE (4.22% DIV) IN 95, 15% IN 94

(B): CALCULATION BASED ON YEAR END OUTSTANDING SHARES

(C): BASED ON AVERAGE SHARES OUTSTANDING

Bottom of Form

Selling and administration expense ratio

Selling and administration expense

-------------------------------------------- X 100
Net sales

1999

497043 ---------- X 100

9436104

=5.27%

2000

545717

---------- X 100

10134014

=5.39%

2001

710360
---------- X 100

11662457

=6.09%

Interpretation

This ratio shows how much percentage of the sale is the selling and administration. Lower the ratio
better for the organization. In1999, it was 5.27%, in 2000 it was 5.39 % and in 2001 it rose to 6.09%. This
percentage shows the increasing trend. This trend is due to expensive advertisement and sales
promotion technique and administration staff salaries. In 2001 the selling and administration expenses
increases by 20.38% as compare to 1999.

OVER ALL PROFITABILITY RATIO

RETURN ON SHAREHOLDER INVESTMENT

Net profit after tax

------------------------ X 100

Shareholders fund

Shareholders fund paid up capital + capital reserves + revenue reserves + unappropriated profit +
surplus on revaluation of investment

1999
380014

---------- X 100

4165228

=9.12%

2000

700387

---------- X 100

4582672

=15.28%

2001

314962

----------- X 100

4730562
=6.62%

Interpretation

This ratio is one of the most important ratios used for measuring the overall efficiency of the firm. As the
primary objective of the firm is to maximize it’s earning, this ratio indicates the extent to which this
primary objective of the company is being achieved. This ratio is of great importance to the present and
perspective shareholder as well as management of the company. This ratio shows how well the
resources of the company are being used. Higher the ratio better for the organization.

In 1999, the return on the shareholder fund is 9 paisa per rupee, in 2000 it increase to 15 paisa and in
2001 it reduced to 6 paisa that is in 2000, return on shareholder fund increased because shareholder
fund increase by 10% in 2000 as compare to 1999 and net profit before interest and tax increased by
84% in 2000 as compare to 1999. In 2001 shareholder fund increased by only 3.22% but net profit after
tax decrease by 55%, which is not in accordance with net profit before tax change. Decrease in profit
resulted in 2001 due to increase in selling and administration expenses and financial charges in 2001 as
compare to 2000.

Return on equity capital

Net profit after tax

------------------------ X 100

Equity share capital

1999

380014
---------- X 100

1113444

=3.13%

2000

700387

--------- X 100

1113444

=62.91%

2001

314962

---------- X 100

1113444
=28.28%

Interpretation

This ratio is meaningful to the equity shareholders who are interested to know the profit earned by the
company and those profit which can be made available to pay dividend to them higher the ratio, better
it is. In 1999 it was 34.13%, it increase to 62.90% in 2000 and then again decrease to 28.28% in 2001.
The reason for increase in return on equity capital is the increase in sale and decrease in cost of goods
sold that resulted in an increase in overall profitability and in 2001, the profit decrease because cost of
goods sold and financial charges increased in 2001. In 2001, every 100 rupee of share capital is earning
Rs. 28.28 of net profit that is still quite satisfactory.

Earning per share

Net profit after tax

------------------------ X 100

No of equity shares

1999

380014

--------- X 100

111344

=3.41 per share

2000

700387

---------- X 100

111344

=6.29 per share

2001

314962

---------- X 100

111344

=2.85 per share

PRE-TAX PROFIT

This graph depicts the pre-tax profit during last 5 years. In the 1999-2000, firm earned huge amount of
profit. This is because of improvement in management decisions.

Interpretation

Earning per share calculated for a number of years indicate whether or not the earning power of the
company has increased. The earning per share simply show the profitability of the firm on a per share
basis .It does not reflect how much is paid as dividend and how much is retained in the business. But as
a profitability index, it is a valuable and widely used ratio. In 1999 earning per share was Rs. 3.41, in
2000, it increases to 6.29 and in 2001,and it decreased to Rs.2.83 per share.

LIQUIDITY RATIO

(a) Current ratio

Current asset

----------------

Current liabilities

1999

5083123

----------

5930585
=0.86:1

2000

5049052

-----------

6070496

0.83:1

2001

5915894

-----------

6895203

0.86:1
Interpretation

Current ratio is general and quick measure of liquidity of a firm. It represents a margin of safety or
cushion available to the creditors. It is an index of the firm’s financial stability. It is also an index of
technical solvency and an index of the strength of working capital.

In 1999, the current ration is 0.86:1 that is Rs 0.86 is available to pay an obligation of Rs 1. It shows
firm’s liquidity position is not strong enough. It cannot pay its short-term liabilities. The financial position
of the firm is not strong. But it has improved its liquidity from 2000 to 2001.

ANALYSIS SUMMARY SEPTEMBER

Note: All figures are in Pakistan Rupees

Ratios

Equity Capital

Dividends

Year

Last

Price

P/E

P/Bk

Earned

Growth

Profit

Rate

Book

Value
Begin Yr

Earnings

Per

Share

Chg

Divs

Per

Share

Avg

Yield

1994

65.65

n/c

n/c

n/c

n/c

n/a

n/a

n/c

A 0.00

0.0

1995
25.66

n/c

n/c

n/c

n/c

n/a

n/a

n/c

A 0.00

0.0

1996

9.21

n/c

n/c

n/c

n/c

n/a

n/a

n/c

0.00

0.0

1997

14.91
5.8

n/c

n/c

n/c

n/a

2.558

n/c

1.32

8.8

1998

9.30

3.4

0.3

3.9

9.0

30.18

2.711

1.54

16.5

1999

8.82

3.2
0.3

4.6

9.5

31.36

C 2.788

10

1.54

17.4

2000

28.10

4.5

0.9

11.4

19.2

32.81

B 6.290

110

A 2.55

9.1

2001

10.95

3.9

0.3
3.2

6.9

41.15

C 2.830

-55

1.50

13.7

2002

16.05

n/c

0.4

n/c

n/c

42.37

n/a

n/c

0.00

0.0

11/15/02

19.00

13.6

0.4

n/a
n/a

42.37

1.350

n/c

1.50

7.9

(A): ALL ITEMS ADJUSTED FOR STOCK SPLITS OR DIVIDENDS - 120:100 RIGHTS ISSUE (14% DIV) IN 2000,
23:20 RIGHTS ISSUE (4.22% DIV) IN 95, 15% IN 94

(B): CALCULATION BASED ON YEAR END OUTSTANDING SHARES

(C): BASED ON AVERAGE SHARES OUTSTANDING

Current Ratio

This graph depicts current ratio of last 5 years. Although current ratio of Nishat mills limited is below the
standard but since it enjoys an excellent credit rating in the eyes of lenders so it does not matter. Its
track record is also excellent. Actually management of Nishat mills limited firmly believes in fair business
practices. So while in obtaining loan not a greater importance is paid to current ratio.

(b) QUICK RATIO / ACID TEST RATIO

Liquid assets

----------------

Current ratio
Liquid assets = Current asset – (inventories + prepaid expenses)

1999

2706725

------------ X 100

5930585

0.46:1

2000

3122112

---------- X 100

6070496

=0.49:1

2001
3397960

----------- X 100

6895203

=0.49:1

Interpretation

Quick ratio is very useful in measuring the liquidity position of the firm. It measures the capacity of the
firm to pay off current obligation immediately and is a more rigorous test of liquidity than current ratio.

In 1999, the liquid ratio was 0.46:1, it has shown more liquid and readily cash convertibles assets of 0.46
to pay off the obligation of Rs 1. It does not represent good financial position.

In 2000, it rose to 0.51:1 and in 2001 it was 0.49:1. A lower liquid ratio does not mean a bad liquidity
position, as inventories are not absolutely non-liquid. The liquid ratio is better in 2000 as compared to
1999 and 2001.

CURRENT ASSET MOVEMENT AND ACTIVITY RATIO

(a) Stock turn over ratio

Cost of goods sold

------------------------
Average stock

1999

7745353

-----------

1931547

=4 times

2000

7991952

-----------

2143256

=3.73 times

2001

9605013
----------

2212850

=4.34 times

Average stock = (opening stock +closing stock)/2

Interpretation

Inventory turnover ratio measures the velocity of conversion of stock into sales. In other words, how
rapidly inventory is turning into receivables through sales.

In 1999,the turnover was 4 times. In 2000, it decreased to 3.73 times and in 2001 it again increase to
4.34 times. In 2000 the ratio was low because of over investment in inventories, stock accumulation.
This low ratio represents in efficient inventory management.

(b) Inventory turnover in days

365

-------------------------

Inventory turnover ratio

1999

365

------

4 times

=91.25 days

2000

365

-------------

3.73 times

=97.85 days
2001

365

-----------

4 times

=91.25 days

Interpretation

It shows in how many days an average, before any inventory is turned into account receivables through
sales. In 1999 and 2000 it was 91 and 98 days respectively and in 2001 it was 84 days. The management
should take prompt action to reduce these days

Debtor’s Turnover Ratio

Sales

-------------------

AV. trade debtors

1999

9436104

--------------------------------

1674052+1290253/2

=6.37 times

2000

10134014

---------------------------------

1290253+1409926/2

=7.51 times

2001
11662457

-----------------------------------

1409926+2027613/2

=6.78 times

Interpretation

It indicates no of times debtors are turned over during the year. The higher the value of debtors
turnover, the more efficient is the management of debtors, or more liquid the debtors. There is no rule
of thumb, which may be used, as normal to interpret the ration. In 1999 the debtor’s turnover ratio was
6.37 times. It increases to 7.1% in 2000 and decrease to 6.78%in 2001. It suggests that management is
inefficient in management of debtors

Average Collection Period

NO. Of working days

-----------------------------

Debtor’s turnover

1999
365

-----

6.37

=57 days

2000

365

-----

7.51

= 49 days

2001

2001

365

------
6.78

=54 days

Interpretation

This ratio measures the quality of debtors. A short collection period implies prompt payment of debtors.
It reduces the chances of bad debts.

In 1999 the collection period was 57 days; it reduces to 49 days in 2000 and then increase to 54 days in
2001. This period is high. Management should take prompt action to control it. It shows inefficient credit
collection performance.

AVERAGE PAYMENT PERIOD

NO of working days

-------------------------

Creditors turnover ratio*

1999

365
-----

17

= 21 days

2000

365

-----

10.56

= 35 days

2001

365

-----
13.42

= 27 days

Creditors Turnover Ratio

Credit purchases

---------------------

Average trade

Interpretation

It represents the no of days taken by the firms to pay its creditors. High creditor’s turnover ratio and low
average payment period represents creditors are being paid promptly. Thus enhancing the credit
worthiness of them.

In 1999 it was 21 days; it rose to 35 days in 2000 and decrease to 27 days in 2001. It shows that firm is
not taking full advantage of credit facilities allowed by the creditors. On other hand, it maintain the
goodwill of the company by increasing credit worthiness on prompt pay back
Nishat Mills Limited

The Company manufactures, spins, combs, weaves, bleaches, dyes, prints, stitches, buys, sells textiles
and otherwise deals in yarn, linen, cloth and other goods and fabrics made from raw cotton, synthetic
fiber and cloth. The Company also generates, accumulates and distributes electricity.

Stock Chart

Stock Price (11/15/02): 19.00

Recent stock performance

1 Week 3.5%

4 Weeks 15.9%

13 Weeks 22.2%

52 Weeks 14.5%

Officers

Chairman & Chief Executive

Naz Mansha

Secretary

Muhammad Azam

Earnings / Dividends (as of 6/30/02)

Earnings

Dividends
Most Recent Qtr

0.46

1.50

Last 12 Months

1.35

1.50

Ratio Analysis

Price / Earnings Ratio

14.07

Dividend Yield

7.89%

Price / Sales Ratio

0.18

Payout Ratio

111.11%

Price / Book Ratio

0.43

% Held by Insiders
5.00%

ANALYSIS OF LONG TERM FINANCIAL POSITION AND SOLVENCY TEST.

Debt-Equity Ratio

OUTSIDERS FUND

-------------------------

SHAREHOLDERS FUND

Outsiders’ fund

Redeemable capital + debentures + long term loans + current portion of long term liabilities + short term
finances

1999

5727113

-----------
4165228

=1.37:1

2000

6291896

-----------

4582672

=1.37:1

2001

8366871

-----------

4730562

=1.7:1

Interpretation
The ratio indicates the proportionate claim of owners and outsiders against the firm asset. The purpose
is to get an idea of the cushion available to outsider on the liquidation of the firm. The interpretation of
the ratio depends upon the financial and business policies.

In 1999, 2000 the ration was 1.37: 1and in 2001 it was 1.76:1, it shows that management want to do
business with maximum outsider funds in order to take lesser of their investment.

It shows that for every 1.76 rupees worth creditors’ investment, the shareholders have invested RS 1.

Debt To Total Asset Ratio

TOTAL DEBTS

--------------------

TOTAL ASSTS

1999

5727112

-----------

10782776

=0.53:1
2000

6291896

-----------

11904857

=0.53:1

2001

8366871

------------

14222444

=0.59:1

Interpretation

It shows how much sufficient our assets are in retiring the total debts. We can observe in our analysis
that for every RS 1 of assets we have 0.53, 0.53 and 0.59 debts respectively. We can also say that how
much is that external financing is our total assets. Now, if the firm liquidates the creditors will owe 0.53,
0.53, and 0.59 in respective years and rest will go to the shareholders.
v Interest Coverage Ratio

EBIT

----------------

Interest expense

1999

1262188

------------

799063

=1.58:1

2000

1698776

-----------
667188

=2.55:1

2001

1463447

----------

1048467

=1.40:1

Interpretation

The interest coverage ration is very important from the lender point of view. It indicates the no of time
interest is covered by the profit available to pay interest charges. It is an index of the financial strength
of an enterprise. A high ratio assures the lender a regular and periodic interest income. But the
weakness of the ratio may create some problems to the financial managers in raising funds from debt
sources.

In 1999 the ratio was 15 times and in 2000 it was 25 times. In 2001 it reduced to 14 times. The ratio is
quite high and helps financial manager to raise funds from debts sources. In 2001 the company has RS
14 of profit to pay RS 1 of interest.

v Inventory Turnover in Days

365

---------------------------

Inventory turnover ratio

1999

365

------

4 times

=91.25 days

2000

365

-------

3.73 times
=97.85 day

2001

365

-----

4.34 times

=84.10 days

Interpretation

It shows in how many days an average, before any inventory is turned into account receivables through
sales. In 1999 and 2000 it was 91 and 98 days respectively and in 2001 it was 84 days. The management
should take prompt action to reduce these days

v Total Asset Turnover / Capital Turnover Ratio

Net sales

------------
Total asset

1999

9436104

------------

10782776

=. 88 times

2000

10134014

-------------

11904857

=0.85 times

2001
11662457

-------------

14222444

=0.82 times

Interpretation

It shows that firms must manage its total assets efficiently and should generate maximum sales through
their proper utilization. As the ratio, increases there are more revenue generated per rupee of total
investment in asset. The firm ability to produce a large volume of sales on a small total asset based is an
important part of the firms overall performance in terms of profits. In 1999, 2000 and 2001 the ratio was
0.88, 0.85, 0.82 times respectively. In 2001, the ratio indicates that it is producing RS 0.82 sales per
rupees of investment in total assets.

v Proprietary Ratio

SHAREHOLDERS FUNDS

------------------------------------

TOTAL ASSETS

1999
4165228

----------- X 100

10782776

=38.6%

2000

4582672

------------ X 100

11904857

=38.5%

2001

4730562

----------- X 100

14222444
=33%

Interpretation

This ratio puts light on the general financial strength of the company. It is also regarded as a test of the
soundness of the capital structure. Higher the ratio, better the long term solvency of the company. Low
proprietary ratio will include greater risk to the creditors.

In 1999 and 2000 this ratio was 38.6% and 38.5% respectively. In 2001 it is reduced to 33%. It shows that
in 2001 the shareholders contribution was RS 33 for every RS 100 employed in business and creditor’s
contribution would be the remaining RS 77.

v OPERATING CYCLE

Operating cycle measures the length of time from the commitment of cash for purchase until the
collection of receivables resulting from the sale of goods or services. Operating period of an enterprise is
the time period between acquisition of raw material till the realization into cash or any other
instrument, which is readily converted into cash.

Operating cycle = Inventory turnover in days + Receivable turnover in days

1999 = 91+57 = 148 days

2000 = 98+49 = 147 days

2001 = 91+54 = 145 days

OPERATING CYCLE

Operating cycle shows how much days are required from the purchase of material to realization of cash.
The length of time from the incurrence of cash for purchase of raw material until the collection of
receivables resulting from the sale of goods or services.

Operating cycle for 1999 is 148 days, in year 2000 it was 147 days and in 2001 it is 145 days. Company
trend is going in appositive ways. Nishat is maintaining its operating cycle. There is no fluctuation. It
shows efficiency of the management that is why inventory is regulating efficiently. A firm with short
operating cycle can operate efficiently with relatively small amount of current assets and relatively low
current and acid test ratio. The firm is liquid in the dynamic sense that it can produce product, sell it and
collect cash for it.

v CASH CYCLE

Cash cycle measures the length of time from the actual outlay of cash for purchase until the collection of
receivables resulting from the sale of goods and services.

Cash Cycle = Operating cycle - Payable turnover in days

1999 = 148-21 = 127days

2000 = 147-35 = 112 days

2001 = 145-27 = 118 days

Cash cycle of Nishat Mills is in year 1999 is 127 days, in year 2000 it decreases to 112 days and in 2001 it
is 118 days. The lesser the days of completing the cash cycle, higher be the business activity and
company efficiency. It indicates the better circulation of cash. Long Cash cycle might be the warning of
excessive receivables and inventory. It might lead to more chances of bad debts. Short cycle is sign of
good management. Nishat is maintaining its cycle.
Stock Price Analysis

Figures in Pakistan Rupees

Quarter

High

Low

Close

Qtrly

Change

12 mo.

Change

Apr - Jun

1994

0.000

0.000
 81.643

n/a

n/a

Jul - Sep

1994

81.643

57.234

65.651

-19.6%

n/a

Oct - Dec

1994

74.068

46.713

46.924

-28.5%

n/a

Jan - Mar

1995

47.134

25.250

26.092
 -44.4%

n/a

Apr - Jun

1995

26.513

22.725

25.219

-3.3%

-69.1%

Jul - Sep

1995

40.351

28.070

25.658

1.7%

-60.9%

Oct - Dec

1995

30.482

22.368

25.658

0.0%
 -45.3%

Jan - Mar

1996

31.140

21.491

24.561

-4.3%

-5.9%

Apr - Jun

1996

23.904

12.281

12.281

-50.0%

-51.3%

Jul - Sep

1996

13.377

8.772

9.211

-25.0%

-64.1%
Oct - Dec

1996

16.447

8.553

14.035

52.4%

-45.3%

Jan - Mar

1997

25.219

14.167

22.368

59.4%

-8.9%

Apr - Jun

1997

23.596

16.754

17.544

-21.6%

42.9%
Jul - Sep

1997

21.930

13.596

13.596

-22.5%

47.6%

Oct - Dec

1997

16.930

11.754

12.807

-5.8%

-8.7%

Jan - Mar

1998

12.632

9.035

9.035

-29.5%

-59.6%

Apr - Jun
 1998

9.167

5.921

7.018

-22.3%

-60.0%

Jul - Sep

1998

9.868

5.789

9.298

32.5%

-31.6%

Oct - Dec

1998

9.254

6.184

8.509

-8.5%

-33.6%

Jan - Mar

1999
 11.404

8.114

9.167

7.7%

1.5%

Apr - Jun

1999

9.912

7.763

8.333

-9.1%

18.8%

Jul - Sep

1999

9.825

7.939

8.816

5.8%

-5.2%

Oct - Dec

1999

23.509
 8.333

23.509

166.7%

176.3%

Jan - Mar

2000

35.800

22.544

35.800

52.3%

290.5%

Apr - Jun

2000

44.250

23.150

23.150

-35.3%

177.8%

Jul - Sep

2000

28.300

19.200
 28.100

21.4%

218.7%

Oct - Dec

2000

29.800

19.900

26.150

-6.9%

11.2%

Jan - Mar

2001

27.300

15.750

16.300

-37.7%

-54.5%

Apr - Jun

2001

19.000

16.550

17.300
 6.1%

-25.3%

Jul - Sep

2001

16.750

10.650

10.950

-36.7%

-61.0%

Oct - Dec

2001

17.250

10.200

13.850

26.5%

-47.0%

Jan - Mar

2002

20.700

14.600

16.450

18.8%
 0.9%

Apr - Jun

2002

17.750

11.550

15.600

-5.2%

-9.8%

Jul - Sep

2002

17.100

15.150

16.050

2.9%

46.6%

11/15/02

19.000

22.2%

14.5%
Top of Form

Bottom of Form

v Return on Investment

Net profit after tax

---------------------------------------- X 100

Total assets

1999

380014

------------------------ X 100
10782776

=3.52 %

2000

700387

-------------------- X 100

11904857

=5.88%

2001

314962

---------------------- X 100

14222444
= 2.21%

Sales & Profitability Summary

Figures expressed in billions of Pakistan Rupees

Year

Sales

Sales

Growth

EBITDA

% of

sales

Inc. bef

Extra

% of

sales

Emps

Sales/

Empl

1992
3.688

n/c

0.579

15.7%

0.223

6.0%

n/a

n/a

1997

8.572

n/c

1.527

17.8%

0.325

3.8%

n/a

n/a

1998

8.919

4.0%

1.874

21.0%

0.344
3.9%

n/a

n/a

1999

9.594

7.6%

1.529

15.9%

0.380

4.0%

n/a

n/a

2000

10.297

7.3%

1.909

18.5%

0.700

6.8%

n/a

n/a

2001
11.662

13.3%

1.777

15.2%

0.315

2.7%

13,146

887,149

Top of Form

Bottom of Form

v Return on Investment

Net profit after tax sales

--------------------------------- X ------------------- X 100

Sales total assets

1999
380014 9436104

--------------------------- X -------------------

9436104 10782776

= 3.50

2000

700387 10134014

------------------- X ----------------- X 100

10134014 11904857

= 5.87

2001

314962 11662457

---------------- X -------------------- X 100

11662457 14222444

= 2.21

Interpretation

Return on investment is an important ratio in measuring the trend of the organization and thorough
analysis of the company. Neither the net profit margin nor the total assets itself provide adequate
measures for overall effectiveness. Net Profit margin ignores the utilization of assets and total assets
turnover ratio ignores the profitability on sales. One variation in Du Pont analysis is to understand the
firm’s return on investment. The return on investment ratio or earning power resolves this shortcoming.
An improvement in the earning power of the firm will result if there is increase in total assets turnover
ratio, an increase in net profit margin ratio or both.

In the year 2001, the return on investment remained low but in 1999 and 2000 there is positive trend
and there is an increase in return on investment because of increase in both, net profit margin and total
asset turnover ratio. This is showing the Total Quality Management (TQM) and efficiency of
management.
NISHAT MILLS LIMITED

INCOME STATEMENT

VERTICAL ANALYSIS

1999

2000

2001

SALES

100%

100%

100%

COST OF GOODS SOLD

82.08

78.86

82.36

GROSS PROFIT

17.92

21.14

17.64
ADMINISTRATIVE SELLING AND GEN EXPESES

5.27

5.39

6.09

OPERATING PROFIT

12.65

15.75

11.55

ADD; OTHER INCOME

0.73

1.01

EARNING BEFORE INTEREST AND TAX

13.38

16.76

12.55

LESS: FINANCIAL CHARGES

8.47

8.58

9
WORKERS PARTICIPATION FUND

0.25

0.41

0.18

PROFIT BEFORE TAXATION

4.66

7.78

3.37

LESS: PROVISION FOR TAXATION

0.63

0.87

0.67

PROFITAFTER TAX

4.03

6.91

2.7

Interpretation

Percentages of cost of goods sold to sales remain with in range of 78% to 80%. It means that cost of
goods is being strictly controlled at Nishat mills limited. In the year of 2000 administrative expenses
were 5.39% but in the year 2001 administrative expenses increased to 6.09% that depicts the
inefficiency of management in curtailing its administrative costs.
Earning before interest and profit also reduced in the year of 2001 because of increase its selling and
administrative costs. Financial charges also increase in the year of 2001 because firm financed its
projects through borrowed financing.

In the year 2001 profit after tax reduced as compared to 2000 because of increase in cost of goods sold,
increase in selling and administrative cost and increase in financial charges.

NISHAT MILLS LIMITED

BALANCE SHEET

VERTICAL ANALYSIS

1999

2000

2001

Equity and Liabilities

Share Capital and Reserves

Authorized Capital

Issued and Subscribed and paid up share capital

10.33

9.35

7.83

Capital reserves

9.53

8.63

7.23
Revenue

18.65

20.4

18.12

Surplus on revaluation of operating fixed assets

0.0046

0.1

0.09

Non Current Liabilities

Redeemable capital

0.11

7.72

15.51

Long Term Loans

2.34
1.92

1.09

Liability against finance lease

3.02

0.87

1.65

Deferred liability for gratuity

0.01

0.1

Current Liabilities

Current portion of long-term liabilities

5.22

5.4

5.4

Short term finance

41.54

36.94

35.17
Creditors accrued and other liabilities

4.44

4.48

5.49

Worker' participation fund

0.22

0.35

0.15

Provision for Taxation

1.73

1.38

1.03

Proposed dividend

1.81

2.38

1.17

Unclaimed Dividend

0.05

0.06

0.07
Total Liabilities and Owner Equity

100

100

100

ASSETS

Non-Current Assets

Tangible fixed assets

Operating fixed assets

32.98

30.91

43.5

Assets subject to finance lease

3.44

2.04

3.29

Capital work in process

1.16

12.31

1.08
Long Term Investment

14.75

11.68

9.78

Long Term loans, deposits, prepayments

0.53

0.65

0.7

Current Assets

Stores, spare parts and loose tools

5.05

4.26

3.81

Stock in Trade

16.92

11.85

13.83

Short term investment

0.06

0.05

0.04
Trade Debts

11.97

11.84

14.26

Advances, deposits and prepayments

6.13

4.02

2.66

Other Receivables

2.4

4.05

4.43

Cash At Bank

4.08

6.34

2.57

47.15

42.41

41.6
333333333333333333333333333333333333333

TOTAL ASSETS

100

100

100

INTERPRETATION

NISHAT MILLS limited operating assets increased in the year of 2001 as compared to year 2000. Firm’s
redeemable capital also increased as compared to previous years. Overall performance of Nishat mills
limited remains satisfactory.

TREND ANALYSIS

“Trend analysis shows the direction upward or downward and involves the computation of the
percentages relationship that each statement item bears to the same item in the previous year.”

Interpretation of Income Statement

v SALE

The increase in sales illustrates that it is showing an upward trend due to the increase in the wholesale
price of the commodity in the market. The unit produced has also been increased and the company also
captured more buyers in 2001 resulting in greater sales volume.

Sales volume in 2000 is greater as compared to the previous year and lesser as compared to 2001
showing the company’s inability to capture more buyers.

v Cost of Goods Sold

Increasing trend in the cost of goods sold is due to the reason that company also incurred more variable
and fixed costs and other operating cost as well as compared to 1998 in 2000 and 2001.
v Gross Profit

Gross profit showing an upward trend in the year 2000 as compared to 1999 because sale volume
increased in this year and cost of goods sold was 78.86% of sale in 2000 as compared CGS i.e. 82.08% of
sale in 1999. In 2001, it again decreased because of increasing in cost of goods sold in 2001 i.e. 82.36%.

v Operating Expenses

Operating expenses are showing an upward trend in 2000 and 2001 as compared to the previous years
because sale volume has increased in these years. The company has a spent a lot of money on selling
expense as advertisement and also on administration, due to these operating expenses are showing an
upward trend.

v Financial Charges

Financial charges are showing an upward trend in the year 2000 and 2001. In 1999, it reduced from the
1998 expense because of the efficiency of the management to control on such expenses. In 1999 and
2000, it increases due to inefficiency of management. Management should take steps to avoid such
expenses.

v Earning Before Interest and Tax

Earning before interest and tax at first reduced in 1999 as compared to 1998 because of increase in
operating expenses in 1999. In 2000, it increased because in this year cost of goods sold decreased due
to efficiency of the management and gross profit are also high.

In 2001, it again decreased because in this year the cost of goods sold increased as compared to
previous year and gross profit ratio was also low. The operating expense also increased in this year due
to inefficiency of management resulting in low earning before interest and tax.

v Taxes

Taxes are levied by the govt. and it can increase or decrease the amount of taxes when it likes or feels
necessary. In 1999, the taxes decrease as compared to 1998 because of new govt. policies and enforced
tax rates. In 2000, it increases because have in sale and profit as compared to 1999. In 2001, it again
decreases due to decrease in profit.
v Net Income

The net income has been increased over the year due to following reasons.

In 1999, it increased because of increase in sale volume and unit cost. In 2000, it again increases because
of increase in sale, decrease in cost of goods sold and increase in earning before interest and expense. In
2001, it again decreases as compared to 2000 because of increase in cost of good sold, selling,
administration and other taxation expenses.

FORMULA USED

Current year amount – previous year amount

Chain base = ------------------------------------------------------------------------ X 100

Previous year amount

Assets

Fixed assets In 1999, the company fixed assets has been increasing by 0.08% as compared to previous
year and similar fashion is noticed the year 2000 and 2001. We have noticed that the sale volume over
the year has been increased. This is due to increased volume of fixed assets.

v Long Term Investment

Long-term investment is showing decreasing trend in the year 1999 and 2000 as compared to previous
year. In 2001, it is same that is in 2000 i. e. no increase in long-term investment. It shows that company
is more interested in investing his current assets.

v Long Term Loans, Deposits, Prepayment and Deferred Cost

Long-term loans, deposits, prepayment and deferred cost showed a positive sign in 2000 and 2001. In
1999, it decreased because there were political crises in the country. The firms do not involved in more
investing in other companies because of risk of loss. The increase in 2000 and 2001 is a healthy sign in
the country; in these years there was political stability, showing that the investment of the company in
other companies has considerably increased.
v Current Assets

Current assets comprising of stores, spare parts and loose tools have shown increased pattern in the
year 1999 and 2000 representing the expansion of the business. In the year 2001, it reduced as
compared to 2000 because these assets were sufficient to meet next year requirement. Stock in trade
showed as increasing trend in the year 1999 showing inefficiency of the management because
management fails to dispose it of in time. The decline in stock in trade in the year 2000 shows efficiency
of management also the buyers are satisfied by the decisions. In the year 2001, it again showed an
increasing trend showing inefficiency of the management.

Trade debtors showing declining trend in the year 1999 as compared to 1998 which is a positive sign but
trade debtors which includes account receivables and debtors have been increased in the year 2000 and
2001 which shows the following:

Company collection on accounts is slow.

Ø Company is selling the goods on credit rather than cash basis.

Ø Management should take remedial measures to lesson the trade debtors at reasonable level.

Ø Short term investment cash and bank

Short term investment cash and bank balance have been increase in 1999 and 2000 showing a positive
sign to meet the working capital requirement of the firm. In 2001, the balance reduced because of the
inefficiency of the management and it reduces the ability to meet working capital requirement of the
company.

FORMULA USED

Current year amount – previous year amount

----------------------------------------------------------------

Previous year amount

LIABILITIES AND OWNER EQUITY

v Issued Subscribed and Paid Up Capital

We have observed that the issued subscribed and paid up capital of the company remained the same
throughout the years.

v Share Holder Equity

The shareholder’s equity is showing a positive sign that the share holder’s share in the business have
been increased

v Long Term Liabilities

Long-term liabilities have been decreased in the year 1999,2000 and 2001 respectively, showing the
efficiency of the management in retiring its debts.

v Deferred Liabilities

Deferred liabilities show the decreasing the trend that shows the efficiency of management in retiring
them off.

v Liability against Assets Subject To Finance Lease

Liability against assets subject to finance lease shows the decreasing trend in the year 2000 and 2001
that shows firms took less loans against assets in this year and shows less expansion in business but in
the year 2001 it again rose that shows expansion of business.

v Current Liabilities

Current liabilities shows the liquidity position of the company short term borrowing of the company
have been increased in the year 1999 but in 2000 and 2001 it shows the decreasing trend representing
its control on borrowing depicting the efficiency of the management
Creditors, accrued and other liabilities have shown a positive trend in the year 1999 that it decreased.
Firm has to pay less amount money to others. It again increased in the year 2000 and decreased in 2001.
The increase depict that company is postponing payment to creditors. Creditors may find in convenience
in receiving their money back. It will effect their goodwill but in the year 2001 the management
controlled it by their efficiency.

v Proposed Dividend

Proposed dividend and dividend payable shows that the company has accumulated greater profit which
would be distributed after some time.

FORMULA USED

Current year – previous year

-----------------------------------------------------

Previous year

Training Programme

While at Nishat, I worked in different department. My focus of intention was on finance department,
where I spent most of my time in understanding the procedure of opening of letter of credit and other
export details. This enabled me in understanding the function performed by bank, in relation to letter of
credit. Here I am presenting a brief summary of department, their functions and what I understood
there.
Brief Introduction 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)

Purchase Department.

Purpose

The main purpose of department is to maintain the desirable level of purchase, so that ideal funds are
not stuck up in the shape of heavy purchase or a position not arise that mill stop due to non-availability
of raw material or store and spares.

In addition to this purchase department is also responsible for checking of following.

· Checking quantity of purchased goods.

· Checking rates of purchased goods.

· Checking quality of purchased goods.

Procedure

Firstly different departments according to their requirement put their demand. Higher authorities will
check the authenticity of demand. They scrutinize that the goods, which are demanded, actually
required.

When demand is approved. Purchase department gets different quotation for this product and after
making a reasonable decision in this regard, they will issue a purchase order. . Purchase order declares
the terms and conditions of order and finally deal between the parties are decided. The supplier will
send the goods along with the delivery order.

On receiving the goods the purchase department will make a goods receipt note on which the name of
goods and it quantity is shown. 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

Accounts Department

Accounts Department

There are four sections, which are described below in details,

1) Payroll section

2) Costing section

3) Payable section

4) Receivable section

· Account payable section

It primarily deals with supplier, contractors, creditors, to whom Nishat mills limited make the payments.
A person designated as assistant manager heads account payable section. Accounts officer and assistant
account officer work under his supervision. Before payment is made to supplier or contractors following
supporting documents are required.

Ø Sales tax invoice

Ø Inward gate pass

Ø Good inspection note

Ø Delivery challan
1. Sales tax invoice

Invoice is prepared which shows 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

In the supporting documents inward gate pass is also very essential. When things are purchased from
outside parties they reach factory premise so entry is made. And a pass is issued by the concerned
authorities that allowing the entrance of goods. Account payable department require a copy of inward
gate pass. Most important thing to 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

When purchase process of goods (commodities is initiated a purchased order is made, a copy of
purchase order is given to payable department, when goods are received the concerned department
(issuing purchase order) inspects the goods to know whether they are according to their specification
mentioned in purchase order. So a copy of good inspection note is prepared. Goods inspection note
should be received within one day after the storeroom receives goods

4. Preparation of checks

After receiving the invoices and checking their accuracy finally account payable department prepares
cheques. Chief controller of Nishat mills limited signs these. Nishat mills limited have totally
computerized system so items are identified and coded. Every party is allotted certain codes and entry is
made in them as and when they take place.
Entries in books of accounts

Party sends the bill, once it is approved. Two vouchers are prepared,

J.V (journal voucher)

Expense account (debit) Amount

Party account (credit) Amount

Expense account is debited because company has incurred certain expense. Party is credited because
payment is going to be made to him.

B.P.V (bank payment voucher)

Party account (debited) Amount

Bank (credited) Amount

Tax Amount

Deduction of tax is made at source under the section 50 of the income tax ordinance 1979.

FUNCTIONS

The main function of account department is to keep proper record transaction and maintain the
accounts.

Procedure

Firstly the account department makes the recording of transaction by different type of vouchers
according to the nature of transaction. The vouchers provide the evidence of transaction.

As books of NISHAT MILLS are computerized and ledgers are being 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.

q FINANCE DEPARTMENT

Purpose
The main purpose of the department is ensuring the availability of the funds for operation and also
better allocation of these funds.

Functions

The most important function of finance manager is to arrange different types of loan according to the
requirement, like:

· Long-term loan

· Leasing

· Short-term loan

One of the main important functions performed by finance department is to prepare loan proposals.

LOAN PROPOSAL

Nishat mills limited generate funds from inside and outside parties. Inside parties include shareholders,
while outsider parties are banks and various loan providing agencies.

Difference between fund based and non-fund based credit

1. Fund base credit

In fund base credit there is actual disbursement of cash by the bank to Nishat mills limited.

2. Non fund base credit

In non fund base credit bank only provides guarantee no disbursement of cash is made.

When loan proposal is made various consideration should be kept in mind, first we will see the matter
from the point of Nishat mills limited then apprehensions of bank will be discussed in detail,
Points to remember

Following points should be kept in mind before making a loan application.

· Loan amount

· Date of expiry

· Rate of interest (important consideration)

· Securities

Nishat mills limited in following forms offer the securities,

1) Pledge of cotton

Mostly or frequently offered security is cotton. Usually loan is obtained from bank after pledge of
cotton. In pledge ownership and possession is with the bank. There is important point to remember that
although cotton is stored in the god own of NML but all the keys are with the banks. The bank releases
when payment is made to bank cotton. Generally cotton purchase is heavily financed by bank. Bulk of
cotton is purchased in the season so to avail the benefit of huge quantity.

2) Mortgage of factory premises

Factory premises are also mortgaged with bank. Sometimes buildings and factory machinery are
mortgaged with bank.

Types of mortgage

There are two types of mortgage

· Equitable mortgage

· RTG mortgage

· Equitable mortgage

Under this type mortgage deed is not registered in the court of law. Normally court fee is paid when
mortgage deed is registered. Registration of mortgage deed means that lien of bank is marked on the
premises in the register of ownership so further purchase and sale of this property is not allowed.

Equitable mortgage is preferred when client is trust worthy, his track record has been established and
he enjoys a favorable repute in the market.
· 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.

3) 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.

ü Bankers point of view

Now we see the loan proposal from bankers’ point of view, banker has various apprehensions before
sanctioning loan to borrower. Bank analyses 3 Ps before advancing loan,

1. Person

2. Purpose

3. Papers

1. Person

First of all person is important. Who is going to be on receiving end? In the past loans were given to
people according to their political status. Now a day’s bank cares a lot before advancing loan.

2. Purpose

What is the purpose of loan? Is it short term or long term loan? The motive behind the loan is of
immense important. Question should be asked whether the loan is obtained for purchase of machinery
or for construction of building.
3. Papers

The securities against which loan is granted are of great importance. Whether the securities offered are
good enough to secure the loan amount of bank. Now we come to the lending policy of bank.

ü Lending policy of bank

First of all loan proposal should meet the prudential regulations requirements. That is maximum
exposure to a single party should not exceed 30% of bank unimpaired capital. The unimpaired capital of
bank is equal to paid up capital plus reserves. Another consideration is that current ratio should not fall
below 1:1 although Nishat mills limited current ratio is not 1:1 but since its track record has been
established and it enjoys a favorable repute in textile sector ,of course one of the leading exporter of
textiles products so banks normally do not pay much attention to this one.

The points which bank takes into account before sanctioning the loan are summarized as under:

We can use word camel to denote them,

CAMEL

“C” stand for CAPITAL ADEQUACY

“A” stand for ASSET MANAGEMENT

“M” stand for MANAGEMENT SOUNDNESS

“E” stand for EARNING AND PROFIT

“L” stands for LIQUIDITY

So we can summarize banks consideration into the above mentioned points.

ü Credit Policy of Bank

How bank advance credit?

Before advancing the loan, bank do calculate certain ratio analysis,

Financial analysis of Nishat mills limited includes,

· File work

· Loan processing

· Previous record

Along with loan application following documents are attached

· Annual report

· Directors NIC copies

· Signature specimen of directors

· Last 3 years exports and imports details

· This statement verifies the financial position of Nishat mills limited Company

q 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 responsible for the export of yarn, grey cloth and processed fiber. This department
has to fulfill all the legal requirements and prepare important 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,

1. SHIPMENT OF YARN, GREY CLOTH & PROCESSED FIBER.

After receiving packing list from shipping department, export departments starts its main functions. It
usually prepares the following documents to ensure the timely shipmen

The most commonly documents which export department has to prepare and deal with are:

o Letter of credit (L\C)

o Bill of exchange

o Commercial invoice

o Export declaration form.

o Certificate of origin

o Packing list

o Customs invoice

o Textile declaration form

o Inspection certificate

o Shipping bill/bill of lodging/air way bill

o Manufacture’s certificate

o Form “E”

In some special cases, some other documents as and when required by the buyer are also prepared like;

o Certificate of child labor

o Certificate of forced labor

Contract

First of all, contract between Nishat Mills limited and importer takes place. Nishat mills limited find its
buyer through marketing department. Then negotiation starts and finally terms and conditions of
contract are finalized.

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,

I. Buyer

II. Buyer bank

III. Beneficiary

IV. Advising bank.

How L/C is opened

The import department receives the Performa invoice from purchasing department, after getting the
approval from the authorized person (Mian Umer Sahib in Nishat Mills Limited) the concerned person
write an Application in the name of his authorized bank requesting him to open a Letter of Credit in the
favor of a particular party in a foreign country. Insurance Certificate is obtained from the Insurance
Company for the protection of damages. H.S Codes are also required for the confirmation of duty
charged by the Government on different item of goods. (Harmonized System Codes)

The department according to the requirement makes sometimes amendments.

Import documents are retired by paying the all dues to bank. L / C and Bill of Lading are given to the
clearing agent for clearing the consignment.
Finally bill of entry is received which has three copies in which every concerned party give its remarks
with stamp. One copy is sent to the SBP for maintaining records of Imports.2nd copy is sent to the
custom department and 3rd is retained by department for record.

After clearance of the export documents, export department negotiate the paper with bank and receive
payment from the bank. Then our local bank sends documents to the buyer bank and foreign bank
release payment to our bank with the permission of the buyer.

In foreign trade, letter of credit has gained tremendously importance. It has facilitated the trade, two
unknown parties come together and both are benefited.

ü Points To Remember In Letter Of Credit

What I did at Nishat mills limited? I came to know lot of things about letter of credit.

Contents of letter of credit are summarized as under,

I. Shipper’s name

ii. Consignee name

Never importer, according to State Bank regulations, consignee of goods can ever be importer unless
mode of payment is advance. State Bank of Pakistan point of view in this regard is to secure the
payment of letter of credit. Goods are received in foreign country either by bank or some one other. The
purpose is that foreign remittance should come inside PAKISTAN.

iii. Mode of payment

Iv. Kind of letter of credit

V. Port of shipment

Vi. Port of delivery

Vii. Special instruction, if any

viii. Customs Invoice

After opening letter of credit, invoice is prepared. One of for customs authorities, so proper shipment
takes place. It is sent along with goods shipped to foreign country.

ix. 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.

I want to mention a very interesting point there. Normally in case of small exporter, bank inspects goods
and issues FORM E. but in case of Nishat mills limited, blank FORM E are issued by the bank, they are
filled by the export documentation department. Since Nishat is a large group and enjoys a favorable
repute in the eyes of banks so they do not care much is issuing blank FORM E. Nishat mills limited have
given written undertaking to bank that in case of unfavorable events. Nishat mills limited will settle the
matter with SBP.

x. Packing list

It describes goods, their quantities which are packaged. This packing list is sent to the shipping company.

XI. Shipping bill/ bill of lading/ airway bill/ railway receipt.

When goods are sent by sea, five copies of bill of lading are prepared. 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.

xii. 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.

Xiii.Certificate of origin
Some importers requires certificate of origin from NML. It is a declaration by NML that goods are of
Pakistani origin. Importers import fabrics because of finest cotton. It is an assurance that goods are of
Pakistani origin. Export Promotion Bureau normally issues this certificate.

xiv. Beneficiary certificate

Export department also prepares it. In some special cases, some other documents as and when required
by the buyer are also provided, for example

Certificate of no child and forced labor

HISTORY OF EXPORT FINANCE SCHEMES

State Bank of Pakistan introduced a scheme in the year 1973 Known as Refinance Scheme for Non-
Traditional and newly emerging Exports with a view to providing adequate bank credit for exports of
non-traditional and newly emerging commodities on favorable terms. Later in May 1976 it was decided
to include all manufactured goods in the scheme. Subsequently in October 1977 the scope of scheme
was further enlarged and a new scheme was introduced named Export Finance Scheme.

EXPORT FINANCE UNDER PART- I

Under Part –I of the scheme, the commercial banks provide concessionary finance to exporters for
financing the exports of eligible commodities on case-by-case basis against individual.

Firm Export Order Irrevocable Letter of Credit

The term Firm Export Order shall include contract of sale, confirmation order for sale, purchase order,
Proforma Invoice and similar other documents evidencing purchase of goods by foreign buyers. The
information such as (1) name and address of exporters / Importers (2) commodity (3) quantity / rate /
amount etc. (4) period of shipment (5) terms of payment.

Signature of exporters / importers should be provided in such documents. The exporter must verify the
signature of the buyer. As for L/C it would be enough that it indicates the name of commodity and the
amount.
The maximum period for which export finance under Part-I of the scheme can be extended to the
exporter is 180 days.

APPLICATION FOR EXPORT FINANCE SCHEME UNDER PART I SCHEME:

Exporter are required to submit following documents to their bankers for obtaining export finance for
onward submission to respective office of State Bank of Pakistan.

Pre-Shipment:

Demand Promissory Note

Undertaking as per Annexure A on non-judicial stamp paper

Copy of Letter of Credit or Firm Export Order

Demand Promissory Note

On demand the exporter promise to pay bank or order the sum or value received from this date which
includes the amount of profit / rate @ XX rate when converted into annual % terms.”

Submission of Substituted Documents

As the loan mature after 180 days the documents must be submitted on 179th day if these are
submitted on 180th day then late substitution fine is paid.

The application for substitution is submitted with following documents:

Covering Letter:

It is a Letter, which informs you that what Type of documents is enclosed herewith.

2. Undertaking by Exporter:

In which the exporter, informs the bank that due to un-expected crisis of the buyer, they are hesitating /
reluctant in establishing letter of credit in respect of contract. They expressed their inability to accept
the shipment at this stage and have accordingly cancelled the contract.

Therefore exporter requested to allow substitution of the contract and adjust the amount of Re-Finance
against substituted letter of Credit.

3. Original Sales Contract

Indicates the date at which contract is issued. The contents of sales contract are

· Buyer’s name & address

· Product description

· Quality & packing

· Shipment date

· Price

· Payment date etc

4. Particulars of Sales Contract Performa

These particulars include no. And date of contract, date till which that contract is valid, the amount of
the contract, name of buyer of contract, destination of the goods, and shipment date of the goods in

Case of already exported goods, value of goods yet to be exported, no. Date and amount of re-finance
loan obtained from State Bank of Pakistan and due date of repayment of the re-finance loan.

5. Telex

It is sent by the buyer in which he informs the seller that due to some crisis in the international market
he is not in a position to open the L/C against that contract so please treat the contract as cancelled.

6. Undertaking by the Exporter

Exporter finance has been availed against this sales contract or will be availed of by us against this new
firm order or against a portion of the transferable L / C duly transferred in the name of above exporter
or against the firm export order (s) in relation to which under noted L / C or a transferred portion of it
was received from our bank or from any other bank under Part-1 of the export Finance Scheme, and the
export proceeds realized against shipment (s) made under the aforesaid documents have not been / will
not be accounted for matching purpose by the aforesaid exporters under part 11 of Export Finance
Scheme.

7. Certificate to Be Given By the Bank in Cases of Substitution of Firm Export Order / Letter Of Credit
under the Export Finance Scheme:
This certificate is issued to certify that they availed of no finance against this contract. It includes the
particulars of the new firm export order(s) and L/C (s) a portion of transferable L/C, which includes no.
And Date of L/C, date till which that L/C is valid, amount of L/C, name of buyer, Destination, last date of
shipment, goods already exported, Date of shipment of above goods, Value of above goods, Value of
goods yet to be exported, Date of which above goods are to be shipped.

Ü 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

1. Invoice

Invoice indicates the particulars of contract, size of commodity, quantity, quality, price and packing.

2. 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.

3. E-FORM

E- Form is submitted under foreign exchange regulation Act 1947.

4. 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.

ü RETENTION OF FUND

The amount of document is paid to SBP then it is usable by the exporter after repaying the loan the
amount is useable by the exporter. For example; if the contract is at sight then the amount is received
within 15 days and it is sent to the State Bank of Pakistan and not useable by the exporter after repaying
the loan the amount is useable by the exporter. This amount is repayable within 3 working days if it is
not paid then the bank has right of retention of fund.

ü LOAN MATURITY

On the maturity date the exporter has to repay the fund if amount is receivable after maturity date then
the exporter has to pay the loan on his own sources.

The loan may be matured at sight 15 days to 120 days if more days are required then permission is
taken from SBP.

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.

ü Collection And Negotiation Of Documents

Documents sent to banks mostly on collection basis as well as negotiation / discounted.

1. Collection Basis
These are forwarded to any bank without negotiating exchange rates. On payments if the exchange rate
of submission bank is better than the other we will credit the same bank.

2. Negotiations / Discount:

We sell out our export documents depending upon better exchange rates of competitive banks.

PREPARATION OF IMPORT DOCUMENTS

1. Proforma Invoice / Indent /Contract

Indicates applicant’s name, to be shipped from 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, amount.

2. Covering Letter

This indicates the detail and price of the imported items.

3. Application for Opening of Letter of Credit

In which request is made from bank to open L/C for the attached Proforma invoices.

4. Form I

Application for permission under the Foreign Exchange Regulation Act, 1947 is made to purchase foreign
exchange for payment of imports. It indicates NIT No, place of issue, date of issue, authorized bank,
currency, beneficiary’s name and address, Indenter’s name and registration No., description of goods,
port of shipment, carrying Co.’s name and applicant’s name and address.

5. Appendix-B

This certificate is given to the bank for export of chemical.

6. Appendix-G

This certificate is given in addition to appendix-G for import of spare parts & machinery. It is not
necessary to submit this document with L/C opening documents. But is not necessary to submit it at the
time of retirement because the bank endorses it properly and it is used for shipment.

ü Particulars of Appendix G:

Name and address of importer, location of industrial unit with full address, name of industry, detail of
machinery, products manufacture, date of original established of the unit, no, date of Government
Sanction/Approval whether the unit was originally established against imported or local machinery,
income tax particulars, brief description of machinery required along with H.S. Code No, purpose for
which machinery required that may be for one of the following: -

a) New Unit

b) Expansion

c) Balancing

d) Modernization

e) Replacement

Particulars of previous imports under expansion, rated capacity of new machinery applied for, brief
description of raw material and estimated annual imports requirements.

7. Applications and Agreement for Commercial Letter of Credit

This prescribed form 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) but within the
validity of the credit, payment period, signed invoices that goods are of exported, country of origin &
B/L.

8. Insurance Arrangements

Insurance of goods are made against the damages. This amount consists of total amount of goods plus
10% cushion.

The insurance Co. certificate indicates: (1) Marine Cover Note No. (2) Date (3) Issuing date.

9. H.S. Codes

These are codes used by custom department for imported commodity.

10. L/C Opening

1) Application

2) Performa Invoice

3) Insurance Cover Note

4) Form I

5) Appendix-G.

11. L/C Scrutiny

When the L/C is prepared by bank, then it is checked by import department with the L/C documents
hold by the Department.

12. L/C Amendment

Sometimes L/C is amended e.g. expiry date, shipment date, amount, indenter is involved etc.

13. Import Documents / L/C Retirement

When L/C is reached to the bank then bank demands the amount of L/C from importer. Importer
contacts the other bank for buying the foreign currency and advice the bank to deposit the amount in
the bank in which the importer opened this L/C then the bank retires the document of importer L/C.

14. 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.
15. 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

a) L/C type, no. & Amount

b) Date & Place

c) Favoring party

d) Applicant

e) Signed commercial invoices indicate the value not more than L/C’s value.

f) Full set of clean “on Board” marine Bill(s) of lading

g) 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.

h) Packing list requirements

Special Instructions

1. Outside bank charges are on beneficiary’s a/c

2. This L/C is available with any bank in Exporter’s country

3. Goods shipment from export country port to import country’s port.

4. Partial shipment allowed / not allowed

5. Transshipment allowed / not allowed

6. Shipment on enemy’s flag vessels and / or parts strictly prohibited

7. Doc. must be presented for negotiation within 15 days after the date of shipment
8. All shipping docs. Must show H. S. Code

9. Short Form / Blank Back B/L(s) not acceptable

10. Shipping Co.’s name also indicated.

ü All Pakistan Textiles Mills Associations (APTMA)

It is an association of textile industry. It is non government body and acts as a pressure group.

Functions

Following are the major functions performed by the APTMA.

1. Talks with government

If a certain textile industry is facing problem, or there is any government intervention MA hold talks with
Government to settle the disputes. So it acts as an intermediate party between government textiles
industry.

2. Conduct seminars

It regularly conducts seminars in which renowned persons are invited to share their experiences in the
field of textiles.

3. Arrange lectures

Foreign delegations are also invited for prospective investment in textiles sector.

It is a facilitating unit/body. If textile unit is worried about taxes, it is the APTMA on which this matter
will be frequently discussed.

Nishat mills limited are an active member of APTMA. There is another non government organization
known as ALL PAKISTAN CLOTHS EXPORTERS ASSOCIATION. Its member through ballot chooses
governing body of APTMA.

ü QUOTA SYSTEM
Most of the customers are American and US Government allocate quota to third world. Infect quote is in
quantitative and more than that can be shipped to non quota countries, like UEA, JAPAN,NEWZELAND
and AUSTRIALIA.

Kinds Of Quota

There are four kinds of quota,

I. First come first serve

II. One time quota

III. Auction quota

IV. Regular quota

i. First come first serve quota

This type of quota is granted by Export promotion bureau through APTMA to those exporters who finds
buyer in foreign quota country.

ii. One time quota

This form of quota is granted only once. It is usually granted for export of cloth. This type of quota is
non-transferable. It finishes when exporter export products to foreign importer.

iii. Regular quota

This type of quota is granted on the basis of past performance and ability of exporter to find buyers in
foreign market.

iv. Auction quota

This type of quota is available through auction. Whosoever bids high gets the quota. Nishat mills limited
not only fulfills it regular quota but also acquire it from auction.

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.

q 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.
ü 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.

ü 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.

WORK DONE DURING INTERNSHIP

During my internship, I worked in the following departments.

· Accounts

· Export documentation

· Export rebate

· Banking

· Finance

· Purchase
· Management information system

Therefore, during my internship I concentrate in account and finance department.

ü Banking Department

Functions

The major function of banking department is to deal with banks. Dealing with bank is normally by
receiving bank reconciliation statements. When banking department receives such statement it tallies
transaction with its own ledgers. Certifies that whether items debited or credited is true in all respect. If
any discrepancy is found it is told to bank. Since Nishat mills limited is a large organization so daily bank
reconciliation are received from the bank

Process

All the cheques, which are presented for payments, any interest or commission charged by the bank,
cheques, received by the banks and credited in the account of Nishat mills limited, any interest received
on account of Nishat mills limited by bank are recorded and then tallied. A person designated as
Assistant Manager heads banking department.

Mark Up Sheets

Second major function of the banking department of Nishat mills limited is preparation of mark up
sheet. Normally finance is obtained from banks against securities. The securities are (a) pledge cotton (b)
mortgaging machinery etc
This loan is taken sometimes for short period and sometimes for longer period. So in these loans interest
is paid. This interest rate varies from 9 % to 14%. This interest is calculated on daily basis.

ü Rules to Calculate Interest

The basic rule which is followed to calculate interest is to include the day at which the loan is sanctioned
and on that date when loan is paid back is not included in the interest charging days.

Formula to Calculate Interest

Interest= loan amount * days

Days in working year

Work done by banking department

When interest and loan amount is paid to bank, it is the banking department, which calculates the
interest amount due on Nishat mills limited. Although interest sheet is sent by bank but it is reconciles
by the banking department.

ü Account department

In account department, I managed to understand the flow of transaction, preparation of vouchers and
ledger posing.

Preparation of vouchers

In account department under the supervision of concerned officers, I came to know different type of
vouchers being prepared and their process of preparation. Vouchers are written evidence of any
business transaction. The different type of vouchers being prepared by the account department of
NISHAT MILLS is as under,

· Cash payment vouchers

· Cash receipts vouchers

· Bank payment vouchers

· Bank receipt vouchers

· Journal voucher or adjustment vouchers

· Petty cash vouchers

Now I discuss these types of vouchers one by one.

i. CASH PAYMENT VOUCHERS

Being a public limited company cash payment vouchers are used for recording the expense of less than
five thousand. These types of vouchers are prepared when cash payments are made against small
expenses i.e. repair, entertainment etc. in order to record the expenses following entry is passed:

Account code name of expense (debit) Amount

Cash account (credit) Amount

Evidence of expense is attached with the cash payment vouchers.

ii. Cash Receipt Vouchers

These types of vouchers are prepared when the cashier on behalf of the Nishat mills limited is receiving
cash. However, these types of vouchers are small in quantity because majority of transactions are done
by bank. On receipt of cash, cashier prepared the cash received slip. Account officer prepares voucher
on the basis of cash receipt prepared by the cashier. In order to book the transaction the following entry
is passed in the books.

Account code cash account (debit) Amount

Income A/C or receivable A/C (credit) Amount

iii. Bank Payment Vouchers

Being a public limited company the majority of payment transactions of the Nishat mill limited are
carried out through banks. Bills and invoices being approved by the competent authority reach at the
table of account officer for payment. Account officer checks the approval and mathematical accuracy of
the bill and prepares the bank payment voucher. Account officer first confirms the nature of expense i.e.
capital or revenue and deduction of tax if applicable then pass the following entry;
Account code Asset name or expense (debit) amount

Bank account (credit) amount

Deduction of tax at source (credit) amount

Evidence of expense/asset is attached with the cash payment voucher.

iv. BANK RECEIPT VOUCHERS

Bank receipt voucher are prepared when mill receives cheques against account receivable or advance
payments.

On receipt of cheques account officer sends the cheques for clearing and passed the following entry;
Account code cheques clearing A/C (debit) amount

Account receivable A/C (credit) amount

Advance against sale A/C (credit) amount

Copy of cheques is attached with voucher.

ü If the collecting bank the reversal of above entry returns cheques is made in the books.

ü On clearing of above referred cheques following entry passed in the books of account officers.

Account code Bank A/C (debit) Amount

Cheques clearing A/C (credit) Amount

ADJUSTMENT VOUCHER OR JOURNAL VOUCHERS

These types of vouchers are generally prepared in the following circumstances;

Purchase on credit

Sales on credit

Writing off assets i.e. depreciation store consumption etc.

Rectification of mistakes or omissions

Now I discuss them one by one

ü Purchase on credit

Generally raw material, stores and spares are purchased on credit. In order to account them for the
journal voucher are prepared by the concerned account officer
Account code Purchase A/C (debit) Amount

Account payable A/C (credit) Amount

Copy of the invoices is attached with vouchers;

ü SALES ON CREDIT

Like purchases, sales (local and export) are made on credit and at the time of delivery of goods following
journal are prepared by the account officer:

Account code Account receivable A/C (debit) Amount

Credit sales A/C Amount

Copy of invoices is attached with voucher.

ü WRITING OFF ASSETS

These journal vouchers are prepared in order to change the assets to expense for the preparation of
monthly accounts.

ü To account for depreciation of fixed assets:

Account code Depreciation A/C (debit) Amount

Accumulated depreciation A/C (credit) Amount

ü To account for the raw material consumption:

Account code raw material concerned A/C (debit) amount

Raw material store A/C (credit) amount

ü To account for store consumption:

Account code store concerned A/C (debit) amount

Store and spares A/C (credit) amount

ü To account for store consumption:

Account code store concerned A/C (debit) amount

Store and spares A/C (debit) amount

ü To account for accrued expenses:

Account code expense A/C (debit) amount

Account payable A/C (credit) amount

In additional to above referred kinds journal voucher is also passed to rectify the mistakes made in
voucher preparation or posting.

During my stay with NISHAT MILLS, I also worked with computer operator in order to understand
posting process.

LEDGER POSTING

Computer operator put log no and make posting in computer. Accounts of NISHAT MILLS are
computerized and ledgers are prepared in computer. After the preparation and coding of voucher it is
sent to computer operator for posting A daily print out of all entries is checked to check the accuracy.
After checking the accuracy the master file is update and posting is made to respective account ledger
by the computer.

ü FINANCE DEPARTMENT

I also spent some time in finance department to understand the cash flow of the department .the main
purpose of the department is ensuring the availability of the funds for operation and best utilization of
available funds.

Finance manger prepares daily cash flows statement in order to determine needs and utilization of
funds.

A weekly projected cash flows statement is also prepared in order to determine the need of the coming
week. An account officer prepares bank reconciliation statement of all the banks and list out the
outstanding entries. He then traces the reason for these entries and put bank reconciliation on the table
of finance manager. On receipt of bank statement the manager prepares cash flow statement and
presents it to the finance director for future actions.
ü PURCHASE DEPARTMENT.

The main purpose of purchase department is to maintain the desirable level of purchase, so that ideal
funds can stuck up in shape of heavy purchase or a position not arise that mill stop due to non-
availability of raw material or store and spares.

In addition to this purchase department is also responsible for checking of following:

· Checking quantity of purchased goods.

· Checking the quality for purchased goods.

· Checking rates of purchased goods.

Problem’s Identifications and Their Solutions

· FACILITY FOR BONUS

At present the facility for bonus is given only for the production department of the company, but in my
view point such bonus facility should given to other department as well as like.

· Accounts Department
· Sales & marketing Department

· Management information system Department

· Finance department

· Export department

· MEDICAL FACILITIES

Medical facilities are provided in the mill where production work is carried out but such facility should
also be provided to the employees who are working in the HEAD OFFICE in Lahore.

Company should take great and early care of this important matter because employees working need
this very badly.

· EMPLOYEES TRAINING

Although there are educated and talented staff working in Nishat Mills limited but it is the need of the
hour that the staff should be given the time-to-time refresher courses for the up to date knowledge for
meeting knew and dynamic challenges in the growing business concern of Nishat Mills Limited.

New training courses will help in uplifting the quality of the work of employees.
· NEED OF A CAFETERIA

There is lack of proper facilities for food. There is no proper canteen or cafeteria or messing facilities. If
there will be messing or cafeteria facility in the premises there will be saving of time and increase in the
efficiency of the workers and it will be easy for the people to return on work after lunch on well in time.

· TRANSPORTATION PROBLEM

They provide transportation facility only to female employees; think they should also provide
conveyance facility to the male employees as well. This will create the easiness for the workers to come
on job on time without much difficulty.
SWOT ANALYSIS

Now we shall conduct swot analysis for Nishat mills limited.

Conducting an internal strategic-management audit is to construct an internal factor evaluation matrix.

This strategy-formulation tool summarizes and evaluates the major strengths and weaknesses in the
functional areas of a business.

Strengths of Nishat mills limited

v Export-oriented organizations

v Highly skilled labor

v Talented marketing managers

v Qualified finance staff

v Professionalism in the employees

v Corporate culture

v Sound policies

v Strong group

v Successful history

v Computer information system

v Paperless organization

v Availability of raw material at cheaper rate

v Products are technologically competitive

v Innovative products

v Customer orientation

v Efficient production system

Weakness of Nishat mills limited

v Rely on foreign customers

These are only few weaknesses in Nishat textiles, over and all it is a successful organization.

Key opportunities available to Nishat mills

v In 2005 when all quota barriers would be lifted

v Increase demand of Pakistan cotton-made products

v Advertising growth

v To use information technology

Key threats to Nishat textiles

v Intensive competition

v WTO

v Child labor propaganda by various NGOs

v Political instability in Pakistan

v Mostly operating in overseas market