INTRODUCTION

Fazal Cloth Mills Limited (“the Company”) was incorporated in Pakistan in May
14, 1966 as a public limited company under the Companies Act, 1913 (now the
Companies Act, 2017) and its shares are quoted on Pakistan Stock
Exchange. The Company is engaged in manufacturing and sale of yarn and
fabric. The manufacturing facilities are located at Fazal Nagar, Jhang Road,
Muzaffargarh and Qadirpur Rawan Bypass, Khanewal Road, Multan in the
province of Punjab.
The company set up its first spinning unit in 1972 at Muzafargarh. Since its
listing, the company has maintained a regular dividend payout, paying cash
dividends or bonus shares in 37 years out of the 48 years.
At present, the company owns and operates 8 Spinning units comprising 274,524
Spindles and 3,660 Open End Rotors and 1,752 MVS Spindles installed
and 224 Air-jet Picanol Looms.
All units have captive Gas Fired Power Generation with a capacit y of 54.06
Mega Watts. All units are equipped with state of the art equipment .
Being listed company, it is sub categorized as public interest company (P IC).
The company is Economically Significant as it provides employment to more
than 6,900 people and having annual sales worldwide in excess of US $ 364.09
Million, out of which US$ 96.25 is generated from exports. The company
produces 100,859 tons of Yarn and 45.37 million meters of fabric per year. Its
count range is from Ne 4/1 – Ne 80/1 in carded, combed, compact, core spun,
Multitwist / Multicount / Slub, Double and Zero Twist Yarns. These Yarns are
produced with Cotton, Rayon, Pol yester Cotton, Modal Cotton and Bamboo
Cotton fair trade cotton Fibers. It also produces certified SUPIMA, ORGANIC,
GIZA, BC I, Cleaner Cotton, LYCRA, USA Cotton MVS Melange Yarns and
Fabric.
Customer satisfaction from order placement to after sales service is given
priorit y over every other aspect as a policy. Continuous reinvestment is made to

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modernize and balance manufacturing facilities with an aim to diversify,
improve and expand product base.
.
GROUP PROFILE

There are certain other organizations, which are managed by the sa me group. A
list is as follow:

1. Ahmad Textile Mills Lt d. Rahim Yar Khan

2. Fatima Sugar Mills Ltd.

3. Reliance Textile Mills Ltd.

4. Reliance Weaving Mills Ltd.

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COMPANY INFORMATION

BOARD OF DIRECTORS:
SH. NASEEM AHMAD

Chairman/Chief Executive

Mr. MUHAMMAD AFZAL ULLAF S IDDIQUI

Director (NIT)

SH. SHAUKAT MASUD

Director

SH. AMIR NASEEM

Director

MR. REHMAN NASEEM

Director

MR. FAZAL AHMAD SHEIKH

Director

MRS. FARRUKH MUKHTAR

Director

AUDITORS:
M/S HAMEED CHAUDHRY & CO.

CHARTERED ACCOUNTANT

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BANKERS:
HABIB BANK LIMITED

NATIONAL BANK OF PAKISTAN LTD.

ASKARI COMMERCIAL BANK

SONERI COMMERCIAL BANK

REGISTERED OFFICE:
ROOM NO. 102-103,

INTERNATIONAL PLAZA,

BOHRA STREET, MULTAN CANTT.

HEAD OFFICE: ROOM NO, 102-103, INTERNATIONAL PLAZA,

BOHRA STREET, MULTAN CANTT.

Registration Number: 0002266

National Tax Number: 0101056-5

SHARES DEPARTMENT
59/3, Abdali Road, Multan.

Phone: (92) 61-4579001-7,4781637 Fax: (92) 61 -4541832

E-mail: corporate@fazalcloth.com; info@fazalcloth.com
Website: www.fazalcloth.com

MILLS

 Fazal Nagar, Jhang Road, Muzaffargarh -Pakistan

Ph: (92) 66-2422216
Fax: (92) 66 -2422217

 Qadirpur Rawan Bypass, Khanewal Road, Multan -Pakistan

Ph: (92) 61-6740041-45
Fax: (92) 61 -6740052

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VISION:
The Company aims to establish a vertically integrated textile business producing
finished products, processed and grey fabrics and yarn. The company aims to
produce high qualit y diversified products at competitive price to be marketed
globall y.

MISSION STATEMENT:
To provide a secure and rewarding investment to its shareholders and investors.
To provide qualit y products to its customers
To secure place of work to its employees
To be an ethical partner with its business associates.

GOALS
 To produce best qualit y yarn.
 To serve our customers, employees, suppliers, shareholders and
the societ y as a whole.
 To become profitable and groom, through providing high qualit y
product and services.

OBJECTIVES
 To increase our production capacit y.
 To reduce production cost
 To increase export of yarn.
 To acquire good qualit y raw material.
 To have good human resource.
 To build good relationships with all stakeholders.

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CORPORATE SO CIAL RESPONSIBILITY

Fazal Cloth Mills Ltd (FCML) considers CSR as a fundamental responsibilit y.

FCM L strives to be a good corporate citizen. The Company contributes to
societ y b y supporting public health and education facilities. Some of the
institutes the company is donating to for this purpose are:

Education:
Al-Noor Special Childern School Multan

Health

 Nishtar Hospital Multan

 Ch. Parvaiz Elahi Institute of cardiology
 Rejeb Tayyib Erdogan Hospital Trust
 Qualit y Surgical Centre
 Ittefaq Hospital Lahore
 Zubaida Fatima Memorial Hospital
 Fatimid Foundation
 Patient’s Welfare Societ y

Others
 Fazal ur Rehman Foundation
 United Relief Foundation for blind
 S.O.S Childern Village Multan

Apart from donations to above institutions the Company also perform following
activities as good co rporate citizen. The Company also regularl y c arries out tree
plantation drive at its offices and factories.

The Company also regularl y organizes medical camps and regular fumigation is
carried out at the premises of all manufacturing facilities by using fogging
machines to prevent viral diseases.

The Company conducts regular testing of waste water, stack emission and
machinery noise.

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PRODUCTS RANGE & MARKETS
A broad range of spun yarns tailored for today's market as per customer's
requirements are made by us. We are mainl y focused towards - the development
and production of Fancy/Novelt y and Blended yarns. Fazal Cloth Mills is ideall y
suited to meet your needs as a one window shop by offering a wide range of
yarns, which has been produced through the latest spinning processes and
technology.

Home Textile
Available in Dyed & Printed Woven and knited Fabrics

 Flat Sheets

 Fitted Sheets

 Pillow Covers

 Quilt Covers

 Bed Sheets

 Comforters

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Introduction to Various Departments

Following are the various departments at Fazal Cloth Mills Lt d.

 Human Resources Department

 Purchase & Sales Department

 Export Department

 Import Department

 Accounting & Finance Department

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Brief description of various Departments

HUMAN RESOURCES DEPARTMENT

This department is responsible for:

 Human resources inventory management

 Payroll preparation

 Employee appraisal

 Employee satisfaction

Some administration work is also performed by this department

PURCHASE AND SALES DEPARTMENT

Purchase department
The purchase department is divided into two categories, cotton purchase
department and store purchase department.

a) Cotton purchase department

Cotton purchase department is most important department in textile industry.
Qualit y of yarn depends upon cotton that has been purchased. It becomes most
important when there is business of export. There is no question on qualit y.
Because your minor mistake may result in huge losses. Moreover you will loss
your credibilit y. Form director to cotton selectors all are involved in cotton
purchase process.

b) Store purchase department

Stores incharge heads the store purchase department.

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The store purchase department is responsible for the purchase of items like
Spare parts of machinery, and Packing material spares, electric items, Oil and
lubricants, Stationery items, Building Material and General Store.

Documents

 Demand Requisition

 Invoice of Purchase

 Delivery Order

 In Gate Pass

SALES DEPARTMENT
Sales department is one of the important departments in any industry. If a unit
produces best quality goods but have not competitive staff then it would be
difficult to sell the products.

Fazal cloth Mills is selling its product to local as well as in international

market. Thus the sales department of the Fazal Cloth Mills is divided in to two
sections

EXPORT DEPARTMENT
Export is the most distinctive recognition of Fazal Cloth Mills Ltd . It is the
most powerful weapon that FAZAL CLOTH MILLS has got in the field of
Textile. It is due to the export that today FAZAL CLOTH MILLS has got a
distinction in the production of textile products. FAZAL CLOTH MILLS exports
both, the Yarn and the Grey Cloth but major export is in the field of yarn.
Hence yarn is the major contributor to the earnings from the export. Currentl y
Fazal Cloth Mills Ltd has four brands of yarn.

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IMPORT DEPARTMENT

Fazal cloth has also an import depar tment. The import department is responsible
to import those items, which are not available in Pakistan. The structure of this
department is as under:

Procedure
Senior Manager is responsible for import of machinery, equipment, spare parts,
raw material, etc.

 An indent for import of item after the approval of Chief Executive is sent
to import department.

 The Senior Manager import selects a subcontractor from approved

suppliers list.

 In repl y, a quotation from the subcontractor is received. A copy of

quotation is sent to concerned department for evaluation and checking of
specification.

 The received items are sending to the mills where these are opened. The
items are checked against quotations. In case of any damage, the import
department is informed immediatel y. Import department do the necessary
arrangement for survey of goods from insurance agencies.

IMPORT DOCUMENTS
There are different document are used when we are going to purchase or import
we required.

 Performa invoice

 Open bond manufacturing certificate (OBM)

 Form I

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  Importer’s certificate

 Bill of entry

 Invoice

 Air way bill

ACCOUNTS DEPARTMENT
Accounting is the art or science of interpreting, measuring, and communicating
the results of economic activities whether you are paying your phone bill,
balancing your checkbook, preparing your income tax return or managing an
international corporation, you are working with accounting. Accounts Manager
makes the important financial decisions with consultation of Director and Chief
executive of company.

Record of all departments like import department, Export department, Purchase

and sale department, are maintained here. Accountant is very much busy person
who gives instructions to six members of finance department and checks their
work time-to-time .His ten -year experience has made the work easier for him.
All t ypes of tax rates, recent changes in tax policies, different codes,
companies’ names are on his fingertips.

The accounts department is responsible for the entire accounting process of the
organization regard ing the recording of transactions, designing the accounting
policies and accounting system, preparing financial statements and computer
application. If we consider a company a cell then we can say that accounts
department has role of nucleus.

Without accounts department there is no possibilit y of doing business even

slight weakness on the part of accounts department can badl y effect the
performance of whole organization.

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Functions of the Department
Very first and an important function of accounting departme nt is recording the
business transactions on vouchers. This is also called process of vouching. This
is made for internal record keeping. Auditors specificall y audit vouchers. Wrong
vouching will lead to error in the system and ultimatel y create problems.

In order to see accounts in condense form ledger is used. From daybook all the
entries are posted in ledger. Ledger represents DR or CR balance of each part y.
So from ledger we can see amount that is to be paid to a part y or the amount
that is to be recei ved and the balance at the end of the month.

After this all the DR balances and CR balances are automaticall y posted in trial
balance through Cranium Software. The trial balance must be equal at both
sides. Otherwise there is any error in recording the tra nsactions. Now trial
balance becomes the source of profit and loss and balance sheet.

This department also designs the accounting policies. All the work in this
department is being take place on accrual basis. Profit and loss accounts and
balance sheet are prepared at the end of year. The financial year ends on June 30
of each year. The financial statements are presented to shareholders.

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MY LEARNING AT FAZAL CLOTH MILLS LTD.

It is difficult to write about what I learned at Fazal cloth Mills Ltd. Because
when I entered within such a big organization, I was bombarded with lot of
things at the same time that I could not realize suddenl y. But with the passage
of time I got realized that m y thinking style, m y punctualit y, and m y routines
are just got better. I became a committed person. Some of the skills that I have
internalized at Fazal cloth Mills Ltd are discussed below;

The primary purpose of this study is to fulfillment of the requirements for the
degree of M.Com For this connection each student of this particular course is
required to undertake training in a relevant organization selected by them.

The secondary purpose of this internship is to understand how the theoretical

knowledge can be applied to the practical situations and examine an
organization’s financial issues and identify its opportunities/ problems and also
suggest corrective measures. This internship is also very necessary to gain
confidence and become aware of the mechanism of an organization. As an
internee I try to accomplish the following objectives during my internship and
organization study:

1. To familiarize with a business organization.

2. To familiarize with the different departments speciall y with Accounting

Department.

3. To enable m yself to understand how the key Accounting pr ocess are carried
out in organization.

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4. To understand how Accounting information is used in an organization for
decision making at various levels.

5. To relate theory with practice.

6. To observe, anal yze and interpret the relevant data competentl y and in a
useful manner.

I also I learned how information flows through different levels within the
departments and how can a relevant person use that information.

Details of m y work week wise is as under:

Week 1 s t

Basic Accounting w ork at Accounts Department

The accounting department is mainl y divided in to following three sections:

1. Stores section
2. Salaries and Wages Section
3. General Accounting

Accounting System
Accounting S ystem at here is centralized and on accrual basis. A Software is
used for recording Accounti ng Transactions. All accounts are maintained in
Multan head office. The process of accounting system starts from the
preparation of voucher. The following are different t ypes of vouchers prepared
at Fazal cloth Mills Ltd

 Journal Voucher
 Bank Voucher

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  Payment Voucher
 Credit Voucher

Journal Voucher (JV)

As accounting system is on accrual basis, so accounting entries are passed on
journal voucher at first step. This is also known adjustment voucher. This is
prepared for adjusting entry. Vouchers are prepare d after every transaction.
Accounts Manager and Director verify the voucher respectivel y. If they have
any question they can ask relevant person if there is no enquiry then they will
put their signatures on voucher. Now it is time to record these vouchers in books
of accounts.

Bank Voucher (BV)

Bank voucher is used when any transaction is made with bank . Amount may be
drawn from bank and can be deposited in bank. You can receive DR advice or
CR advice from bank

DR Advice
When issued by bank, it means ban k has deducted some amount from your
account or when has been made through your account

CR Advice
When issued by bank to you, it means some amount has been added in your
account .It normally takes place when some foreign remittances has been
received by bank in your account. This is usuall y sent by your customer in
foreign country to which exports has been made.

Payment Voucher
This voucher is prepared at the time of making payments to any part y. Part y
name is debited with the amount to which payment has b een made. Payment
vouchers are used for the payment up to Rs.5000. Payments more than this are
made through bank

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Credit Voucher
As name of voucher represents, this voucher is prepared when some amount is
received from any part y. In this case party name is credited by the amount that
has been received.

2 n d Week
Revenue Cycle reports:
When the customer received desired goods then the bill department received the
delivery notes and make the bill for those goods and services or request for the
payments so sale transaction is occur.

The three copies are prepared :

1 s t is send to sipping department for consumer invoice

2 n d to store as billing records

3 r d is sent to accounts department for collections

Cash
Receipt Account Receivable
Cash
System

In cash recepit system there may be sales on cash or credit basis:

In case of cash sales then debit cash and credit sales.

In case of credit sales then Account receivable is debited and sales is credited.

Types of documents:

Credit Sales: Sales order, shipping notice, sales invoice.

Cash Sales: Sales ticket

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Cash receipt: Remittance advice

Sales return and allowances Credit Memo

Bad debts written off Memo

REVENUE CYCLE REPORTS

 Control Reports: control reports may disclose the transactions, or they
may list changes made during file maintenance.

 Registers: A register is a listing of all transactions of a certain t ype that

were processed during a single processing period.

 Special purpose Report: most systems require three special purpose

accounting reports in the revenue cycle.

3 r d Week
Inspection of Registers

Registers:
A register is a listing of all transactions of a certain t ype that were processed
during a single processing period.

Its includes

1. cash receipts register

2. invoice register

3. credit memo register

these are used in internal control , audit review , and six setups of accounting
cycle

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Special purpose report
 Customer statement: it is a list of all transactions in a customer’s account
during a specified time period.

 Aged a/c receivable trail balance: it is a list of all customers and th e

balances they owe at a specified date. When this trail balance is aged,
each customer balance is categorized according to how long it has existed.

 Remittance list: a remittance list enumerates all currency and checks

received during one day.

These above kinds of reposts are used in the sales anal ysis. These reports may
be used by the marketing management department to:

• to evaluate the profitabilit y of products

• the performances of sales personal

• the effects of special advertising comparisons .

4th Week
Computerized Accounting
Accounting records kept by computerized processes are in the form of computer
files and databases. In traditional data file system, revenue cycle applications
use two master files and as many as six transactions files.

Two master files

1. Customer master files includes (date, customer address, credit limits,
credit terms, and balances owed).

2. Inventory master file which contains(perpetual inventory records. Records

each items kept in inventory warehouse when merchandise is shi pped from the
quantit y on hand in the inventory master files.

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“Applications in the revenue cycle routinel y update the customer master file
record.” This file has one record for each credit customer.

Contnets of a customer master file:

• Customer number

• Customer name

• Billing-address

• Shipping address

• Credit-limit

• credit-terms

• Statement date

• Statement -balance

• Current-balance

Order Entry application:

It’s purpose is to record a customer’s request for goods or services. Procedure
for credit approval usuall y require the credit department to establish a credit
limit for each customer.

5 t h Week
Working in Sales Department

Sales process
Following procedures were observed in sales department:

Procedure

 The following activities are perform ed in the local sales department.

 The directors receive the order of yarn by tele phone, fax or e -mail.

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  Directors evaluate the capabilit y to fulfill the order by consulting dail y
stock repot from mills.
 Directors give the instructions to local sales manag er that transfer the
information on local sale contract slip.
 Before issuing contract slip, sales manager checks the selling limits of
the particular part y and discusses the matter with Director if it is selling
limit
 Sales department writes the three copi es of delivery order signed by
director
 One copy is dispatched to the mill for issuing goods, after reading the
particulars of delivery order store in charge in the factory will issue the
goods .
 One copy of delivery order is send to the accounts departme nt and third
one is kept for record.

6 t h Week
Export at Fazal Cloth Mills Ltd
The activit y of Export is carried out at the Head Office of Fazal Cloth Mills
Ltd. For export, there is a separate department for export known as Export
Department.

Procedure for Export

There are various steps involved in export. These are explained below.

(1). Receipt and Checking of Letter Of Credit (Lc)

At Fazal Cloth Mills Ltd, the export procedure begins by the Sales Contract.
After the contract, the buyer opens Letter Of Credit (explained below). The
concern person of FAZAL C LOTH MILLS studies the Letter Of Credit on
receipt and makes sure that its particulars are according to the sales contract. If
there is any discrepancy between the sales contract and LC, it is remo ved.

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Letter of Credit
After the contract is developed, the buyer opens Letter of Credit in his bank
(foreign bank) and that LC is sent to bank by that foreign bank. Then Fazal
Cloth Mills‘s bank forwards the LC to it.

It is a document that is cashed when e xporter hands over the negotiable

documents (explained later) to its bank. In an LC the buyer quotes following
important explanation;

 Product Specification.
 Amount of the transaction in US dollars.
 Shipment detail
 Packing detail.
 Bank detail (that opens LC )

Week 7 t h : Finalization of Production and Shipment Schedule

Then the preceding procedure is over, and then the concern responsible person f
the export department prepares the Shipment Schedule keeping in view i.e.
booking. This schedule is finalized by the director and then it is sent to i.e. GM
at the mill who makes the Production Schedule by keeping in view i.e. Shipment
Schedule.
 When the goods are produced, the Office Manager finalizes and discusses
all programs with Manager Export before dispatching the goods from
mills and makes arrangements accordingly.
 Custom Clearance, Shipment, Buyer Information
 When the goods are dispatched from mills the office manager informs the
export manager about the dispatch and gives Performa Detail Of Dispatch
(It is a small report that gives the details about the dispatched products )
which is used in maintaining the export record.

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  The Clearing Agent is also informed accordingl y about the dispatch and
all the documents are sent to him after they are checked by the Audit
Department.
 When the goods are dispatched from the mills, the buyer is informed
 The clearing agent arranges custom clearance and sends the Bill Of
Lading (explained below) to the export department.

Week 8 t h : Bill Of Lading

when the goods are cleared fro m the custom and reach shipment, then the
shipping company issues Bill of Lading to the exporter. Bill of Lading intains
following important information;

 Shipper and Consignee's particulars.

 Place of Receipt, Loading and place of Delivery.
 Forwarding Agent.
 Country of Origin of Goods.
 Port of Discharge.
 Description of Goods and Packages.
 Container Numbers.
 Weight of Goods and
 Total Freight (in US $ and local currency).

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ANALYSIS & CONCLUSION
FINANCIAL ANALYSIS

The financial position of the company is of two t ypes which are as follows:
 Short Term Financial Position
 Long Term Financial Position
There are four major tools to check or evaluate the financial position of the
company which are as follows:
1. Ratio Anal ysis
2. Comparative Statements
3. Common Size Statements (Vertical Anal ysis)
4. Trend Percentages (Horizontal Anal ysis)

The information contained in financial statements of a company is of major

significance for shareholders, creditors, managers and all that regularl y need to
have relative measure of the company’s operating efficiencies and conditions.
The anal ysis of financial statements is based on the knowledge and use of ratios.
In this report I am mainl y concerned with the ratio anal ysis only.

Ratio Analysis

The purpose of using ratios in the finan cial statement anal ysis is to reduce the
amount of data to workable form and to make the data more meaningful. Ration
anal ysis is involving methods of calculating and interpreting financial ratios in
order to assess the firm’s performance and status. The i nputs of anal ysis are the
firm’s income and balance sheets.
Financial ratios can be divided in to four basic categories:

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  Liquidit y Ratios
 Activit y Ratios
 Debt Ratios
 Profitabilit y Ratios

Liquidity Ratio

The liquidit y of firm is measured by its abilit y to satisfy its short -term
obligation as they come due. Liquidit y refers to the solvency of the firm’s
overall financial position -the ease with which it can pay its bills. Because a
company precursor to financial distress and bankruptcy is low or declining
liquidit y, these ration viewed as good leading indicators of cash flow problems.

Financial Information
Dec-22 Jun 22 Jun 21 Jun 20

Balance Sheet
1 Non-current Assets 1410 1426 1435 854

Investments - - - -

Related Part exposure - - - -

4 Current Assets 851 931 650 506

Inventories 442 538 292 263

Trade receivables 267 248 215 127

5 Total Assets 2261 2357 2085 1360

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6 Current Liabilities 257 412 326 173

Trade payables 98 192 174 19

7 Borrowings 683 724 521 262

8 Related Party - - - -
exposures

9 Non-current Liabilities 171 118 149 96

10 Net Assets 1151 1104 1089 828

11 Shareholder’s equit y 1151 1104 1089 828

Dec-22 Jun 22 Jun 21 Jun 20

Income Statement

1 Sales 1656 2657 2091 2168

Cost of goods sold (1520) (2481) (1992) (2044)

2 Gross Profit 136 177 99 125

Operating expenses (45) (74) (71) (65)

3 Operating Profit 91 103 27 60

None operating income 7 (2) - (3)

4 EBIT 99 101 27 57

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 Total finance cost (26) (78) (37) (21)

Taxation (26) (8) (7) (18)

5 Net Income(Loss) 47 15 (16) 18

Dec-22 Jun 22 Jun 21 Jun 20

Cash Flow Statement

Free Cash flow from 87 124 20 62
operation

Net cash from operation 52 46 (3) 42

before working capital
changes

Changes in working (22) (204) 10 (66)

capital

1 Net Cash provided by 30 (158) 7 (24)

operating activities

2 Net cash (used) or (7) (39) (270) -

available from
investment

3 Net cash (used) or (38) 15 256 48

available from
financing activities

4 Net cash generated or (15) (182) (7) 25

(used) during period

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 Dec-22 Jun 22 Jun 21 Jun 20

Ratio Analysis

Performance

Sales growth 24.6 27.1 -3.6 10.3

Gross profit 8.2 6.7 4.7 5.8

margin

Net profit 2.9 0.6 0.8 0.8

Margin

Cash 3.9 -3.0 1.5 -0.2

conversion
efficiency

Return on 8 1.4 -1.8 2.2

equit y

Working capital managemen t

Gross 82 89 78 58
working
capital

Net working 66 64 61 54
capital

Current ratio 3.3 2.3 2.0 2.9

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Coverage

EBITA/ 5.2 2.1 2.0 4.9

Finance cost

FCFO/Finance 1.1 1.2 03 3.1

Debt payback 2.4 4.4 -12.8 0.0

Capital Structure

Total 37.2 39.6 32.4 24.1

borrowing

Interest or 71.0 87.9 19.5 97.1

markup
payable

Entit y 8.0 12.8 8.8 7.2

average
borrowing
rate

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 SWOT Analysis

STRENGTHS

Goodwill:
DERBY and LUCUS are Fazal Cloth Mills Ltd ’ Brands that are known as
qualit y yarn in national and inter national markets. Company has good image and
reputation in market. The company is exporting its yarn to the developed
countries like USA and Japan, which are very qualit y conscious. With this fact,
we can well imagine its repute.

Qualified Human Resource:

Fazal Cloth Mills has professional management, skilled technical staff and
trained labor force. Management of Indus group includes talented people , who
started his textile business 40 years ago. He is responsible for strategic
corporate planning. Shazad A hmad MBA (Marketing) from USA. Mr. Naveed
Ahmed Graduate from USA in Accounting. Irfan Ahmad, B.Sc Textile from
USA. Riaz Ahmad , Kashif Riaz has completed his MBA from Bahauddin
Zakari yya University. The other management staff includes 24 personnel
including managers, assistant managers and engineers in different sections of
organization. A recent figure of total employees in this organization is
approximatel y 700 including man agement staff and labor force.

Backward integration:
One of the great strength of Fazal Cloth is that it has its own suppliers of ginned
cotton. It owns several ginning factory. Few advantages are reduce in
transaction cost, on time delivery of raw material etc.

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Technology:
The company invested Rs. 20 million this year and replaced t he old 1990 model
technology with the state of art latest technology (2000 Reiter Swiss Model).
This will improve the productivit y and qualit y of yarn and company will become
able to charge better prices of yarn and compete in international market.

WEAKNESSES

High manufacturing cost:

The main weakness is that the cost of production is very high. e.g. in the recent
year 2001, cost of goods sold was 82 % of the revenue. The main reason for this
is the high price of cotton and electricit y charges. It their we akness because, in
other similar mills, gas is used instead of electricit y. And it is considerabl y
cheap as compared to electricit y.

OPPORTUNITIES

Demand:
Yarn and textile has a great demand all over the world, so whatever is produced,
is sold. It is a maj or opportunit y for the company to expand its operations and
increase the market share.

Government policies:
The government’s policies are favorable to textile and related industries. e.g.
there is no sales tax on exports and there are rebates on the import of raw
material like cotton. The machineries imported under Balancing, Modernizing
and Replacement (BMR) are exempted from dut y.

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Cheap labor:
Pakistan has one of the cheapest labor country in the world. The local textile
industry is labor intensive. A tex tile unit of average size employs around 700
employees.

THREATS

High financial charger:

The financial cost in our country is very high as compare to other competing
countries like china, India. Interest paid on loans, by the local textile industry
comprises 41% of its total operating cost. Interest rates in Pakistan are
considerabl y higher than those of competing countries thus making our industry
uncompetitive.

Substitute product
There are a large number of competitors, who are constant threat to FCML.

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SUGGESTIONS

Fazal Cloth Mills Ltd is a very efficient organization. Here teamwork is recited
and there is no communication gap between the various levels of hierarchy. As
far as rules and regulations are concerned, employees are made to stick closel y
with them. No negligence on the part of workers managers is tolerated. Owners
have a very strong control on the working the employees. Every one in the
organization is seen working hard and committed to qualit y. So far as teamwork,
communication and commitme nt qualit y are concerned, organization is going
very well but few areas need be improved.

The avenues are always open for further improvement. I hope that the
suggestions given by me will not onl y benefit to the management for getting
business but the wor kers will also efficient in performing their duties.
 There is centralization of authorit y. All the decisions are taken by
the Chief Executive and Working Directors. Even Chief Accountant
of textile units cannot take the decision. The authorit y should be
decentralized, because delegation of authorit y creates
responsibilit y. If the management will delegate some authorit y to
the employees then employees will feel themselves responsible and
they would work with zeal, by doing this the top management can
save im portant time which will be utilize in other matters which
will benefit the organization. Because the delegation of authorit y
creates the confidence among the employees and they will perform
their work efficiently.
 I would like to recommend that the manage ment 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

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 for the promotion of efficient workers. T his will not onl y increase
the productivit y 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 productivit y of the employees will increase.
 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 shou ld 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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Table of Contents

INTRODUCTION 1

GROUP PROFILE ----------------------------------------------------------------------------------------------------------------------------------- 2

COMPANY INFORMATION -------------------------------------------------------------------------------------------------------------------- 3

BOARD OF DIRECTORS: -------------------------------------------------------------------------------------------------------------------------- 3

VISION: ----------------------------------------------------------------------------------------------------------------------------------------------- 5

MISSION STATEMENT: --------------------------------------------------------------------------------------------------------------------------- 5

GOALS ------------------------------------------------------------------------------------------------------------------------------------------------ 5

OBJECTIVES ----------------------------------------------------------------------------------------------------------------------------------------- 5

CORPORATE SOCIAL RESPONSIBILITY ------------------------------------------------------------------------------------------------------- 6

PRODUCTS RANGE & MARKETS -------------------------------------------------------------------------------------------------------------- 7

Home Textile --------------------------------------------------------------------------------------------------------------------------------------- 7

INTRODUCTION TO VARI OUS DEPARTMENTS ------------------------------------------- 8

BRIEF DESCRIPTION OF VARIOUS DEPARTMENTS --------------------------------------------- 9

HUMAN RESOURCES DEPARTMENT --------------------------------------------------------------------------------------------------------- 9

PURCHASE AND SALES DEPARTMENT ------------------------------------------------------------------------------------------------------ 9

SALES DEPARTMENT --------------------------------------------------------------------------------------------------------------------------- 10

IMPORT DEPARTMENT ------------------------------------------------------------------------------------------------------------------------ 11

ACCOUNTS DEPARTMENT -------------------------------------------------------------------------------------------------------------------- 12

MY LEARNING AT FAZAL CLOTH MILLS LTD. ------------------------------------------ 14

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WEEK 1 S T ----------------------------------------------------------------------------------------------- 15

Journal Voucher (JV) -------------------------------------------------------------------------------------------------------------------------- 16

Bank Voucher (BV) ----------------------------------------------------------------------------------------------------------------------------- 16

DR Advice------------------------------------------------------------------------------------------------------------------------------------------ 16

CR Advice ------------------------------------------------------------------------------------------------------------------------------------------ 16

Payment Voucher ------------------------------------------------------------------------------------------------------------------------------- 16

Credit Voucher ----------------------------------------------------------------------------------------------------------------------------------- 17

2 N D WEEK ----------------------------------------------------------------------------------------------- 17

Revenue Cycle reports: ------------------------------------------------------------------------------------------------------------------------ 17

REVENUE CYCLE REPORTS -------------------------------------------------------------------------------------------------------------------- 18

3 R D WEEK ----------------------------------------------------------------------------------------------- 18

Inspection of Registers ------------------------------------------------------------------------------------------------------------------------ 18

Special purpose report ------------------------------------------------------------------------------------------------------------------------ 19

4TH WEEK------------------------------------------------------------------------------------------------- 19

Computerized Accounting -------------------------------------------------------------------------------------------------------------------- 19

5 T H WEEK ----------------------------------------------------------------------------------------------- 20

Working in Sales Department --------------------------------------------------------------------------------------------------------------- 20

6 T H WEEK ----------------------------------------------------------------------------------------------- 21

EXPORT AT FAZAL CLOT H MILLS LTD --------------------------------------------------- 21

(1). Receipt and Checking of Letter Of Credit (Lc) ------------------------------------------------------------------------------------- 21

Week 7th : Finalization of Production and Shipment Schedule --------------------------------------------------------------- 22

Week 8th : Bill Of Lading ----------------------------------------------------------------------------------------------------------------- 23

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ANALYSIS & CONCLUSIO N ---------------------------------------------------------------------- 24

FINANCIAL ANALYSIS -------------------------------------------------------------------------------------------------------------------------- 24

Ratio Analysis ------------------------------------------------------------------------------------------------------------------------------------ 24

SWOT Analysis ----------------------------------------------------------------------------------------------------------------------------------- 30

STRENGTHS --------------------------------------------------------------------------------------------------------------------------------------- 30

Backward integration: ------------------------------------------------------------------------------------------------------------------------- 30

Technology: --------------------------------------------------------------------------------------------------------------------------------------- 31

WEAKNESSES ------------------------------------------------------------------------------------------------------------------------------------- 31

OPPORTUNITIES --------------------------------------------------------------------------------------------------------------------------------- 31

THREATS ------------------------------------------------------------------------------------------------------------------------------------------- 32

SUGGESTIONS ---------------------------------------------------------------------------------------- 33

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