Internship Report

INTERNSHIP REPORT
FAZAL WEAVING MILLS LIMITED
A REPORT SUBMITTED TO THE DEPARTMENT OF MANAGEMENT SCIENCES,

VIRTUAL UNIVERSITY OF PAKISTAN IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE DEGREE OF MASTERS IN BUSINESS
ADMINISTRATION
Submitted By
BC150400827
Shahid Masood Ghani
Spring 2017
June 30, 2017
Department of Management Sciences,

Virtual University of Pakistan
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This report is dedicated to my parents.
For their endless love, support and encouragement
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Acknowledgement
All praises are for my ALLAH for blessing me with courage and strength to complete this report.
Countless thanks to my parents for their love and support throughout my life. Thank you both for
giving me strength to reach for the stars and chase my dreams.
I would like to express my gratefulness to all my teachers for guidance and support throughout this
study.
I am also thankful to all Fazal Weaving Mills Limited (FWML) Staff for gentle supervision and
encouragement throughout my internship. Special thanks go to the heads of Accounts and Corporate
Departments of FWML for their cooperation during my stay in the organization.
Finally, I would like to leave the remaining space as dedication to those brave people who never lose
hope and continue their struggle in whatever circumstances…
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Executive Summary
Internship program is one of the most important activity of the whole associate degree program. This
provides a student to observe and experience the actual business environment. Things learned here
play a vital role in future professional career of the student.
I did my internship in Fazal Weaving Mills Limited. The Company is newly setup and going through
CAPEX and operational improvements. The financial results are not very good as net losses are
observed due to high borrowing costs on finances obtained for CAPEX. However, the Company is
expected to be in profits as soon as operations are normalized.
I learned a lot of new things here. I got the first hand experience of posting transactions, running and
analyzing reports and customer relationing with perspective to accounts department. I also learned
the important corporate and secretarial compliance which company goes through every year.
I leaned the benefits of control environment and saw the benefits of principle of segregation of
duties.
Summing up, the whole experience was very interesting and I believe will help me a lot during my
future career.
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Table of contents
Serial # Description Page #
1 Brief introduction of the Textile spinning sector 8

2 Overview of Organization
Brief History 9
Organizational Hierarchy chart 9
Business Volumes 10
Product Lines 10
Competitors 11
Brief introduction of all departments 11
Comments on Organizational structure 12
3 Plan of internship program 12
4 Training Program
Reason for selecting the organization 13
Duties performed 13
5 Learning experience 15
6 Ratio Analysis
Current Ratio: 17
Acid Test Ratio 18
Working Capital 18
Times Interest Earned 19
Debt Ratio 20
Debt to Equity Ratio 20
Net Profit Margin 21
Gross Profit margin 22
Return on Assets 22
Operating Income Margin 23
Return on Equity 24
Assets Turnover Ratio 24
Operating Cash flows Ratio 25
Dividend per Share 26
Earnings Per Share 26
7 Future Prospects of the Company 27
8 Conclusion 27
9 Annexure
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Brief introduction of the Textile spinning sector
Pakistan is the 4th largest producer of cotton in the world with large spinning capacity in Asia.
Pakistan ranks as 3rd in the world in the field of yarn production. In fact, Pakistan contributes 4.3%
to the global spinning capacity after China and India.
Since spinning is beginning of value chain, all value added processes of weaving, knitting,
processing, garments and made-ups are dependent upon this process. The effect of a sub-standard
yarn by spinning segment can go right across the entire value chain. Pakistan's spinning sector caters
not only to the requirements of the domestic industry but also about one-third of the total production
of yarn is exported to different destinations.
According to the Textile Commissioner’s Organization Annual Report for the year 2016, there are
477 textile spinning units in operation with 13.414 million spindles and 187,259 with annual
production capacity of 3,397.3 million kilograms of Yarn
Pakistan’s leading buyers of cotton yarn are China, Hong Kong, Bangladesh, Korea Republic,
Turkey, Japan and Portugal.
Recently the government has announced the country's biggest export package worth Rs 180 billion
($1.72 billion) to enhance foreign trade. The package envisages abolition of customs duty and sales
tax on import of cotton. Under the package, duty draw back rate for Yarn and grey fabric is 4%.
Textile is the one of the major employers in Pakistan. It employs 187,920 production workers, 37,323
non-production workers and 16,971 contractual labors.
Pakistan’s textile imports include import of textile machinery from China, Japan and North Korea.
During the year 2015-16, a total of US$ 461.51 million were spent on imports.
Source: Textile Commissioner's Report

Pakistan Textile Journal
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Overview of Organization
a) Brief History
Fazal Weaving Mills Limited was incorporated in Pakistan in 1989 as a Public Limited company under the
Companies Ordinance, 1984. The Company is engaged in the manufacture and sale of yarn. The registered office of
the Company is situated at 69/7, Lahore Cantt, The Head office of the Company is situated at 59/E Abdali road
Multan. The manufacturing facility of the Company is located at Mauza Khairabad Qadir Pur Rawan. The Company
is a wholly owned subsidiary of Fazal Cloth Mills Limited.
b) Organizational Hierarchy chart
Board of Directors
BOD Audit Committee

chairman Chairman
Head of Internal Audit

Chief Executive officer
Internal Audit Department
GM Chief finance GM H. R Company GM Admin Procure Cotton

Finance officer Marketing Manager Secretary Productions Manager Manager Manager
Finance S. M. Marketing Corporate Technical Security & Procure

Department Accounts Department Department Manager Admin Department
department
Supervisors s Cotton
Department
H. O. Manager Mills Manager
Accounts Accounts
Head
H. O. Accounts Jobbers
Department
Production
Department
Gate and Labor Accountant Store and
Quality officer Inventory
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c) Business Volumes
June 30, 2016 June 30, 2017
------ Rupees -------
Authorized share capital 300,000,000 300,000,000
Issued, subscribed and paid up capital 250,000,000 250,000,000
Property, plant & equipment 3,103,852,385 2,424,300,297
Stock in trade 1,105,870,876 987,534,026
Borrowings 2,156,410,447 1,698,880,458
Annual Revenues 3,742,908,806 3,569,814,519
Loss after tax 2,615,693 7,256,144
Loss per share 0.10 0.29
No. of spindles installed - Numbers 39,600 26,400

Production capacity (20 counts) - Kilograms 13,854,811 8,188,914
Actual production (20 counts) - Kilograms 9,701,387 7,452,084
Total number of employees 718 579
d) Product Lines
The Company is engaged in production and sale of Yarn. Sales are done both locally and export. Following types
(count) yarn are currently produced and sold;
 07/1 CD SIRO  14/1 CD SLUB

 07/1 CD WP  14/1 CD WP
 08/1 CD CF  15/1 CD CF
 08/1 CD SIRO  16/1 CD CF
 08/1 CD WP  16/1 CD HOS
 09/1 CD CF  16/1 CD SIRO
 09/1 CD WP  16/1 CD WP
 10/1 CD CF  16/1 CD WP BCI
 10/1 CD SIRO  18/1 CD WP
 10/1 CD SLUB  19.5/1 CD WP
 10/1 CD WP  20/1 CD CF
 10/1 CD WP BCI  20/1 CD HOS
 11/1 CD CF  20/1 CD WP
 11/1 CD SIRO  21/1 CD CF
 11/1 CD WP  21/1 CD WP
 12/1 CD CF  22/1 CD CF
 12/1 CD SIRO  22/1 CD WP
 12/1 CD WP  24/1 CD CF
 14/1 CD CF  24/1 CD PK
Cotton Count is defined as the number of 840 yards length of yarns in one pound. It means that the
number of yarns of 840 yards length required weighing one pound. For example, a 30 count yarn means
you need 30 yarns of 840 yards length to make it one pound weight.
In cotton count (indirect yarn numbering) system, higher the count of a yarn is, finer the yarn. For
example, a 40’s yarn is two times finer than a 20’s yarn.
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As shown above 07 means 7 fibers of Yarn. /1 means single yarn. /2 would mean doubled yarn i.e. two
fibers twisted to form a single yarn fibers. CD means carded and SIRO is the type of spinning i.e. a
process in which the yarn is made into 2 ply on the ring spinning machine
e) Competitors
Textile sector is a saturated industry and spans from home textile units to large production houses. Below
mentioned are the key competitors of Fazal Weaving Mills Limited;
- Reliance Weaving Mills Limited (Spinning unit)

- Allawasaya Textile and Finishing Mills Limited
- Maqbool Textile Mills Limited
- Sunrays Textile Mills Limited
- Mehmood Textile Mills Limited
- Masood Fabrics Limited (Spinning unit)
- Roomi Fabrics Limited (Spinning unit)
f) Brief introduction of all departments

Finance Department:
This department is responsible for catering cash flow needs of the Company. As Fazal Weaving
Mills is a highly geared Company, the importance of this department is on the rise. This
department manages disbursement and repayment of loans. This department is led by GM
Finance
Accounts Department:
This department deals with the accounting matters. All types of receipts and payments are
processed from here. This department is also responsible for preparation and presentation of
financial information. This department is led by the CFO.
Marketing Department:
This department is responsible for business promotion, client gathering and client retention. Not
only promoting sales but this department also strives to build a positive image of the Company.
The operations start from sampling, taking orders, coordinating dispatches and addressing
customer complaints. This department is led by GM Marketing.
Human Resource:
This department is responsible for all HR related matters including employees hiring,
promotions, dismissals and addressing grievances. The department also promotes
implementation of HR policies and ensures ethical compliance by all hierarchies of
management. This department is led by HR Manager.
Corporate Department:
This department is responsible for Corporate and statutory compliance matters. It works as a
front desk for shareholders. It arranges Board and Shareholders meetings and keeps record of
minutes. This department is also responsible for dissemination of financial information. This
department is led by the Company Secretary.
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Production Department:
This department is the back bone of the Company. It converts raw material into finished goods.
It strives to improve yields and minimize wastages. It is headed by GM Productions.
Administration Department:
This department deals with security, vehicle management, repairs and maintenance, cleaning
and other administrative matters.
Procurement Department:
This department is responsible for all types of procurements including stores, spares and loose
tools. It works hard to procure materials as per user requirements on timely basis with best
possible quality and price. This department is headed by Manager Procurement
Cotton Department:
This department is responsible for procurement of cotton and other raw materials. It is headed
by the Cotton Manager.
g) Comments on Organizational structure
Fazal Weaving Mills Limited is a part of Fazal Group and is a family owned business (majority share
holding). The management structure is horizontal and bureaucratic. All sorts of operational and strategic
decisions are made by the top most management including the Chairman and the CEO, in consultation
with other BOD members.
As textile industry is mature and does not face frequent changes in business environment, most of the
organizational tasks are repetitive. The established rules help people perform efficiently with reliable
results. Further, the operation span is vast; a bureaucratic style with a converged leader best suits the
organization.
Plan of internship program

I was assigned at the head office of Fazal Weaving Mills Limited. It is situated at 59 / 3, Abdali road,
Multan. All major departments are situated at Head office. Total staff strength at head office is 130
persons. Largest strength department includes accounts and marketing departments. The accounts
department is sub-divided into accounts payable section, accounts receivable section, inventory section,
fixed assets section, cash management and general ledger section. Order management module is managed
by the marketing tram. These bifurcations are made as per sub-modules of Enterprise resource planning
(ERP) software named Oracle. The Company is currently using its version I 12. Oracle is an integrated
software which ensures automatic processing of data and summarization of financial results in a
reportable format. The departmentalization and bifurcation of work ensures segregation of duties and
clear identification of job description to each employee.
The internship started on May 01, 2017 and ended on June 15, 2017
During this tenure, I was assigned to work in accounts and corporate departments. In accounts
department, I spent 4 weeks of training. I was assigned work in accounts payable, inventory and account
receivable section. Subsequently, I was transferred to corporate department where I spent remaining 2
weeks of internship. I got the opportunity to get learning directly from senior manager accounts and the
Company secretary.
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Training Program
a) Reason for selecting the organization
Textile is one the main industry in Pakistan. This sector plays a vital role in economic development of the
country and considered to contribute 8.5% to the GDP. Pakistan is the 8th largest exporter of textile
commodities in Asia. In addition, the sector employs about 45% of the total labor force in the country
(and 38% of the manufacturing workers). Pakistan is the 4th largest producer of cotton with the third
largest spinning capacity in Asia after China and India and contributes 5% to the global spinning capacity.
Some of Pakistan’s large textile units are situated in South Punjab, with head office situated in Multan.
One of these includes Fazal Weaving Mills Limited.
I decided to apply to Fazal Weaving mills for internship which was generously accepted. By having
experience of this Company, I understand that I have gained valuable knowledge of textile industry and
its accounting and reporting processes. This will help me to achieve my future career goals in a better
way.
b) Duties performed
I. Duties performed in Accounts Department
Accounts Payable Section:
This section is responsible for supplier maintenance and efficiently processing payments. I was assigned
to work on payment to store parties.
The process of payment would start when invoice against goods is received from suppliers.
Store items are normally purchased from existing suppliers (mostly original equipment manufacturer
(OEM) or official distributors of a product) In case a new supplier was entered; a supplier selection form
was completed and approved from respective authority. The manager accounts would open a new supplier
in Oracle AP Module.
Subsequent to receipt of invoice from supplier, an accounts payable voucher is entered in system. For
most suppliers, payment terms are 30 days from delivery. Some payments are made in advance e.g. petrol
and diesel.
Once voucher is entered into system, its in validation stage. The voucher is then is sent for approval from
the accounts manager and subsequently to audit department. Once being audited, the voucher is validated
in Oracle and the subject amount is available for payment processing.
An accounts staff run a “payment due list” on daily basis. This list shows balances which are due (as per
payment terms) and should be processed for payment. This staff then generates a bank payment voucher
for all selected payments. This voucher too passes through above mentioned approval authorities. Once
approved, the vouchers are sent to treasury section for cheque preparation / online transfer. All cheques
are approved by three (3) tier signatories including the CFO and two directors.
Further to that, an accounts staff runs “supplier ageing summary” on monthly basis. This report shows
overdue status of payments that are pending due to some reason. The senior manager accounts discuss
this report with CFO who signs this report along with necessary directions.
Base on this report, reconciliation of balances is done with suppliers. Any dispute arising is resolved on
monthly basis.
I reviewed all types of vouchers to understand accounting entries and authorization matrix. I made
accounting entries of different payable transactions in Oracle system. I generated different reports from
Oracle to understand various types of reporting and its uses. I coordinated with suppliers through email
for balance confirmations. I was reporting to senior manager accounts
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Accounts receivable section:
This section is responsible for customer management, generating customer invoices and handling receipts.
The marketing department is responsible for customer selection, sales contracts, deciding credit limits and
directing dispatch of Yarn.
The accounts department maintains a “summary of contracts” which shows the status of each contract
along with agreed prices and quality. When marketing department intimates an intended sale of Yarn
through dispatch order, the accounts department confirms it validity from the “summary of contracts and
checks availability of stock from Oracle inventory module. In case of valid dispatch order, the same is
signed by the accounts manager and forward to mills for dispatch of materials.
When actual dispatch of goods is done from mills, the Oracle system generates an invoice based on the
outward gate pass (OGP) entered in mills. This invoice is signed by the accounts manager and sent to
audit department for verification. Subsequent to audit, the accounts manager validates invoice in Oracle
system.
On monthly basis, the accounts staff runs “debtor ledger summary” to identify overdue and aged
balances. This is reviewed by the CFO and signed along with necessary directions.
The accounts staff follows up for aged balances. Further dispatches are stopped till old balance is
recovered.
On monthly basis, reconciliation with customers is done to identify any disputes. The company has a
policy to record provision against doubtful balance. However, no provision was made at time of my
internship as all balances were considered good.
During my stay in accounts receivable section, I prepared dispatch orders based on instructions received
from marketing department. I entered sales invoices in Oracle. I coordinated with customers through
email to confirm balances. To one customer, ledgers were exchanged to identify non reconciling items
and it was observed that a payment to other group company was recorded in fazal weaving account.
Inventory section:
This section manages inventory including raw materials, wastes, finished goods and store items.
For procurement of items, requisition is raised by the end user in Oracle system. The procurement
department generates purchase order as per demand which is approved by accounts manager and the
CFO.
When store items are received from supplier as per purchase order, these are subject to clearance from
inspection department. After inspection, these are received in store through goods received note (GRN).
This will automatically update inventory and its costing. GRN and issuance for consumption is entered at
mills site.
The company uses perpetual inventory system for stores, spares and loose tools. For raw materials and
finished goods, periodic inventory system is used.
Physical stock count of raw material and finished goods is done on monthly basis. Stores and spares are
counted on quarterly basis.
The accounts staff generates pending requisition and pending purchase order from Oracle on monthly.
These are discussed with procurement department to remove inconsistencies. These reports are reviewed
by the CFO and signed alongwith necessary instructions.
I was assigned to check rates as put in purchase orders in accordance with previous purchase orders. I
studied monthly reports as were reviewed by the CFO. I participated in monthly stock count and check
that physical stock is accurate as per inventory reports and bin cards are timely updated.
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II. Corporate department:
This department deals with corporate and statutory matters.

All types of notices are disseminated from this department. It keeps and continuously updates record of
share holders, directors and key officers of the Company.
After each meeting (share holders / BOD), it is the responsibility of the Company secretary to record
minutes of the meeting and get approval of the same from the chairman in next meeting.
The department also hold election of Directors at expiry of office tenure i.e. three (03) years.
During my tenure in this department, I learned about agenda, notices and minutes preparation of BOD and
share holders meetings. I was trained about secretarial compliance including annual returns and other
forms.
My internship helped to understand corporate culture and office working environment. I understood that
how important it is to maintain punctuality and discipline. I learned that it is very important to follow
office timings and negligence of these has negative consequences.
I also learned why it is important to maintain different hierarchy levels in the organization. I came to
know that respect to seniors is very important in order to maintain office decorum.
Further, I understood the principle of segregation of duties. I also identified that non-compatible functions
should always be kept separate e.g. a person holding custody of cash should be different from the one
who authorizes payments.
I also came to the principle of confidentiality. I understood that it is very important to share business
information on need to know basis only. I also understood that some of the information is sensitive and its
disclosure to un-wanted persons may have legal consequences as well e.g. sharing profitability figures to
outsiders when the information is not yet public.
Further I came to know that each organization has ethical principles as well. Some aggressive acts may be
treated as harassment and may be subject to legal consequences.
Also I noticed that compensation rewards are linked with performance. An employee performing well
shall be more honored than the one who does not work properly.
I understood the importance of team work also and noted that departmental performance is a result of
cumulative efforts.
In short, this has been a life time learning experience.
Learning experience
Knowledge gained
I have got thorough understanding of business processes of the Company including accounts payable,
accounts receivable and inventory. I got understanding of transaction approval authority matrixes. I
reviewed various reports used to inference various types of information including age analysis, overdue
receipts / payments. The knowledge gained in courses of financial accounting, business and labor laws
and human resource management was seen in practical application.
Skills Learned
The internship program provided me an opportunity to have practical experience of textile sector. I can
use this experience in my future career goals. Now I can better understand the figures presented in the
financial statements, especially the income and expenses. I have also learned how ERP brigs efficiency in
preparation and reporting of financial information.
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Values gained
I have learned that hard work is the key to success. Time management is very important in achieving
goals. Also, punctuality is very important in business life as it ensures discipline. Above all, integrity is
the main factor in business as no one likes to be cheated, neither the employer nor the customers. So to
be honest is very important even if it may not be liked.
I also learned that employee should be worthy of accepting responsibility. The senior / employer must be
able to depend on them and they must possess ability to complete tasks as assigned and expected.
Most challenging task performed
I found that reconciling balances with customers is a challenging task. People do not share information
easily. Further, they won’t accept liability unless it is evidenced with proof. So I found it quite
challenging to reconcile balances with customers.
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Ratio Analysis
The Company is newly setup and started commercial production in the year 2014, therefore is
experiencing losses and high gearing. The Company is a wholly owned subsidiary and secures a firm
support from its holding company and sponsors. Therefore, although the ratio analysis shown weak
position, still there is no going concern problem.
The ratio analysis is as below;
1. Current Ratio:
Formulae:
Current Ratio = Current Assets / Current Liabilities
Computation is as below;
Year 2014 Year 2015 Year 2016

Figures 1464630138 / 1370823753 / 1706740727 /
1544634717 1657135906 2244403002
Result 0.95 Times 0.83 Times 0.76 Times
Graphical presentation is as below;
Current Ratio
1.00
0.90
0.80
0.70
0.60
0.50
Current Ratio
0.40
0.30
0.20
0.10
-
Interpretation
As evident from graph, the current ratio of the Company is deteriorating every year. This represents that
liquidity position of the Company is not favorable and working capital needs proper management
attention.
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2. Acid Test Ratio
Formulae:
Acid Test Ratio = (Current Assets – Stock) / Current Liabilities

(1464630138- (1370823753- (1706740727-
Figures 1186740824)/1544634717 987534026)/1657135906 1105870876)/2244403002
Result 0.18 times 0.23 times 0.27 times
Acid Test Ratio

0.30
0.25
0.20
0.15
Acid Test Ratio
0.10
0.05
-
Interpretation:
Acid test ratio shows that Company’s control over its stock is improving and cash and cash equivalents
are improving with each year.
3. Working Capital
Formulae:
Working Capital = Current Assets – Current Liabilities

Figures 1464630138 -1544634717 1370823753 -1657135906 1706740727 -2244403002
Result (80,004,579) (286,312,153) (537,662,275)
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Working Capital
-
(100,000,000.00)
(200,000,000.00)
(300,000,000.00) Working Capital
(400,000,000.00)
(500,000,000.00)
(600,000,000.00)
Interpretation:
As evident in graph, the working capital position is deproving in each year. This situation needs urgent
management attention towards cash flow management.
4. Times Interest Earned

Formulae:
Mark up Cover Ratio = Operating Profit before financial charges / Financial charges

Figures 23139601 / 84823198 283254535 / 291907040 176537496 / 217562746
Times Interest Earned

1.50
1.00
Times Interest Earned
0.50
-
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Interpretation
The situation improved in the year 2015 however gone down in year 2016 due to increase in current
portion of long term liabilities.
5. Debt Ratio
Formulae:
Debt ratio = Total Debt / Total Assets
Figures 3,027,755,294 / 2,778,295,541 / 2,949,790,382 /
3,619,937,908 3,894,809,658 4,937,115,869
Computation of total debt is as follows:

Holding Company's Loan 499,940,000 530,000,000 530,000,000
Long Term Financing 1,249,999,000 1,151,705,889 1,612,358,528
Long Term Musharika 18,735,894 17,174,569 14,051,919
Short term borrowings 1,259,080,400 973,687,175 565,532,232
Current portion of non-current Liabilities - 105,727,908 227,847,713
3,027,755,294 2,778,295,541 2,949,790,392
Debt Ratio
1.00
0.50
Debt Ratio
-
Interpretation
This position shows that asset base of the Company is improving. This means that more assets are
available for utilization and pay-off liabilities.
6. Debt to Equity Ratio

Formulae:
Debt Equity Ratio = Long term Liabilities / Equity
Figures 1,768,674,894 / 304,398,312 1,698,880,458 / 306,171,369 2,156,410,447 / 317,485,883
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Computation of long term debt is as follows:
Holding Company's Loan 499,940,000 530,000,000 530,000,000
Long Term Financing 1,249,999,000 1,151,705,889 1,612,358,528
Long Term Musharika 18,735,894 17,174,569 14,051,919
1,768,674,894 1,698,880,458 2,156,410,447
Debt to Equity Ratio

10.00
Debt to Equity Ratio

-
Interpretation
The graph shows debt position is on the rise. This is due to the reason that company is availing more
loans for CAPEX
7. Net Profit Margin

Formulae:
Net profit (Loss) Ratio = (Net Profit (Loss) / Sales) x 100
51156292 / (7256144) / (2615693) / 3742908806
Figures 762768816 * 100 3569814519 *100 * 100
Result 6.71% -0.20% -0.07%
Net Profit Margin

0.10
0.05
Net Profit Margin
-
(0.05)
Interpretation
There is net loss in the year 2015 and 2016. The main reason for loss is drastic increase in borrowing
costs due to high gearing.
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8. Gross Profit margin
Formulae:
Gross Profit (Loss) Ratio = (Gross Profit (Loss) / Sales) x 100

34290831 / 345077512 / 245430919 / 3742908806
Figures 762768816 *100 3569814519 *100 * 100
Result 4.50% 9.67% 6.56%
Gross Profit margin

0.12
0.10
0.08
0.06
Gross Profit margin
0.04
0.02
-
Interpretation
Although there is net loss but the Company is in operational profits. The graph shows that GP increased
in the year 2015 however tilted down in year 2016
9. Return on Assets
Formulae:
Return on assets = Net Profit (Loss) / Total Assets
51156292 / (7256144) / (2615693) /
Figures 3619937908 * 100 3894809658 * 100 4937115869 * 100
Result 1.41% -0.19% -0.05%
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Return on Assests
0.02
0.01
0.01 Return on Assests
-
(0.01)
Interpretation
Due to net loss in the year 2015 and year 2016, the return has gone negative. Loss has mainly resulted
from high borrowing costs.
10.Operating Income Margin

Formulae:
Operating Income / Sales
23139601 / 283254535 / (2615693) /
Figures 762768800 * 100 3569814519 * 100 4937115869 * 100
Result 1.41% -0.19% -0.05%
Operating Income Margin

0.02
0.01
0.01 Operating Income Margin
-
(0.01)
Interpretation
As there has been net loss in the year 2015 and 2016, so the figures are negative in respective years.
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11.Return on Equity
Formulae:
Net Income (Loss) / Shareholders Equity

51156292 / (7256144) / (2615693) /
Figures 304398312 306171369 317485883
Result 16.81 times -2.37 times -0.82 times
Return on Equity
0.20
0.10
Return on Equity
-
(0.10)
Interpretation
As mentioned earlier, net loss in the year 2015 and 2016 has turned the return on equity figures as
negative in respective years.
12.Assets Turnover Ratio

Formulae:
Net Sales / Avg. Total Assets
762768816 / ((3619937908 3569814519 / ((3894809658 + 3742908806 / ((4937115869 +
Figures + 254762534) / 2) 3619937908) / 2) 3894809658)/2)
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Assets Turnover Ratio

1.00
0.80
0.60
0.40 Assets Turnover Ratio
0.20
-
Interpretation
As 2014 was the first year of operations, therefore the turnover was less. However in 2015 is improved
steadily and but reduced in 2016. High turnover shows high system efficiencies.
13.Operating Cash flows Ratio

Formulae:
Operating cash flow ratio =Cash flows from Operations / Current Liabilities
(1301209097) / 469994596 / 745777238 /
Figures 1544634717 1657135906 2244403002
Operating Cashflows Ratio

1.00
0.80
0.60
0.40 Operating Cashflows Ratio
0.20
-
Page 25 of 36
Interpretation
As working capital losses are too high in the year 2015 and 2016, therefore operating cash flows are weak
in the respective years also/
14.Dividend per Share

Formulae:
Total dividend paid / Total Shares
Figures 0/25000000 0/25000000 0/25000000
Result - - -
Interpretation
As no dividend is paid till date, so the results are zero
15.Earnings Per Share

Formulae:
Earning per share ratio = Net profit after tax before appropriation / Number of shares
51,156,292 / (7,256,144) / (2,615,693) /
Figures 25,000,000 25,000,000 25,000,000
Result 2.05 per share (0.29) per share (0.10) per share
Earning Per Share

3.00
2.00
1.00 Earning Per Share
-
(1.00) Year 2014 Year 2015 Year 2016
Interpretation
As there had been net losses in the year 2015 and 2016, EPS has turned into Loss in the respective years.
Page 26 of 36
Future Prospects of the Company
The Company is newly setup and going through initial setup phases. Additionally, the year 2015 and
2016 were not good years for textile industry. The production costs hiked as a reason of fuel and
electricity prices. Yarn prices also came down in these years as well as bad cotton crops.
However, the Company with support of other companies of the group expects to overcome issues.
Electricity is expected to be purchased on lower rates from one of the group companies which is an IPP.
Production costs are expected to be lower due to economies of scale and good supply chain management.
The Company is now aligning itself towards market demand to produce products that have high
acceptability among customers.
Conclusion:
Fazal Weaving Mills Limited belongs to a very strong group which has established itself as one of the
large textile group of Pakistan. The Company has invested a lot to develop a large scale yarn spinning
capacity which is sufficient to meet the needs of other group weaving companies as well as outside
customers. The Company has an experienced management which bears numerous years of successful
textile experience on its shoulders.
Although the ratio analysis does not present a good position at present, however things are expected to
improve as production efficiencies are attained. Once operations are stabilized, the borrowings will stand
at a normal position and high profit margins are expected.
The Company’s management is motivated to make it a large scale company. Contract for purchase of
electricity from one of the group company is complete and by this the Company shall be able to run its
operation 24 /7 on cheap electricity produced from baggas and coal.
The machines installed are latest and state of the art. They are expected to give high yields with minimum
production losses.
My learning experience with this Company went very well and I have learnt a lot which will help me in
my future endeavors.
Recommendations for improvement:
Although the management is striving hard to bring production efficiencies however it is critical for the
Company to manage its stock in trade issues and lower working capital costs. It has been observed that
huge stocks are available with the Company as at 30th June. These are definitely increasing working
capital costs.
Therefore, it is strongly suggested to produce stock on JIT basis and this can not be done unless efficiency
is produced in order to delivery cycle is achieved.
Annexure
The company has not put the financial statements on its website. Therefore extracts are attached.
- Balance sheet, profit and loss account and cash flow statement for the year ended June 30, 2014
Only the three documents are uploaded as file size specified is too less.
The files have been uploaded on file hosting website. Links as below:
http://www.filehosting.org/file/details/678470/FS%202014.pdf
Files are protected with password “ bc150400827”
Page 27 of 36
Balance sheet for the year 2014
Page 28 of 36
Profit & Loss for the year 2014
Page 29 of 36
Cash flow for the year 2014
Page 30 of 36
Balance Sheet for the year 2015
Page 31 of 36
Profit and loss for the year 2015
Page 32 of 36
Page 33 of 36
Balance Sheet for the year 2016
Page 34 of 36
Profit and loss for the year 2016
Page 35 of 36
Page 36 of 36

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INTERNSHIP REPORT

FAZAL WEAVING MILLS LIMITED

A REPORT SUBMITTED TO THE DEPARTMENT OF MANAGEMENT SCIENCES,

Department of Management Sciences,

1 Brief introduction of the Textile spinning sector 8

Source: Textile Commissioner's Report

b) Organizational Hierarchy chart

BOD Audit Committee

Head of Internal Audit

Internal Audit Department

GM Chief finance GM H. R Company GM Admin Procure Cotton

Finance S. M. Marketing Corporate Technical Security & Procure

No. of spindles installed - Numbers 39,600 26,400

 07/1 CD SIRO  14/1 CD SLUB

- Reliance Weaving Mills Limited (Spinning unit)

f) Brief introduction of all departments

g) Comments on Organizational structure

Plan of internship program

Accounts Payable Section:

This department deals with corporate and statutory matters.

Most challenging task performed

Year 2014 Year 2015 Year 2016

Graphical presentation is as below;

Year 2014 Year 2015 Year 2016

Graphical presentation is as below;

Acid Test Ratio

Year 2014 Year 2015 Year 2016

(300,000,000.00) Working Capital

4. Times Interest Earned

Year 2014 Year 2015 Year 2016

Graphical presentation is as below;

Times Interest Earned

Computation of total debt is as follows:

Graphical presentation is as below;

6. Debt to Equity Ratio

Graphical presentation is as below;

Debt to Equity Ratio

Debt to Equity Ratio

7. Net Profit Margin

Graphical presentation is as below;

Net Profit Margin

Year 2014 Year 2015 Year 2016

Graphical presentation is as below;

Gross Profit margin

0.01 Return on Assests

10.Operating Income Margin

Graphical presentation is as below;

Operating Income Margin

0.01 Operating Income Margin

Year 2014 Year 2015 Year 2016

Graphical presentation is as below;

12.Assets Turnover Ratio

Assets Turnover Ratio

0.40 Assets Turnover Ratio

13.Operating Cash flows Ratio

Graphical presentation is as below;

Operating Cashflows Ratio

14.Dividend per Share