FAZAL CLOTH MILLS

TEXTILE INDUSTRY OF PAKISTAN

In 1947, at the time of independence Pakistan Textile Industry was like a

feeble child with only three cotton mills, a small woolen spinning, whereas

weaving, hosiery and knitwear were features of cottage industry. Now when

we have entered into new millennium, Pakistan’s Textile Industry has become

a stalwart fellow, which has grown in all sections. Now we are not only self-

sufficient but are also exporting surplus products. Today we have over 8.358

million installed spindles, 166,000 installed rotors 20,000 shuttle less looms,

200,000 power looms, 8,000 terry towel looms, 7620 canvas looms, 157,000

woolen/worsted installed spindles, 15,000 woolen looms, 12,000 knitting

machines, over 600 processing units and over 2500 garments units.

We all know, journey of textiles starts from seed and culminates at ready-to-

wear garments and in present competitive world scenario, it is combination of

high production efficiencies, most appropriate technologies and work methods,

together with trained work force, management and marketing skills which can

give any industry a successful status.

Textile industry today is the backbone of economy of Pakistan and provides

the largest number i.e. about 40% of total industrial jobs and very vast

industrial service opportunities. It has always been the pillar of Pakistan’s

economy contributing substantially to Govt. revenues. It also has a dual

linkage. As a major consumer of domestic cotton, it provides a market for a

leading cash crop and thus has a critical influence on the growth and

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productivity in agrarian sector. Hence the performance of the textile industry

has a vital impact on the over all growth and development of the economy. The

industry also tops, as an earner of ever-so- scarce foreign exchange and

exported goods worth US $4.9billion last year and this amount is about 60% of

the total national exports. Its share in total GDP is 8.5%. The investment in

Textile Industry is 31% of total investment. The interest that banks and other

financial institutions earn from Textile sector is RS. 4 billion per annum. The

salaries and wages that Textile sector provides to workers is Rs. 40 billion per

annum. Its contribution to R & D is RS.116 million per annum. This very

remarkable achievement did not come easily and is due to the combined and

tireless efforts of the Govt. Planners. Currently total textile industries in

Pakistan which are registered with All Pakistan Textile Mills

Association(APTMA) are 442. In which, 345 are spinning units ,53 composite

units and 44 weaving units.

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PROBLEMS OF TEXTIEL INDUSTRY

 The main problem the industry is confronted with are summarized

below:
 Supply of raw cotton is uncertain and below the required level.
 The cotton crop grown in Pakistan is mostly of short and medium
length while long.
 Stapple cotton is required for producing of fine quality of yarn
and cloth.
 There is need to increase production of long stapple, cotton to
shift textile industry to the production of:
 Fine products rather than inferior yarn and cloth.
 Scoaring lint cotton prices have croded.
 Competitiveness of local industry visa-a-vis supplies of
 Cheap production like India, China, South Korea and Bangladesh.
 Lack of availability of polyester staple fiber (PSF) and man-made
fibers (MFP)

The textile industry is also facing the problems pf closure of mills and
financial constraints. The solution of these problems is under active
consideration of the Government. Economic revival package 1997 and
export enhancement measures are already under implementation, which
aimed at the rival of the sector. The Govt. is accelerating the pace of
the implementation of these reforms. The installed and effective
capacity of the textile industry is summarized in the table.

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TEXTILE INDUSTRY’S ECONOMIC CONTRIBUTION

Description Contributions
Exports 64% of total exports (US$ 4.9 Billion)
Manufacturing 46% of total manufacturing
Employment 38% of total employment
Investment 31% of total investment
Market Capitalization 7% of total market capitalization
Interest Rs. 4 Billion per annum
Salaries and Wages Rs. 40 Billion per annum
Contribution to Research and Development Rs. 116 million per annum
Gross Domestic Product (GDP) 8.5% of total GDP

This sounds a triumph like situation at a glance. There is how ever much more than it
meets the eyes when you go into details, which carry some failures also to weep on. This
industry has not performed as well as it should have. It is struggling for its survival for the
past 7 years.

The textile industry at present is passing through a transition phase. It is sailing smoothly
under the protected cover of the quota system, however it has to face the rough waters of
the open sea when globalization of trade is implemented under WTO agreement in 2004.
Three years have already gone unnoticed. The fast approaching deadline sounding a note of
warning for re-structuring of all the segments of the cotton and textile industries on war
footings to enable it to face the future challenges of fierce competition amongst the low
cost Asian manufacturers to capture share of their higher cost European counter-parts when
the gates of the global economies are open.

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Cotton Based

Cotton, the most precious commodity from Pakistan’s economic point of view, has
become a bone of contention between textile industry and the growers, ginners and
exporters of raw cotton. Pakistan, being the fourth largest cotton producing country
provides a strong base for development substance of textile industry in spite of tremendous
growth in all the area of textile industry, including:

 Cotton
 Ginning
 Spinning
 Processing

Because Egypt has been able to develop good quality staple as against the poor quality
cotton, despite the lavish spending on Research and Development, which turns into billion
of rupees every year. However, in Pakistan the major chunk of the funds allocated for
research and development go into salary bills of white elephant hired by the governments
on political considerations in the past. We failed in developing even a single variety of long
staple cotton, which is the major handicap of the textile industry in producing yarn of the
fine quality.

Number of units and classification

In the organized section there are232 listed textile companies of which 153 are spinning
units, 28 weaving and 51 composite units while the total no of textile units both listed and
non-listed however are 443.

Import of Machinery

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The industry imported textile machinery from abroad the detail of which for last few years
is as below, it represents a decline in import of machinery in yearly:

Year Value (million)

1996-97 789.2

1997-98 352.7

1998-1999 294.9

Contribution in Employment

Textile unit constitute 38% of employment generated by the manufacturing sector while
textile being largest industry has got other forward and back ward relation where it must
had played its role in generating employment in related industries for example shipping
industry will definitely by mainly depended upon textile industry.

Share in Value addition

As the table indicates the status of textile industry among other production units, it
constitutes for almost 26% of total value added by the manufacturing sector this value
addition for textile sector was Rs.8596 million in 1985-86. It has increased to Rs.29251
million in 1999.

Contribution in Forex

Textile exports constitute about 60-65% of the total exports of Pakistan, but textile industry
also has to import the raw material the data for which is given below:

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IMPORTANCE OF COTTON IN THE ECONOMY OF

PAKISTAN

Cotton “the silver fiber” of Pakistan is the backbone of Pakistan’s economy. A simple
notion “one million bales of cotton means to Pakistan, plus or minus one percent gross
domestic products (GDP)” narrates the vital importance of cotton in Pakistan’s
economy. Pakistan was ranked as third largest cotton exporting country in the world in
1991 when its production of cotton reached its climax (12.82 million bales). The anticlimax
began thereafter and in the very next year cotton production decreased to 9.05 million bales
and further to 8.86 million bales in 1993. The major biotic factor responsible for the
downfall was the leaf curl disease of cotton that pervades through out the Cotton Belt.

The production of cotton during 1998-99 was 1,372,000 metric tons (7.22 million bales),
which is 13.6% less as compared to the previous year. Pakistan exported 2,000 metric tons
and imported 142,000 metric tons of cotton during that year. The quality of Pakistani cotton
is not very good. There is contamination in the cotton and there is not proper grading of
cotton in Pakistan. The average ginning out turn (%), fiber length (mm), fineness and
strength (000’ppsi) is 36.8, 28.2, 4.4, and 94.2 respectively.
It will be interesting to note that the export value of our raw cotton which was $1.03/kg
some 45 years ago in 1951-52, while it is still moving around $1.47kg. The value of
Egyptian cotton is more than double of Pakistan cotton in the international market simply
because they have been able to develop good quality staple as against the poor quality
cotton produced in the country despite the lavish spending on R&D which runs into billions
of rupee every year. The major chunk of the funds allocated

For R&D GO INTO SALARY BILL OF THE WHITE ELEPHANT HIRED BY THE
different governments on political consideration in the past.

We failed in developing even a single variety of long staple cotton, which is the major
handicap of textile industry in producing of yarn of fine quality. The textile industry at

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present is passing through a transition phase. It is sailing smoothly under the protected
cover of the quota system. However it has to face the rough water to the open sea when
globalization of trade is implemented under WTO Agreement in 2004. Three-year have
already gone unnoticed. The fast approaching dead line sounding a note of warning for
restructuring of all the segments of the cotton & textile industries on war footings to enable
it to face the future challenges of fierce competitions amongst the low cost Asian
manufacturers to capture share of their higher

GROWTH OF TEXTILE SECTOR IN PAKISTAN

Year NO. Spindles (000) Looms (000)

of Installed Working % Installed Working %
Mills Growth Growth
1948 - 78 78 3 3 -
1958-59 70 1,581 1,488 .76 26 24 -

1964-65 83 1,967 1,852 2.82 31 28 3.33

1974-75 144 3,366 2,823 .60 29 25 -3.33

1984-85 219 4,445 2,872 4.05 23 10 -4.17

1994-95 494 8,610 6,262 2.27 14 5 -6.67

1998-99 442 8,358 6,631 -.12 10 5 -23.08

COMPANY INFORMATION

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BOARD OF DIRECTORS:

SH. NASEEM AHMAD

Chairman/Chief Executive

Mr. MUHAMMAD AFZAL ULLAF SIDDIQUI

Director (NIT)

SH. SHAUKAT MASUD

Director

SH. AMIR NASEEM

Director

MR. REHMAN NASEEM

Director

MR. FAZAL AHMAD SHEIKH

Director

MRS. FARRUKH MUKHTAR

Director

COMPANY SECRETARY:

MR. M. D. KANWAR

AUDITORS:

M/S HAMEED CHAUDHRY & CO.

CHARTERED ACCOUNTANT

BANKERS:

HABIB BANK LIMITED

NATIONAL BANK OF PAKISTAN LTD.
ASKARI COMMERCIAL BANK
SONERI COMMERCIAL BANK

MILLS:

FAZAL NAGAR, JHANG ROAD,

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MUZAFFARGARH

REGISTERED OFFICE:

ROOM NO. 102-103,

INTERNATIONAL PLAZA,
BOHRA STREET, MULTAN CANTT.

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COMPANY PROFILE
COMPANY NAME:
FAZAL CLOTH MILLS LIMITED:

VANUE
MILLS: FAZAL NAGAR, JHANG ROAD,
MUZAFFAR GARH

HEAD OFFICE: ROOM NO, 102-103, INTERNATIONAL

PLAZA, BOHRA STREET, MULTAN CANTT.

The company was incorporated in 1966 as a public limited company under the
company’s ordinance, 1984.

The mill is situated at a piece of land measuring 368 kanals. Te company does not
enjoy tax Holidays for some period from the date of its company production.

The company has imported most modern spinning unit from different advanced
countries, which is the best combination. Letter of credit for import of machinery was
established by the Muslim commercial bank ltd.

GROUP PROFILE
There are certain other organizations, which are managed by the same group. A
list is as follow: -

1. AHMAD TEXTILE MILLS LTS. RAHIM YAR KHAN

2. FATAMA SUGAR MILLS LTD.

3. RELIANCE TEXTILE MILLS LTD.

4. RELIANCE WEAVING MILLS LTD.

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Highlights
Yunus Brothers is the flagship company and trading arm of the group which was
formed in 1962 by Chairman (Late) Haji Abdul Aziz Tabba. Starting as a small
commercial Exporter of Yarn and Grey Cloth to Far Eastern countries, the company
developed rapidly and expanded its Exports to Europe also. The continuous growth
and development of the business launched the group into Industrial activity in the year
1983. Starting with the very small Weaving facility, the Yunus Brothers Group today
has Two most modern Spinning Mills, with 245,000 Spindles, Weaving Mill with over
750 Looms and has just started most modern vertically integrated Textile Mills of
USD. 30/- Million having 214 Air Jet Looms with state of the art processing and
stitching facilities.
Yunus Brother Group is recognized internationally in the world of Textiles and
enjoying a strong reputation in respect of consistent quality, reliability and superb
customer services. The Yunus Brother Group has been a frequent recipient of various
awards and trophies for the Export Performance by the Government of Pakistan.
Yunus Brothers is actively involved in international trading of various products
including Cotton & Blended Yarn, Cotton & Blended Fabrics, Garments, Rice, Sugar,
Fertilizer, Earth moving equipments, Chemicals, Spare Parts and Automotive Vehicles
etc. Yunus Brothers is one of the largest export houses of the Pakistan exporting
mainly to the European, US, Far Eastern, Middle Eastern and African markets. Yunus
Brother’s annual sales turnover exceeds USD 300/- million with 95% of the sales
geared towards the export markets.
Spinning activities of the Yunus Brothers Group is being carried-out under the name of
;
FAZAL TEXTILE MILLS LTD. ( 60,000 SPINDLES)
GADOON TEXTILE MILLS LTD. ( 185,000 SPINDLES)
Total installed spindles are 245,000 for the production of approximately 150 M/Tones
of yarn everyday.

Gadoon Textile Mills Ltd (GTML) was established in 1988 and came into commercial
production in 1990. GTML is located in the Gadoon Amazai Industrial Area,
approximately Two-hours drive from the city of Islamabad.
GTML started production by producing Poly/Cotton yarn with 14,400 Spindles but
later the Management expanded its production capacity by making huge investments.
Over a period of 12 years the GTML capacity has increased to 185,000 Spindles which
are producing various types of yarns.
Now Gadoon Textile Mills Ltd is producing the Best Quality Compact_yarn ,
Murata_Jet_Spinning yarn , Core_Spun_Yarn, besides
100%_Grey_Cotton_Ring_Spun_Yarn, Synthetic_yarn & Poly/Cotton yarns.

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Apart from above items, Gadoon Textile Mills Ltd is engaged in the production of
Compact Core Spun yarn. Gadoon Textile Mills Ltd. is the first Mill in the world
starting production of Compact Core Spun Yarn. Presently, besides GTML, there is
only one other mill situated in Italy producing Compact Core Spun Yarn. GTML is
producing top grade Compact Core Spun yarn in count Range from Ne 30/1 upto Ne
80/1 with Dupont’s Lycra and the Air Jet Weavers of Pakistan, Far East, Europe and
India are enjoying the quality of Gadoon’s Compact Core Spun yarn. Gadoon Textile
Mills Ltd. recently received an award for being one of the top 5 buyers of Lycra from
Dupont Pakistan.
Initially GTML was using raw cotton of Pakistani origin but now it is producing
different varieties of yarn with Pakistani, Chinese, West African, Australian, Egyptian
as well as Pima Cotton in Normal and Extra Long Staple in the count range from Ne
6/1 to Ne 140/1 and double of the same counts.
GTML is certified with Oeko-Tex_100 Standards.

We believe that in textiles, Quality means “ Best Raw Material”, “State of the art
Machinery” & “ Highly Trained and Skilled Human Resources”.
The Quality Management at our Mills believes in implementation of all three.

Value Chain analysis

Souring of Raw Materials
The Market environment today has become increasingly competitive with the
consumer becoming more Quality conscious. Therefore, besides sophistication in
terms of speed and technology of machinery, it is very important for a mill to know all
the important properties of the Fiber. In the case of Raw Cotton, especially, it is
necessary to know Fiber properties of each and every bale and to understand how the
fiber properties interact with the processing conditions to determine the Yarn quality
and the performance of the process itself.
Raw Cotton Fiber characteristics vary from field to field. This variation is due to
genetic and environmental factors such as harvesting and ginning conditions.
Therefore, our Raw Cotton selectors choose Raw cotton based on its Physical
characteristics, Length of Fibre, Trash Percentage, Micronaire, Pressley and Colour
grade. The quality monitoring starts at the cotton procurement stage. Only cotton
which meets all the required characteristics is purchased.
We also Import Raw Cotton from America, Australia, Egypt, West Africa, C.I.S. China
depending on the type of yarn to be produced as per the customer’s requirement.
Processing ( Machinery & and Professional Human Resource)

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“NO SUBSITITE OF BEST QUALITY” is the reality we believe in, and we strive to
service our customers at every stage according to that belief by adopting the following
procedure:
 We carry out mixing of the cotton in three shifts, round the clock. Trained and
expert workers open bales, which are laid down properly by trained labourers
after the bales have been tested by the quality department. All the important
parameters of fiber are tested to keep the mixing even throughout the season.

 Our Blow room line consists of Trutzschler machines. To keep the yarn free
from contamination we employed persons on the feed lattice for manually
picking out contaminants. Fiber growth, neps and waste extraction is
monitored throughout the blow room line using most modern testing
equipment, including AFIS.
We use different Origin of Cotton such as US PIMA, EGYPTIAN GIZA, Chinese,
among others. Unlike these growths, Pakistani Cotton has some inherent
contamination and we use the following procedures to minimize the contamination
presence in yarn:
1. We have manual Contamination Picking System at our Blow Room level so
that maximum quantity of foreign Matters can be removed at the early stages.
2. LOPTEX CONTAMINATION SORTER: Our blow rooms are equipped with
Two Loptex Sorters in one line to remove the remaining contamination before
it reaches the Carding stage. The Loptex Sorters can detect and remove visible
contamination of upto 1 square centimeter effectively.
3. All Autoconers are equipped with Loepfe Yarn Master Spectra, which further
controls and eliminates the contamination in the yarn.
 The card machines have a chute feed system and consist of Trutzschler DK
903, Crosrol MK5D and Rieter C51 equipped with Auto-levelers. Waste
percentage, Card U% and wrapping is carried out daily to check the
performance of the Cards. The maintenance cycle of Card machine is
monitored using AFIS N module. Every individual card is tested for neps
fortnightly using spin test technique along with continuous checking of neps
with the help of AFIS-nep module to keep the neps under control.

 The Toyoda drawings are used as breaker for cotton carded yarn. Card U% and
Sliver Wrapping is checked for each machine daily to ensure proper working of
machine within our quality parameters.

 The Automatic Unilap machines are used to feed the E62 Rieter combers. All
combers are checked throughout the day for sliver wrapping and a weekly
cycle of checking of waste percentage is carried out to ensure proper removal
of short fibers. The extracted waste is also checked on the AFIS to ensure that

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the Noil percentage is sufficient. Neps are again monitored during combing
process with the help of AFIS. Spin tests are also carried out keeping in view
that every comber must be checked at-least once a month.

 Our Auto leveler Rieter D35 and Trutzschler HSR1000 Finisher Drawings are
equipped with Sliver Quality Monitoring System. It allows 24 hour on-line
checking and detection of faults that could cause Drawing Sliver to deviate
from it’s required mean. Additionally Uster Tester-4 is used to test evenness of
sliver daily for each machine.

 Toyoda FL-16 and FL100 Simplex machines are used to convert sliver into
roving of our required parameters. Evenness of roving is checked for every
machine daily by using wrapping drums and Uster Tester-4. The Uster
standards are strictly followed through out the back process to produce high
quality roving.

 Our Ring department consists of Toyoda RX240 and Chinese EJM 128A with
SKF-225 German drafting system. Every individual count spun on our Ring
machines is checked daily for count, twist / inch, strength and evenness using
Uster Autosorter, Zweigle Twist Tester, Uster Tensorapid and Uster Tester-3
and 4 respectively. We practice to keep all quality parameters of yarn within
Uster Statistics category of 5%. Some individual values may exceeds to Uster
category of 12% but they are always monitored, and we try to keep it within
Uster category of 5%.

 Yarn from Ring department is converted onto required package using

Schlafhorst-238, 338, Savio Espero and Savio Orion winders. The Schlafhorst
machines are equipped with Loepfe Yarn master 930 Plus and Uster Quantum
clearer. On-line classimat is performed on Savio Espero to check the yarn
parameters daily for each individual count. The contamination clearance is also
carried out on these machines to produce “contamination-controlled” yarn.
By employing the above stringent measures we try and keep the quality of our
products consistent.

MACHINERY

BLOW ROOMS Truetzschler Germany

Rieter Switzerland

ELECTRONIC CONTAMINATION Loptex Sorter (Optical & Sonic) Italy

CLEARER (At Blow Room Stage)

CARDINGS Truetzschler Germany

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Crossrol England

COMBERS Rieter Switzerland

DRAW FRAMES Truetzschler Germany

Rieter RSB-D35 Switzerland

Toyota Japan (With Auto-Leveller & On-

Line Sliver monitoring)

SIMPLEXES Toyota FL-100 Japan

Howa Japan

RING FRAMES Toyota RX-240 (With Auto Doffing)

EJM-128 China (With SKF German

Drafting system)

COMPACT SPINNING Suessen “Elite” Germany

Toyota RX-240 Japan. (With Compact)

JET SPINNING Murata MJS Japan

LYCRA ATTATCHMENTS (RING & Pinter Spain

COMPACT)

WINDERS Schlafhorst-338 Germany

Savio Espero Italy

Savio Orion Italy (With On-Line

Classimate of Loepfe Switzerland)

ELECTRONIC YARN CLEARERS(At Loepfe Yarn Master YM-930 Spectra

Winding Stage) Uster Technologies Quantum

DOUBLER/TWISTERS

KNITTING MACHINES Fukuhara Japan

LABORATORY EQUIPMENTS

FIBER

Afis-LM&T (Uster Technologies

Switzerland)

Fiber Glow 380 (Uster Technologies

Switzerland)

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Fibrograph 530 (Uster Technologies

Switzerland)

Stelo Meter (Uster Technologies

Switzerland)

Micronaire-770 (Uster Technologies

Switzerland)

YARN

Uster Tester-3 (Uster Technologies

Switzerland)

Uster Tester-4 (Uster Technologies

Switzerland)

Auto Sorter (Uster Technologies

Switzerland)

Lea Strength (Asno Japan)

Twist Tester (Zweigle Germany)

Hairiness Tester (Zweigle Germany)

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ORGANIZATION
STRUCTURE
The organization gram shows the structure of the company. It sows that head
office and Production, Maintenance; Quality Control handles the Purchase and Sales
Department and the Mills controls Administration.

The responsibilities and authorities can be summarized as follows: -

1. CHIEF EXECUTIVE

He is responsible for overall operation of the company and finally responsible

for the quality of the products of the company.

2. GENERAL MANAGER/MANAGEMENT
REPRESENTATIVE

He is responsible for quality maintenance, planning and upgrading of the

project and also responsible for all activities at the Mills. General Manager as
Management Representative.

3. QUALITY CONTROL DEPARTMENT/MILLS

MANAGER

This department is responsible for all testing and inspection activities to

predetermine the information obtained are issued to make decisions for raw material
purchases, process control and corrective actions.

4. TECHNICAL MANAGER

He is responsible for the production and maintenance department.

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MAINTENANCE DEPARTMENT

This department is responsible for the proper function of all the machinery.
This department has prepared a preventive maintenance schedule and maintained the
plant according to it.

PRODUCTION DEPARTMENT

This department is responsible for the activities about quality production and
its affecting aspects. Te technical Manager is responsible for production and he shall
repot to the General manager. He is also responsible for the training of the production
staff.

5. ADMINISTRARION DEPARTMENT
This department is responsible to receive the ginned cotton, its storage and
waste handling, it is also responsible for the issue of raw material according to the
laboratory instructions, for the Blow Room prior to the production. It also handles the
packing and dispatch of finished yarn, saleable wastes, receipt/issue of general goods
stores. It also arranges the Internal Audits.

6. ISO – 9002 COORDINATOR

He is responsible for the documentation and documents control, training

records and also maintain the minutes of the meetings.

7. PURCHASE DEPARTMENT

Responsible for purchasing the Raw Material ((Cotton etc.), Spare Parts,
Equipments and Packing Material.

8. SALES DEPARTMENT

Sales Department is responsible for optimum sales, smooth flow of shipment

and provide the after sales services to the customers.

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RESOURCES

Fazal Cloth Mills Ltd. ’s executive management commits to provide all

resources required for the effective implementation and maintenance of the quality
system. The management review activity acts as a forum to address all resources
requirement and approvals.

MANAGMETN REVIEW:

In order to control the quality system and to ensure its continuing effectiveness,
a system of management review meeting has been instituted.

The management review Meeting is held every month in order to discuss all
quality related issued. The agenda will always include: -

* Corrective Actions arising from previous meeting.

* Customer Complaints.
* Result of Corrective Actions.
* Resources Requirements.
* Other quality related matters.
* Achievement of Quality Objectives.

Complete records are maintained and kept by the Management Representative

through ISO-9002 Coordinator.

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Vision Statement

 A leading producer of textile products by producing the highest

quality of products ad services to its customers.
 To strive for excellence through commitment, integrity, honesty
and team work.
 Highly ethical company and be repeated corporate citizen to
continue playing due role in the social and environmental
sectors of the company.
 To develop and extremely motivated and professional trained
work force, witch would drive growth through innovation and
renovation.
 Sustained growth in earning in real terms.

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Mission Statement:

Our mission is to be a dynamic, profitable and growth

oriented company by providing good return on investment to its
shareholders and investors, quality products to its customers, a
secured and friendly environment place of work to its employees
and to project Pakistan’s image in the international market.

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Organizations Values

 Trust
 Integrity
 Respect
Customer profile

FAZAL Textile Mills has also proud of work with world best Labels
like
 JC Penney (Stafford, Arizona, St. John’s Bay)
 War Naco (Chaps Ralph Lauren, Calvin Klein)
 Indus (Vantage, Champs, Tom Taller)
 Vanity fair Lee, Wrangler
 Perry Ellis
 Levi’

Corporate Objectives

1. Maximization of wealth of shareholders.

2. To increase market share
3. To achieve customer satisfaction.
4. Making arrangements towards achieving total quality standards.
5. To get growth through professional management.
6. To growth through professional up to minimum level..
7. To control the atmosphere by installation of lated machinery.

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8. To continue to improve/ surpass past achievement.

9. To lead the local manufactures.
10.To attain a good word of month and to make company image.
11.Stronger in the international market
Management Hierarchy

Chief Executive
Top Management Officer

General Manager

Middle Management
Manager

Senior Deputy Assistant Officer

Officer Manager Manager

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ADMINISTRATION DEPARTMENT

ADMINISTRATION
MANAGER

LABOUR SECURITY GATE TIME

OFFICER OFFICER KEEPER OFFICER

This is very important department of the organization. As the name shows this
department is to administer all the operations of the organization.

This is headed by the R.D. (Resident Director) of the company. It deals with
all the matters that are related with personnel Section of this department are divided
into officer as under: -

A) Labor Office
B) Security Guard Office
C) Gate Office
D) Time Office

A) LABOUR OFFICE

As required by the Labor Department of the Government of Pakistan this office

has been set up to deal with all the matters that are related with labor.

It is the duty of Labor Office to inform the management regarding update

information of legal requirements concerning the labor and company affairs. It is his
duty to satisfy himself regarding payment of bonus, gratuity and other benefits to
labor.

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FAZAL CLOTH MILLS

B) SECURITY GUARD OFFICE:

The main objective of the Security Office is to safe handling of the good form /
to the mail premises. For the achievement of such objectives a team of security guards
has been employ by the company.

C) GATE OFFICE:

This office has been made to keep the record of each and every thing coming
into and going out of the organization. For this purpose Gate Office Clerk maintains
two types of registers called: -

1) Outward Going Pass (Register)

2) Inward Going Pass (Register)

C) TIME OFFICE:

This office keeps the record of all the workers on Time Cards and Pay Register
for the final costing of the workers` salaries..

1. It is also helpful in keeping the record of workers at ten

dances, which is then used to prepare salaries, bonus on
the monthly basis for all workers.
2. It also keep the record of the leaves, number of days
worked of all the workers.
3. It also keeps the record of Social Security. EOBI,
Education Cass etc. of each worker/employee payable to
the Government treasury.

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FAZAL CLOTH MILLS

FINANCE DEPARTMENT
FINANCE CONTROLLER/Chief Accountant

i) Deputy Chief Accountant ii) Deputy Chief Accountant

Accounts Accounts Accounts Accounts

Assistant Assistant Assistant Assistant

This Finance Department is situated at head office i.e. Muzafar Garh. The
Chief Accountant Mr. FAIZAN UL HAQ who is a highly qualified and experienced
person heads it. It also deals with the both the units of shipping units. The staff of the
finance department is also very competent and hard working.

JOB FUNCTION OF ACCOUNTS MANAGER

The Accounts Manager of fazal Cloth Mills is responsible for the

following function: -
* To look after and control the work of the department
* To sign:
(a) Cheques
(b) Cash/Bank payments, vouchers, journal voucher etc.
* To check monthly/quarterly/annual accounts, funds movement sheets, stock
statement for banks, reconciliation of accounts statements.

* To deal with banks and cotton suppliers in respect of payment and audits etc.
* To prepare projected profile and loss statements, balance sheet and cash flow
statements.

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FAZAL CLOTH MILLS

* To prepare projected profile and loss statements, balance sheet and cash flow
statements.

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FAZAL CLOTH MILLS

ACCOUNTING
DEPARTMENT
The accounts department of Fazal Cloth Mills is responsible for the entire
accounting process of the organization and for an efficient handling of the accounts the
Accounts Department mainly performs the following functions: -

1.MAINTENANCE OF PURCHASE ACCOUNT:

The Assistant Accountant is responsible for entire accounting process to record

the purchase made. The process to purchase and afterwards records the purchase is as
follows: _
i) The requisition department sends Demand Note to main
store.

ii) If the goods are not available, than store sends that Demand
Note to the purchase department who decides either to
purchase locally or import the goods.

iii) After approval for Director the purchase department

prepares a purchase order and the purchase is made.

iv) The goods are received at head office. Purchase department

prepare four copies of delivery order and the goods are sent
to the mills with three copies.

v) When goods are received on gate, an Inward Gate pass is

made. After physical checking of purchase in the store, they
prepare store receipt Voucher in triplicate. The goods with
two copies of SRV are sent to the relevant department for
quality checking.

vi) When department approves goods then one copy of SRV is

sent to purchase section and one to the accounts department.
Purchase department attaches Inward Gate Pass and original
bill of the supplier along with that approved SRV and sent to
the accounts department.

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FAZAL CLOTH MILLS

vii) Accounts department entcom pares the copy of SRV with

the copy of same SRV sent to them from the mills and
prepares a voucher an enter the transaction in the relevant
books.

2.MAINTENANCE OF SALES ACCOUNT:

The company sale is of two types:-

1. Finished Product Sale.

2. Waste Sale.

1.FINISHED PRODUCT SALE:

(a) The company’s finished product is yarn. First of all a

contract is made between the company and the
customers. Then the goods are forwarded or supplied
to the customer.
(b) A detail of goods sold is entered on the bill with
reference to its description, quantity, are per unit and
the total amount of the goods sold.
(c) When goods are reached on gate an outward Gate Pass
is prepared and both the document are sent to the
accounts office. The accounts office records the
transaction in the sales book, customer ledger and
ultimately in general ledger.

2.WASTE SALES:

Waste sale is of the following types: -

i) Soft Waste Sale:

When cotton is blowed in blowing room,
some quantity of cotton is wasted during
its process. Sometimes a defected or sub
standard bale of cotton is also sold as soft
waste.
ii) Hard Waste Sale

Sometimes the yarn produced by the

company is not up to the standard. The

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FAZAL CLOTH MILLS

company sells its substandard product as

hard waste.

3.CASH AND BANKING TRANSACTION:

The cash and bank sections of the accounts department make payment to the
suppliers and receive payment from the customer. This section also maintains a
cashbook in which all receipts and payment are recorded.

PAYMENT TO SUPPLIERS
On receipt of the proper purchases documents, the cash, bank payment,
voucher of the party is prepared and the payment is made mill site for mill employees.
Salaries are fixed and are prepared by earning the attendance record of the employees.
Addition of different allowances deductions of different liabilities and funds
contribution are made there from. Pay slips of all employees are prepared and
distributed to their relative account number by sending a bank advice. In this way
salaries are paid to the employees. When payment made 3 ½% tax deduct of NTN not
allowed then 5% deduction made

WAGES
All sorts of wages are prepared at the mill site. For this purpose, record of data
and hours worked for each worker is maintained. Therefore the wages are calculated
accordingly and payment is made to the workers.

5. INVENTORY CONTROLLING

Inventory controlling plays an important role in any manufacturing concern.

There are two types of store in Fazal Cloth Mills, which are: -

1) The main Store

2) Raw Material Store

1) The main store contains:

i. Spare parts.

ii. Electric goods.

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FAZAL CLOTH MILLS

iii. Packing material.

iv. Stationary

v. Workshop

ii) While the raw material store contains:

a) Cotton

b) Polyester.

c) Acrylic

d) Viscose.

The functions of store controlling can be further sub divided into two parts:-

1) Purchase for stores.

2) Stores Issued

PROCEDURE OF STORE PURCHASES

In Fazal Cloth mills, the company purchase come material on regular basis
such as stationary, packing material etc. and maintains the average quantity of theses
goods every time, these are considered as stores. Other store goods such as spare parts,
electric goods etc. are purchased on requirements.

When a department needs any goods, it prepares a Demand Note for these
particular goods and sends it to the shift in charge, which signs it. Then this demands
sent to general manager for approval. After it is delivered to the main store. Store
department examine the demand and then enters it in demand register. This demand is
then sent to etc purchase department.

On receipt of demand note from the mills, the purchase department decides
either the goods are available form the local market or it should be purchased from the
foreign market. If the required goods are note available in local market, the demand is
transferred to import department to purchase the goods from foreign markets.

Otherwise quotations are called oft the required goods and then purchases
Assistant prepare the comparative statement of the prices of the goods. The
comparison statement is first examined by the purchase Manager and then it is sent to

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FAZAL CLOTH MILLS

the resident directors for approval. After approval the goods are purchased from the
specified supplier.

The goods are received ate the head office. The purchase department sends all
the goods to the mill with three-purchase department advice.

The goods are received at mill and the details of the goods are entered in the
Inward Register and Inward Pass is prepared. The goods then reach the stories. A store
receipt Voucher is prepared. The goods then reach the store and store receipt voucher
number is written on the Inward Gate Pass. The concerned foreman/in charge is called
to inspect the goods and the sub standard goods are rejected which are returned to the
supplier. The goods then are recorded on the store receipt register. After that they are
posted to Bin Card.

PROCEDURE OF STORE ISSUE

In Fazal Cloth mills, store department has issued an issue book to every
department. The requisitioning department fills the store issue note and signs it from
departmental heal and mills manager. The storekeeper issues the goods to the specified
department and makes an entry in the issue file. Three copies of the store issue note
are prepared. One copy is kept in the relevant department, the second copy is sent to
the accounts department and the third copy is kept in the store record.

BOOK KEEPING

The following books are maintained at the Fazal Cloth Mills Ltd…-

1. General Journal

2. Ledger

3. Purchase Book

4. Sales Book

5. Supplier Book

6. Customer Ledger

7. Cash Book

8. Bank Book

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FAZAL CLOTH MILLS

PREPARATION OF FINANACIAL STATEMENT

Different financial statement such as balance sheets and income statement are
prepared to show the working of the business. The accounts department prepares the
Trial Balance of a Company every month. And then Accounts Manager prepares the
other financial statements.

MARKETING DEPARTMETN
MARKETING MANAGER

Import Officer Export Officer Marketing officer

MARKETING DEPARTMENT
The market department of Fazal Cloth Mills consists of three section: -
i. Local Sale
ii. Export Section
iii. Import Section

1. Local Sale

The local sale is made from the head office at Muzffargarh. Yarn is supplied
mainly to the weavers and partially to the knitters. Volume of local sale is very much
high.

YARN PRICES

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FAZAL CLOTH MILLS

As the yarn size decreases the prices of yarn increase. It means that higher the
count number the more will be the price. It is because as the count numbers increase
the size of yarn decrease but price increase.

It is due to the reasons that think yarn gives more production in pounds while
the thin yarn gives less production in pounds. Thus as the production decrease the cost
will increase and so the price will automatically increase due to the more cost. That is
why the higher counts have prices.

PRICE STRATEGY:

The prices of the yarn fluctuate in the market on day-to-day basis. The price of
every textile mills is different for the some count.

The Marketing Manager of Fazal Cloth Mills has introduced the fixed price
strategy of their yarn in the market. Their prices do not change with the market. This is
because they produce very high quality tarn on the latest machinery. Although they
face some problems to this fixed price but overall they receive good response from the
parties, which rely on quality.

EXPORT SECTION:

The whole yarn is sold in the local market except a little portion, which is
exported. This little portion is exported to Middle East and Japan, U.S.A. and other
worlds advanced countries. About six months ago, export was very good due to high
rates. But in ordinary conditions, we shall see it in detail in export chapter.

IMPORT SECTION:
The import section of the Fazal Cloth Mills is headed by the import discharge
that is highly qualified and dedicated person. The Import Officer assists him.

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FAZAL CLOTH MILLS

PURCHASES DEPARTMENT

PURCHASE MANAGER

Purchase Officer

Purchase Purchase
Assistant Assistant

The efficiency of purchase department directly effects the production and

efficiency of the company. The purchase department of Fazal Cloth Mills is in the head
office, under the control of purchase manager who is highly qualified and experienced
person. The staff of the department is also very experienced.

JOB FUNCTION OF PURCHASE MANAGER

Purchase Manager is responsible of the following functions: -

i. To fulfill the demand of purchase of the department.

ii. To maintain stocks and store of goods level within the approved
budget.
iii. To control on purchase price of stores.
iv. To exercise general checking of store.

TYPES OF PURCHASE:

The purchase in the textile industry is of two types as given below: -

1. Purchase of goods.
2. Purchase of raw material.

PURCHASE PROCEDURE OF STORE GOODS:

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FAZAL CLOTH MILLS

The stores are used to buffer the emergency conditions; therefore no limit is
fixed to purchase these types of goods. These goods are consisting of spare parts,
electrical goods and other general items.

When a department needs any goods, it prepares a Demand Note of these

particular goods and sends to the Shift Incharge, which signs it. Then this demand is
sent to the General Manager for approval, and then it is delivered to the main store.
Store department examine the demand and then enters it in Demand Register. This
demand is sent to the purchase department. Purchase department decides either to
purchase the goods locally or form foreign markets.
FLOW OF PURCHASE RAW MATERAIL:

The directions make the raw material purchase. The directions negotiate with
the supplier. The supplier sends the cotton to the specified unit where cotton is
received at gate and Gate Inward Pass is prepared. The cotton is unloaded in go down
after measuring the weight. A weigh statement is prepared when the cotton is weighed.

ARRANGEMENT OF ITEMS IN MAIN STORE

The main store is categorized in different sections. The main sections

are as: -

1. BLOW ROOM 2. CARD 3. COMER

4. DRAWING 5. SAMPLE 6. RING
7. AUTO CONE 8. ELECTRICAL 9. WORKING
10. AUTO CONE (AC)

With every stand of an item Bin Cards are placed. On these bin cards the Issue
or Receipt of different amounts of the items is recorded. Theses cards also help to
locate the items.

PROCEDURE TO ISSUE ITEMS FROM STORE

In Fazal Cloth Mills, store department has issued an “Issue Book” to every
department. The requisitioning department fills the store issue note and gets approval
form the General Manager mills. The store issues the required goods to the specified
department. The storekeeper at that time makes required entries in the Issuance
Register at mill. Three copies are prepared, one copy is kept in department, second
copy is sent to accounts and the third copy is kept in the record at store.

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 FAZAL CLOTH MILLS

PRODUCTION DEPARTMENT

GENERAL MANAGER

Technical Mills Electric

Administraion Manager
Manager Manager Manager

Spinning Assistant Labor Gate

Manager Manager Officer Officer

Supervisor

Time
Record Security
Officer Officer
Assistant Foreman
Spinning
Manager

Foreman

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INTRODUCTION TO SPINNING UNITS

The Fazal Cloth Mills Spinning unit is situated at muzaffarGarh. The highly
automated imported machine is installed in all the units.

The spinning consists of the following sections.

1. BLOW ROOM SECTION

2. CARDING SECTION

3. DRAWING SECXTION

4. SIMPLEX SECTION

5. RING SECTION

6. AUTO CONE SECTION

All the department takes part to convert the balls of raw cotton in to form of fine
yarn.

1. FUNCTION OF BLOW ROOM.

When blow room send a demand note for cotton, the cotton is issued
the blow room and a cotton statement is prepared. The cotton, which is sent to blow
room, should contain the maximum level of moisture. When cotton bales are reached
to blow rooms these are opened and the cotton is stoned into small pieces y hand. The
temperature of the blow room is maintained highly to eliminate the moisture.

The cotton is passed through the blow machines which blow cotton and
the salvage is separated form the cotton. This cotton is reached into the carding section
through pipes automatically.

2. CARDING SECTION

The cotton, which reaches in this secition from blow room, is rolled on big
rings called “Lapse”. These laps contain fine cotton in the form of a layer on big

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FAZAL CLOTH MILLS

rollers. Theses rollers are used and silver of this cotton is prepared and collected in big
plastic canes, which are filled with the silver in drying section.

3. DRYING SECTION

In this section two types of machines used, which are called: -

1. BREAKER MACHINE
2. FINISHER MACHINE

4. SIMPLEX SECTION

In simplex section, the cone of cane of silvers, which are made in

drying section, is used and big size bobbins are prepared. During preparation of these
bobbins, machines, which are used in this section, separate the cotton, which is not up
to the standard to prepare the very fine yarn.

5.RING SECTION

The ring section converts the big bobbins into the small size bobbins.
This section is not only changes the bobbins but also makes the thread finer. Now it is
the final product and it is ready to prepare and cones of yarn. These small bobbins are
sending to the auto cone section.

6. AUTO CONE SECTION

In Fazal Cloth Mills Ltd. The auto cone machines of very highly quality
and modern technology are installed. All the working on these machines is automatic
and theses are looked as an appreciable invention of man. Now this prepared yarn is
sent to packing department where it is packed in cartoon and sold to the customers.

PROCEDURE OF PRODUCTION CONTROL

First of all, the cotton is issued to blow room on demand and it is
recorded in raw material transaction register. It contains the details of lots is issued to
blow room such as: -

 OPENING BALANCE

 NUMBER OF LOTS ISSUED

 WEIGHT OF LOTS

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FAZAL CLOTH MILLS

 TOTAL BALANCE OF COTTON IN BLOW ROOM

The production department examines the daily cotton consumption by the

cotton quantity being work in process in blow room. It has a record of opening balance
and issuance cotton of the day. Therefore, it calculates the consumption of the cotton
of the day.

It prepares the production report, which contains the information about the
yarn prepared, the soft waste and the hard waste obtained.

The production department prepares daily useable waste report and also daily
saleable waste part.

Finally the packing department prepares the daily cone packing report, which
contains the following information: -
1) OPENING BALANCE

2) CONES PACKED ON THIS DAY

3) BALANCE OF PACKED OR UNPACKED YARNS.

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FAZAL CLOTH MILLS

EXPORT
DEPARTMENT

EXPORT MANAGER

Assistant Assistan
Export Export
Manager Manager

The export department consists of export manager who is a qualified and

experienced person. His subordination is also not less than him in efficiency and
experience. During the current year, the company exported a lot of cotton yarn. The
directions are hopeful that approximately 70% of the total production will be exported
in the near future.

EXPORT PROCESS:

This process starts form a bargain. A buyer contacts the company and tells
them about their demand. This contact may be direct or through an agent. In response
to this contact, the director often settles the price and terms and conditions thorough
visit, fax, telex, telephone etc. when the contract is matured three copies of the contract
are issued to the buyer. They sent back one copy to Fazal Cloth Mills, which is in full

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FAZAL CLOTH MILLS

arrangements and conditions. If any agent is involved, three copies are sent to the
agent.

After agreement of both the parties on terms and conditions, the buyer opens
letter of credit in his bank. That foreign bank sends that letter of credit to the bank in
Pakistan and that bank gives the original letter of credit to Fazal Cloth Mills. The
company after fulfilling the requirements of the letter of credit dispatches the material
to be exported.
To get letter of credit, company has to fill the following documents: -

1) INVOICE

2) PACKING LIST

3) CERTIFICATE OF ORIGIN

4) FORM E

5) BILL OFEXCHANGE

QUOTA RECTRICTIONS

After discussing export process the main thing is to discuss export process in
those countries on which quota is levied. Mostly European countries use quota
restrictions. These countries inform exporting that how much they can export. Then
through associations like Textile mills Association the companies are informed about
the quota. The association distribution the quota on the basis of option and past
performance. If a company, due to certain reasons, cannot expert then they sell the
quota in the open market.

ROLE OF GOVERNMENT IN EXPORT:

To boost up exports, Government has given rebate facility to the exports. The
Fazal Cloth mills is also availing this facility. They are getting rebate on packing
material and the chemicals used in the polythene bags.

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DATA
PROCESSING
DEPARTMENT

E.D.P. MANAGER

Programmer Computer Co-ordinator

Assistant programmer

Operator Operator Operator

Operator

A successful businessman always has a curiosity and keenness to know about

the requirements of the age and tries to adopt the new technology to services in the
competing world. In the mid of 19 th century a same invention attracted all the
progressive and foresighted people. It was the introduction of the computer. The
computer makes able a businessman or industrialist to expand his business. Keeping

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FAZAL CLOTH MILLS

the manual records up to date is becoming more and more time consuming. Therefore
a computer allows you speeding up the processing of transaction and makes enable to
expand the business without the need of additional staff.

APPLICATION

The areas, which have computerized, are as under: -

i. General ledger

ii. Inventory control

iii. Payroll accounting

iv. Purchase accounting

v. Administration block

vi. Sales and receivable

vii. Imports

viii. Exports

There systems help the company in various aspects i.e. time decision, accuracy of
work etc. and keeping is ahead in competition.

FUNCTIONS OF DATA PROCESSING

DEPARTMENT
I. Training
II. Services
III. Development

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FAZAL CLOTH MILLS

M. I. S TEAM
FINANCE CONTORLLER

Deputy Finance
Manager

Assistant Assistant
Finance Finance
Manager Manager

The management information teams of the Fazal Cloth Mills include very
competitive and qualified persons. They produce report of different nature. Theses
reports are presented to the Finance Controller and the company Directions. Theses
reports help the company in timely decision.

These report include: -

Production Report Daily

Bank position Report Daily
Consolidation Production and Sales Repot Monthly
Master Payment Plan Monthly
Fund and Non Fund liabilities Monthly
Yield and Waste Report Monthly
Inventory Report Monthly
Consolidated Production and Sales Report Monthly
Consolidated Balance Sheet & Profit & Loss Account Monthly
Ratio Analysis Report Monthly
Stock Valuation Report As and when required
Yarn Costing Report “ “ “ “

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FAZAL CLOTH MILLS

Those all reports generated in minutes and hours on requirement very

accurately and stored on auxiliary media for the future use. Thus M. I. S team is
considered as an essential part of the company because of its performance.

ISO 9000
The ISO 9000 is major consideration for the very type of organization and
especially for the industry. No firm can export its production products in future
without ISO 9000 certificate. Realizing the situation organization is analyzing the
situation for necessary action. This discussion includes the following topics:-
ISO 9000:
ISO 9000 quality system standard are currently one of the highest criteria of
quality in the world trade. Up to now more than 65 countries in the world have
officially adopted this standard.

The European Community (EC) is the most active region in promoting them.
Presently companies that produce regulated products, such as medical devices, must be
registered. The European Community encourages all producers to register their
products.

QUALITY OF MANAGEMENT IN PAKISTAN

The industrial culture undergoes changes from traditional information
management to modern formal management.

With the wide spread establishment of management schools, increasing

collaboration with international companies, and deregulatio9n policies of the
Government, the management crises in industries is minimizing.

The industries are expanding and people are looking more and more into new
avenues for exports. Due to this phenomenon, the competition in both local and
export market is increasing.

QUALITY COST IN PAKISTAN

In a survey of more than one hundred companies in Pakistan, through in plant
training programs and counseling it was found that the rate of rejection produced in
the average Pakistani industries is about 10%. In monetary terms, this ranged from
Rs.20 to 150 million per company per year.

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FAZAL CLOTH MILLS

It is estimated that annual collective loss to Pakistani industries due to

Nonconformance in quality is more than Rs.100 billion.

Total cost of quality is even higher. It is an incredible loss about which few are
aware of. This national problem needs immediate attention jointly by the Government
and the industries.

WHAT IS ISO 9000?

The ISO (International Organization for Standardization) is a world wide
federation of national standard bodies who prepare and issue standards.

The ISO 9000 series was issued for the first time in 1987 and had a great
impact on the manufacturing industries. They establish requirements for Quality
Assurance and Quality Management Systems of manufacturing, services and other
organizations.

They do not refer to any specific technical specification of products. The

elements that are described in then cover organizational structure, personal
responsibilities, authorities, training procedures, documentation and records, process
control and resources allocation for production and all related departments that directly
affect the product quality.

These standard are generic and apply to all types and size of companies.
However, they are written in general terms. While applying these standards to a
company, they must be interpreted professionally to suit the applicability. Clear
concepts, professionalism and involvement of all employees (from top to bottom) are
required.

The basic aim of ISO 9000 is to provide a management framework to prevent

“Non-Confirming” in every stage, from design through to after sales servicing. It is a
basis for contracts between purchaser and suppliers.

ISO 9000 registration is given only after assessment by an approved

registration body.

There are a number of bodies operating worldwide. A company seeking

registration in free to chose any approved registration body.

After a company applies to way registration body, its quality auditors, who are
specialist in two areas, formally visit the plant, interview personal, evaluate the plant
and if it complies with the standards, issue a certificate to the company.

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Quality Assurance Dept of fazal textile COMPANY

The ISO 9002 was awarded to the Fazal Cloth Mills four years before. Now the
products of the company are made are maintained the quality. Mr. Anwar is the
Coordinator for ISO 9002 program in the company. All the related persons, authorities
are doing their efforts to continue the production of cotton yarn up to international
standard. A full time ISO 9002 Coordinators is appointed. The organization is enjoying
healthy uplift export after maintaining this standard.

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Value chain analysis

Value chain analysis is widely used to determine where cost improvements could be
made or value creation improved. This process involves the analysis of all the
activities starting from the raw material provisions to the distribution of final product.
That is why it is necessary to understand the complete procedure of production and
distribution.
Organization Value Chain
All these activities are broadly categorized into two main heads, which are Primary
activities and Support activities.
Primary Activities
The primary activities of the organization are grouped into five main areas: inbound
logistics, operations, outbound logistics, marketing and sales & services. Cottonseed
oil mills perform the inbound activity in Fazal cloths Mills, which provide basic raw
oil to firm. This activity should be efficient in order to increase recovery rate by
obtaining good quality oil. So in order to receive good quality of oil, Fazak Cloth
Mills has its own cotton factories which provide required quality of cottonseeds. The
operations are the production process of ghee/oil where the major value addition is
made. The management subcontracts the outbound activity, and the distribution is
through dealers. The company owner believes that marketing has no benefit until
unless they don’t utilize the enough production capacity.

Production Process
When decanting tanks of oil entered in the factory first of all they have stored in main
storage tanks with the help of pumps. Then they transfer oil from main storage to
refinery section where first of all the oil pass through pre-neutralizer then through
post-neutralizer then after filtration they pass ghee and oil from pre-bleacher and then
post bleacher. Then they pass ghee and oil from deodorization then after deodorization
they got the oil in the final stage where as for ghee they pass for hydrogenation at
particular temperature in the presence of nickel then after filtration they got ghee in the
final stage which is free from nickel.
Support Activities
The support activities can be divided into four groups, which are procurement,
technology development, human resource management and infrastructure. As the
prime input of ghee is available locally and some material has to import from out side
countries. So procurement for long time is not possible in case of raw material, which
is locally available. Where as the material that has to be import the company has a
lead-time of 2-3 months. So the department of inbound logistics is sufficiently
performing the activity of procurement.
R & D and Process development researches are very important in ghee/oil industry in
Pakistan. So in the company value chain this thing should be emphasized much, rather

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it has a big contribution in total value addition. Human resource management involves
the training and development of workers and employees in order to increase their
productivity and efficiency. For this purpose company make their employees to work
with the senior worker to get the experience, but they don’t have any separate training
program for new employees. The company has good planning, quality control systems
and future orientation, which although does contribute directly in value addition and
increase the effectiveness of whole process. The organization has the policy that the
dealer who distributes their product will not distribute the products of any other
competitors or substitute.
Analysis
All the value creation does not happen in the organization itself rather much of it can
be occur in the supply and distribution chains. So the whole process needs to be
analyzed. For this purpose we can divide it into three areas: suppliers, organization and
channel members.
Suppliers
Suppliers play a very vital role in total value creation. The whole of the profitability
depends upon the quality of raw material; if supplier does not provide the good quality
of oil then the desired level of quality of ghee/oil cannot be achieved. The price
structure of the country de-motivates the grower to produce better quality of
cottonseed. But good relationship with the suppliers and fair and prompt payment can
enforce the grower to cultivate better variety.
Organization
Within the organization the value addition activity is focused only on ghee/oil
production, which is their core competence. In order to provide the superior quality of
ghee/oil to customers, Fazal Cloth Mills pass the raw material from two different
machines.

Channel Members
There is a difference of 1-2 rupees per Kilogram in the Ex-mill price and market price
and the middlemen create this difference. As shown in the distribution network
diagram, the ghee/oil is not directly sold to the ultimate consumer rather it goes
through a long process. And everyone involves in this process take its share in terms of
commission. Here the value addition takes place in terms of price increase.

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SWOT ANALYSIS

SWOT analysis is a tool for auditing an organization and its environment.

It is the first stage of planning and helps marketers to focus on key issues.

Once key issues have been identified, they feed into marketing objectives.
It can be used in conjunction with other tools for audit and analysis, such
as PEST analysis and Porter's Five-Force analysis.
SWOT stands for strengths, weaknesses, opportunities, and
threats. Strengths and weaknesses are internal factors.

Strength could be:

 Your specialist marketing expertise.

 A new, innovative product or service
 Location of your business
 Quality processes and procedures
 Any other aspect of your business that adds value to your product
or service.
A weakness could be:

 Lack of marketing expertise

 Undifferentiated products and service (i.e. In relation to your
competitors)
 Location of your business

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FAZAL CLOTH MILLS

 Poor quality goods or services

 Damaged reputation
Opportunities and threats are external factors. For example:

An opportunity could be:

 A developing market such as the Internet.

 Mergers, joint ventures or strategic alliances
 Moving into new market segments that offer improved profits
 A new international market
 A market vacated by an ineffective competitor

A threat could be:

 A new competitor in your home market
 Price wars with competitors
 A competitor has a new, innovative product or service
 Competitors have superior access to channels of distribution
 Taxation is introduced on your product or service

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FAZAL CLOTH MILLS

STRENGTHS WEAKNESSES

1. ISO 9000 Certification. 1. Increased employee

2. WRAP Certified turnover
3. Vertically integrated.
2. Centralized management
4. High quality products.
system
5. Excellent market image in the local and
international market. 3. High cost of production.

6. Highly qualified management.

4. Low production capacity.
7. Adequate financial resources.
5. De-motivated Staff.
8. Competitive advantage.

9. Adopting information technology.

6. Non-Corporative culture.

10. Recruitment on merit. 7. Insufficient benefits for the

11. Loyal customers. employees.

12. Skilled Labor.

8. Stereotype machinery for
13. Broad and motivational vision. processing.
14. Back Track System
9. Communicational gap
among different
departments.

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FAZAL CLOTH MILLS

OPPORTUNITIES THREATS

1. Entry of new competitors just

1. Can expand its division such as
entering in weaving sector also. like China & India.

2. Can introduce its own label in 2. Buyer need and demand

domestic as well in international changes.
market
3. Political instability.
3. Can capture new market
segment. 4. Changing geopolitical
situation.
4. Full potential of entertaining the
local market. 5. Change of government
5. Can reduce the cost by proper policies.
utilization of resources.
6. Low price offered by
6. End of quota restrictions by the competitor
end of year 2009.
7. Globalization.
7. Can hire well-educated and
experienced staff.

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FAZAL CLOTH MILLS

Observations & Suggestions

As the Textile Industry is in crisis but Fazal Cloth Limited is performing very well in such
difficult economic conditions. The avenues are always open for further improvement. I
hope that the suggestions given by me will not only benefit to the management for getting
business but the workers will also efficient in performing their duties.
There is centralization of authority. All the decisions are taken by the Chief
Executive and Working Directors. The authority should be decentralized,
because delegation of authority creates responsibility. If the management
will delegate some authority to the employees then employees will feel
themselves responsible and they would work with zeal, by doing this the
top management can save important time which will be utilize in other
matters which will benefit the organization. Because the delegation of
authority creates the confidence among the employees and they will
perform their work efficiently.

I would like to recommend that the management should develop some

policies for the promotion of efficient workers. As there is no any policy
for the promotion of workers so it is creating unrest among the workers.
The management should make sound policies for the promotion of efficient
workers. This will not only increase the productivity of workers but the
management can low the turnover rate of employees.

There is need for refresher courses for the managerial level employees. If
the owners would make arrangement to provide training to the employees
then they would work efficiently. By doing this the productivity of the
employees will increase.

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The culture of the organization should be made according to the well

established organization.
The control of the Top Management should be strict over the employees so
that employees will take responsibility for their assigned job.
Proper training should be given to new employees as well as to existing
employees for improving their efficiency and productivity.
There is no any procedure for evaluating the employees and hence there are
no extra benefits to the efficient employees. The Owners should start some
criteria for the evaluation of employees and there should be some reward
for efficient workers. This reward may be non monetary such as
“Employees of the Day”, “Employees of the Month”, “Employees
of the Year”. This will not increase any monetary burden but will increase
the efficiency and productivity of the worker. Similarly, some monetary
benefits should also be given to the employees on better performance of the
work.

There is flat rate of increment for all the employees. This flat rate is also
minimal. This is breeding discontent among the employees. This flat rate
should be abolished and increment should be given on the basis of
performance and efficiency.

There is lack of staff members in the office, so new employees should be appointed for the
proper working and removing burden on other employees to achieve efficiency and better
results.

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FAZAL CLOTH MILLS

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