IN THE NAME OF ALLAH WHO IS MOST BENEFICENT AND MERCIFUL
My beloved parents whose encouragement, guidance and presence are assets of my life.
&My teachers who illumined the dark corners of my mind and heart.
This report describes the effort made by me for the learning by first hand practical experience about a business organization. Today is the era of experience as is said by quotation “Experience makes a man perfect.” No body can deny the importance of practical training and experience.
Through internship students get the first touch of professional exposure of the roles; they have to play during their professional careers. The students not only acclimatize themselves to the corporate environment but also learn to assume responsibility, co-operation and teamwork the hallmarks of modern management.
Having experience of textile industry is really a good experience for me. I am submitting all my experiences. No doubt, omissions and errors are expected but it is requested to ignore the nominal errors.
I was lucky enough to have a chance of doing internship in Fatima Sugar Mills Limited. I learnt a lot about the practical business and above all, the mental discipline and awareness, which are the most useful tools for an executive to raise the organizational structure.
First of all, I want to express all and thanks to ALMIGHTY ALLAH whose blessings are above each and every thing which make me able to present my tiny effort. All prays to Hazrat Muhammad (pbuh) who is the reason for creation of the universe and whose kindness came to my part.
Secondly on the successful completion of my internship program, I whish to express my gratitude and heart worthy acknowledgement to my teachers for full co-operation and helped me in completing this report. I feel utmost pride in acknowledging with sincere gratitude for the valuable guidance I have received from my respected teacher Mr. Muhammad Aamir, He has been a constant source of enthusiastic encouragement through out the internship program. Due to his guidance I have become able to complete internship as well as this report. His advice, criticism and remarks were of the most value to me.
�I am also thankful to following persons:
Dr khalid ahmad khokhar Chief Executive
Zubair ahmad khokhar Executive Director
Shahbaz idrees Engineer
Hussain Sajid kazmi Chief Financial officer
M.tahir Raza Sales manager
Furthermore all the other executives and staff members of Khokhar textile Mills Limited, Head Office and Site deserve my thankfulness for their co-operation and guidance during the course my internship at Khokhar Textile Mills Limited. Finally I would like acknowledging the contributions by many other sources of information used in preparation of this report.
TABLE OF CONTENTS
Sr. No. Description Page No.
1. Preface 1
2. Acknowledgment 2
3. Structure of Management 3
4. Growth of Sugar Industry in Pakistan 4
5. Group Profile 5
6. Board of Directors 6
7. Mission of FSML 7
8. Objectives 8
9. Introduction 9
9. Working Force 11
10. Products of the Company 12
11. Production 13
12. Main Departments 15
13. Departments at Site 16
14. Departments at Head Office 33
15. Banking Section 47
16. Data Administration 51
17. Organizational Incentives 55
18. Quality Management 57
19. Problems of Sugar Industry 59
20. Comments & Suggestions 60
Introduction to Textile sector
Textile includes all the business related with yarn and cloths, so all the business from cotton ginning to cloth and apparel manufacturing comes under the textiles. There are different functions of Textile, which are as under:
This is the first stage where cotton is separated from the seeds. Raw material of this stage is cotton seed. Khokhar textile mills does not deal in this function.
Raw material of this stage is Ginned cotton. This cotton is spun to make yarn. Yarn produced in various qualities, this is the main Raw material of Reliance Weaving mills, which is purchase from local market. Khokhar Textile mainly deal this function.
In weaving unit yarn is converted into cloth through power looms or through hand driven machines. Khokhar textile mills does not deal in this function.
Processing and Dying
Cloth is further processed and it could be used for a lot of purposes, like Bed sheets and Garments.
Cutting and Stitching
This is a final use of cloth in which cloth is cut and stitching is made according to local market or importer requirements.
History of the Textile industry
While farmers were developing new and better methods of agriculture, life in other areas of work had changed little for hundreds of years. Early in the 18th century, most of the population still lived in small rural settlements. Few people lived in towns, as we now know them.
Many people worked as producers of woolen and cotton cloth. They cleaned, combed, spun, dyed and wove the raw material into cloth. They did this work in their own houses.
This type of production has become known by the general term of the Domestic (or cottage) Industry.
Work within the Cottage Industry was usually divided up between the members of one family. The women and girls were responsible for cleaning the sheep fleeces, carding the wool and spinning it. The process of weaving was physically hard work and, traditionally, it was the man who was responsible for it.
Generally, at regular intervals, a cloth merchant visited each handloom weaver’s cottage.
He would bring the raw material and take away the finished cloth to sell at the cloth hall.
As soon as the new wool arrived, it was washed to clean out all the dirt and natural oil.
After this, it was dyed with color and carded. This was the process of combing the wool between two parallel pads of nails, until all the fibers were laying the same way.
Next, the carded wool was taken by the spinner and, using a spinning wheel, the thread was wound onto a bobbin. The unmarried daughters of the household who were called spinsters often performed this part of the process. The term spinster still exists in English to man an unmarried lady. The spun yarn was then taken to the loom to be woven. In a weaver’s cottage, the loom was often to be found on an upper floor. There were large windows in the room to let in plenty of daylight. The loom was worked by both hand and foot movements. Working the loom was quite strenuous work, which is why it was traditionally the work of the men of the household.
Textile Industry in Pakistan
Textile is the important sector of Pakistan’s economy. It playing the important role in economy of Pakistan and fulfilling the 65% export target.
The textile industry which is endowed with a strong base of weaving had started its journey from almost non existence in 1947 with a meager size of 3000 shuttle looms that is too in the unorganized sector with only 10 textile units. The industry has gone through a long way and now possesses the 220 units, 45000 looms in which include more or less 30000 shuttles looms. The textile industry is not only catering to the entire local requirement but sharing out 65% of the total foreign exchange earning.
Pakistan being the fifth largest cotton producing country provides a strong base for development sustenance of the textile industry. In spite of tremendous growth in all the peripheral areas of the textile industry includes cotton, ginning , spinning, processing and made up sector. This industry which is the main pillar of the economy has not attained its optimum potential so far.
Let have a look on the istalled units and looms and production.
Capacity Installed Operative
1994-95 55 6600 5500
1995-96 59 7080 6100
1996-97 91 10920 9128
1997-98 105 13125 11125
1998-99 115 14375 12950
1999-2000 153 19125 19556
2001-01 166 20750 19840
2001-02 157 19480 17850
period grey cloth
Current position of textile industry
With the exception of the period from 1958-59 to 1974-75; the textile industry could not maintain, a sustainable growth, and registered its growing rate at the nominal level in the country. In the organized sector there are 452 textile companies of which 212 are not listed and 240 textile units are listed on KSE/LSE comprising of 157 spinning units,29 and unlisted is however is around 452 approximately.
The weaving capacity of the textile industry in our country is static at 9000 shutlle looms for past many years. The capacity of conventional looms is also around 19840, which have no match with quantum jump the industry as taken in this spinning sector. Instead of going for value added products the frenzy for setting up spinning projects dictated the mind of the textile industry over the years which took the 4.1 million spindles in 1996-97 instead of going to more value added textile products like dying bleaching units in the country.
CAPACITY UTILIZATION (%)
The textile exports projection in the trade policy 1999-00 worth 6.5 billions $, of major textile products include cotton yarn with the target of 1800 million $, grey cloths 1680 million $ , ready made garments 1050 million $, tent and canvas 55 million $, knit wear 950 million $ and made ups 965 million $.
The industry has to achieve its newly settled targets in the face of difficult trading conditions especially the disturb economies of Asian countries, threat of imposition of anti dumping duties on our gray cloths by the European union countries,(E.U. has withdraw an anti dumping duty i.e. 1.01.2002)cotton yarn of 20/s in Japan and constant decrease in imports from South Korea, all together posting an uphill task of achieving the export targets for the textile industry during the financial year. Duty drawback (rebate)is reducing from time to time and changing in sales tax refund to export oriented units, which is very poor sign for the exporter of the value added items.
PROBLEM OF TEXTILE SECTOR
The textile industry has been crisis ridden for some time because of shortage of raw material due to three successive cotton crop failures. The main problems it is facing are as under:
1) The production of lint cotton remained below the target.
2) The shortage and non-availability of the lint cotton in the domestic market has led to the price-hike in domestic market.
3) Competitor’s installation of over capacity in some production lines or closure of spinning capacity due to higher prices and short supply.
4) Docile labor-intensive technology, needed to be changed to cost efficient capital intensive.
5) Lack of institutional finance for modernization efforts.
KHOKHAR TEXTILE MILLS LIMITED
CHAIRMAN Zubair Ahmad Khokhar
MANGING DIRECTOR Dr. Khalid Ahmad Khokhar
DIRECTORS Dr. Khalid Ahmad Khokhar
Zubair Ahmad Khokhar
Mrs. Fatima Leghari
Mrs. Shahnaz Kameel
Mrs. Maheer Perwar
COMPANY SECRETARY Hussain Sajid
AUDITORS Mahboob Sheikh & Co.
BANKERS National Bank of Pakistan
The Bank of Punjab
Union Bank Ltd.
Metropolitian Bank Limited
LEGAL ADVISOR Syed Mushtaq Ali Kazmi
REGISTERED OFFICE 90-Qasim Road,
MILLS Chak 565 TDA, DD Panah Road,
Chowk Serwar Shaheed
Brief Profile of the Companies
The company consists of following concerns:
M/s Khokhar Textile Mills Ltd.
M/s Khokhar Cotton G/P Factory
M/s Khokhar Agri Farms
Tallal Petroleum Services
The following are the main sponsors of group:
Dr. Khalid Ahmad Khokhar
Mr. Zubair Ahmad Khokhar
i) M/s Khokhar Textile Mills Ltd.
The sponsors have well reputed and experienced people of the business of textile, TPS and investment. They engaged in textile business since 1991. The textile spinning having worth of Rs. 650.0 M situated at Distt. Muzaffar Garh.
ii) M/s Khokhar Cotton G/P Factory
The ginning unit situated at Industrial Estate, Multan having net worth of Rs. 50.0 M producing 30% requirement of our spinning unit.
iii) M/s Khokhar Agri Farms
Khokhar Agri Farm consists of 850 acres having net worth of Rs. 430.0 M in which cotton, wheat and vegetables are growing and this farm also consisting of orchard of Mango and citrus etc.
iv) Khokhar Investments
The group is also engaged in the business of property and land development in Lahore and Multan. Recently they set up a residential colony namely Canal Cantt. View, which consists on 20 acres of land.
v) Tallal Petroleum Services
The petrol pump is situated on main Khanawal Multan Lahore going to Lahore. It engaged in the business of sale of petroleum product.
vi) KK Gases
The company has entered in the LPG re-filling business and in addition to this EOI for LPG extraction plant has also been submitted. We are already in process of establishing LPG re-filling station at 19A-Industrial Estate, Multan and 2 acres of land has already been purchased. This plant will fulfill the requirements of South Punjab mainly the area of Multan, D.G. Khan and Bahawalpur.
KHOKHAR TEXTILE MILLS LTD.
The company is interested to install complete textile finishing plant including bleaching, dyeing, mercerizing, calendaring, folding, printing plant in the existing yarn units at Multan to make it a complete composite unit, which can explore local and international market of high value products. The company would keep its emphasis on product and market diversification, values addition and cost effectiveness. We want to fully equip the company to play a meaningful role on the sustainable basis in the economic development of the country.
The mission of the company is to operate state of the textile plants capable of producing yarn and fabrics.
The company will conduct its operations prudently assuring customer satisfaction and will provide profits and growth to its shareholders through:
Manufacturing of yarn and fabrics as per the customer’s requirements and market demand.
Exploring the global market with special emphasis on Europe and USA.
Keeping pace with the rapidly changing technology by continuously balancing, modernization and replacement of plant and machinery.
Enhancing the profitability by improved efficiency and cost controls.
Recruiting, developing, motivating and retaining the personnel having exceptional ability and dedication by providing them good working conditions, performance based compensation, attractive benefit program and opportunity for growth.
Protecting the environment and contributing towards the economic strength of the country and function as a good corporate citizen.
KHOKHAR TEXTILE MILLS LIMITED
NOTES TO THE ACCOUNTS
FOR THE PERIOD OF MARCH 31, 2007
1. STATUS AND NATURE OF BUSINESS
M/s Khokhar Textile mills Limited was incorporated on May 30, 1990 as a public
limited company (limited by shares) under the Companies Ordinance, 1984. The
principal activity of the company is to manufacture and sale of yarn of all types.
2. SIGNIFICANT ACCOUNTING POLICIES:
The principal accounting policies which have been adopted in the preparation of
these accounts are summarised below:
2.1 ACCOUNTING CONVENTION:
These accounts have been prepared under the historical cost convention.
2.2 STAFF RETIREMENT BENEFITS
No provision is made for gratuity payable to the company’s staff on retirement
or leaving the empolyment of company. The payments, as and when, made are
charged to profit & loss account.
2.3 FOREIGN CURRENCY TRANSLATION
Assets & Liabilities in foreign currencies are converted into Pak rupee at the rate
of exchange ruling on the Balance Sheet date except those covered under the State
Bank of Pakistans. Exchange risk cover scheme which are translated at the covered
rate. Exchange gains/losses and exchange risk coverage fee on foreign currency loans
are capitalised as a part of cost of plant & machinery acquired out of the proceeds of
2.4 TANGIBLE FIXED ASSETS AND DEPRECIATION
Tangible fixed assets are stated at cost or valuation less accumulated depreciation.
Freehold land is stated at valuation. Plant and machinery is stated at valuation and
includes exchange risk coverage fee on foreign currency loans. It also includes the
amount of surplus on revluation on fixed assets.
Depreciation is charged applying the reducing balance method at the rates
specified in the operating assets note.
Depreciation on addition is charged on the basis of whole year, while no
depreciation is charged on deletion during the year.
Maintenance and normal repairs are charged to current year income as and
when incurred. Major renewals and improvements are capitalised.
Gain or loss on disposal of operating fixed assets are included in current year
Charge for current taxation, if any, is based on taxable income at current tax
rates after considering the tax credits and rebates. Deferred tax liability, if any,
is accounted for by using the liablity method on all major timing differences to
the extent that liabliyt can be estimated for the foreseeable future.
2.6 DEFERRED COST
Deferred costs ae being charged to profit & loss account over a period of five
2.7 STORES AND SPARES
There are valued at moving average cost.
Basis of Valuation
RAW MATERIAL: -At Annual Average Cost
WORK IN PROCESS: -At Raw material and proportionate
conversion cost depending upon the
stage of completion.
FINISHED GOODS: -Lower of the Cost / Net Relisables
WASTE -At Net Realisable Value (NRV)
Cost signifies in relation to finished goods the annual average cost consisting prime
cost and appropriate manufacturing overheads. Net realisable value signifies the
estimated selling price in ordinary course of business less expenses necessary to
be incurred in order to make the sale.
2.9 REVENUE RECOGNITION
-Local sales are recorded on despatch of goods.
-Export sales will be booked on shipment basis, if any.
MARCH 07 2006
3. ISSUED, SUBSCRIBED AND PAID-UP-CAPITAL:
8,490,330 Ordinary shares of Rs. 10/- each issued
for cash. 84,903,300 84,903,300
4. SURPLUS ON REVALUATION OF FIXED ASSETS
Evaluation done by Asif Associated vide their report
dated 19.07.2004. 199,822,736 199,822,736
5. SHARE DEPOSIT MONEY (DIRETORS EQUITY) 108,070,370 100,070,370
6. LOANG TERM LOANS / B.G
Bank guarantee (NBP) (Notes 6.1.5) – 70,000,000
DF (NBP) DF I (Notes 6.1.9) 70,000,000 –
DF (NBP) DF II (Notes 6.1.8) 60,933,333 66,400,000
DF (NBP) DF III (Notes 6.1.10) 3,774,000 –
DF (BOP) (Notes 6.1.7) 30,110,000 38,000,000
LESS: Current portion shown under
DF (BOP & NBP) 33,580,002 11,000,000
131,237,331 163,400,000 10,999,628
6.1.1 This finance was rescheduled by Habib Bank Limited by transferring the total
outstanding principal of DF-16A AND FAF-19 as at 30-06-1999. 304,846
6.1.2 Down payment of Rs. 52.933950 (M) has been made on 31-12-1999 by equal #REF!
monthly installments commenced from 31-08-1999.
6.1.3 The debt was repayable in 146 monthly installments commencing from
31st January 2000.
6.1.4 No mark-up was charged on the debt.
6.1.5 The outstanding liability as on 31.12.03 has been resheduled by the HBL on following
terms and condition:
– Settlement amount Rs. 220.0 million
– Down payment Rs. 20.0 million (paid by the company)
– The said DF shall carry nil markup and will be repaid in six installments starting from 1st
– Principal Rs. 33.800 million, un-debited markup Rs. 99.084 & Rs. 0.706 million being
rescheduling charges will be kept frozen and will be reversed/waived, subject to
regular debt servicing to the satisfaction of HBL.
– Repayments shall be guaranteed by NBP through irrevocable L/g to the satifaction
– All charges will be released on the submission of L/g. (All charges of HBL on fixed
assets has been vacated.
6.1.6 NBP has issued bank guarantee of Rs. 200.0 million against following securities: (14,626)
– 1st exclusive charge on the project:
– Personal guarantees of all directors
– Collateral valuing Rs. 50.00 M
– Cash margin 25%
6.1.7 BOP has sanctioned DF for Rs.38.0 M for the expansion of 4128 spindles with back process :
against following terms and conditions:
– Urban security in the name of directors
– Personal guarantees of all directors
– Repayment by 10 half yearly equal installments.
6.1.8 NBP has sanctioned DF for Rs. 66.40.0 M for the expansion of 4128 spindles with back process :
against following terms and conditions:
– 1st Charge on the Project
– Personal guarantees of all directors
– Repayment by 24 quarterly equal installments.
6.1.9 NBP has sanctioned DF I for Rs. 70.00.0 M for the debt swap of HBL which has now been fully utilized
and HBL long term loan has been cleared. Repayment will be in 6 half yearly installments.
6.1.9 NBP has sanctioned DF III for Rs. 12.00.0 M for the construction of 15 cotton godowns.
Repayment will be in 16 quarterly installments.
Long Term Loans 33,580,002 11,000,000
8. SHORT TERM RUNNING FINANCE:
Cash Finance (NBP & BOP) (Note-8.1) 216,594,617 146,040,482 (61,719,822)
8.1 CASH FINANCE
8.1.1 This represents the principal amounts of cash finance. 3,499,417
8.1.2 This finance is secured by way of pledge of stocks. Raw material,
work-in-process, finished goods. This amount forms part of aggregate borrowing
limit of Rs.500.0 (M).
9. CREDITORS, ACCRUALS AND OTHER LIABILITIES 5,000
-Trade 4,116,215 4,472,988
-Others 1,050,000 1,688,712 180,342
Mark-up and Others:
Accrued Expenses 21,672,800 1,787,393
Commission on Sale & Purchase 250,400 1,042,652 14,626
Income Tax 2,990,000 3,768,781
11. LONG TERM DEPOSITS
Security Deposits 1,285,065 1,285,065
12. STORES , SPARES & LOOSE TOOLS:
-Stores 8,099,000 6,090,800
-Spares 1,896,520 1,680,900
-Loose Tools 50,600 25,500
13. STOCK IN TRADE
Raw Material 310,094,900 183,702,698
Work in Process 3,187,249 3,155,054
Finished Goods 4,417,600 3,900,000
14. TRADE DEBTORS RUPEES RUPEES
Local considered good (unsecured) 3,679,700 5,699,811
15. ADVANCES, DEPOSITS AND PREPAYMENTS
Employees 1,285,650 1,186,987
-Cotton 1,050,000 2,570,600
-Goods Supply 750,400 856,900
-Commission Agents 56,500 –
L.C. Deposits 164,500 –
Income Tax/others – 4,156,182
Sales Tax Refundable 1,052,013 1,052,013
16. CASH AND BANK BALANCES
In Hand 2,830 305,060
At Banks 404,580 6,000,400
17. SALES RUPEES RUPEES
Local 677,685,500 682,954,682
Waste 12,632,347 14,596,955
Less: Commission (1,694,770) (1,455,305)
18. COST OF GOODS SOLD
Raw Material Consumed (Note 18.1) 476,611,345 457,588,749
Packing Material Consumed 8,439,755 6,913,859
Stores, spares Consumed 12,862,334 9,574,308
Wages, Salaries & Other Benefits 24,805,530 33,338,583
Power And Fuel 63,351,083 67,099,253
Repair And Maitenance 515,045 746,249
Insurance Expenses 2,350,360 2,145,355
Depreciation 22,543,519 29,558,026
Misc. Expenses 23,650 47,347
WORK IN PROCESS
Opening 3,155,054 1,696,362
Closing (3,187,249) (3,155,054)
Cost Of Goods Manufactured 611,470,427 605,553,037
Opening Stock 3,900,000 5,200,000
Closing Stock (4,417,600) (3,900,000)
Cost Of Goods Sold 610,952,827 606,853,037
18.1 RAW MATERIAL CONSUMED
Opening Stock 183,702,698 133,203,200
Purchases 603,003,547 508,088,247
Less : Closing Stock (310,094,900) (183,702,698)
Raw Material Consumed 476,611,345 457,588,749
19. ADMINISTRATIVE & GENERAL EXPENSES RUPEES RUPEES
Director’s Remuneration 225,000 300,000
Salaries, Wages & Other Benefits 4,023,874 4,283,934
Postage & Telephone 778,399 1,193,421
Electricity Expenses 479,810 611,430
Printing & Stationery 104,379 13,690
Travelling & Conveyance 1,038,774 673,415
Rent, Rates & Taxes 45,000 100,000
Vehicles Running & Maint. 823,730 1,174,071
Legal & Professional Charges 50,000 1,500
Auditor’s Remuneration 75,000 80,000
Repair & Maintenance 274,911 53,509
Paper & Periodicals 31,998 47,205
Fee & Subscription 1,248,386 –
Entertainment 230,440 331,209
Charity & Donation 197,784 218,336
Depreciation 75,859 101,145
Miscellaneous 17,815 6,155
20. SELLING EXPENSES
Local freight, Ortri and Loading 217,050 471,047
Salaries 189,000 243,000
Advertising 30,000 33,420
21. FINANCIAL CHARGES :
Interest and Mark-up on:
-Long term Laon 16,888,104 5,607,098
-Short term running finance 27,928,274 23,372,054
-Commission on L/G 2,400,000 72,069
-Bank Charges 210,546 441,572
22. OTHER INCOME:
Profit on profit & loss sharing account 256,400 2,617,489
-Figures have been rounded off to the nearest rupee.
-Figures of the previous year have been re-arranged wherever necessary
to facilitate comparision
24. PLANT CAPACITY AND ACTUAL PRODUCTION March, 2007 2,006
Number of spindles installed 31,296 31,296
Average No. of spindles worked 31,296 31,296
Number of shifts worked per day 3 3
Capacity of yarn 20/s count Kgs. 10,061,320 10,061,320
Actual production converted into 20/s count Kgs. 9,582,209 9,582,209
– have been rounded off to the nearest rupee.
– of prior year have been rearranged wherever necessary for the purpose of