New Report Saaad Masood Gill

8/4/2019 New Report Saaad Masood Gill

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INTERNSHIP REPORT

ON

KYK & NESS PVT. Ltd.

Submitted To :- SIR KHALID

Submitted by: - SAAD MASOOD GILLM.COM(Finance)

SESSION 2009-2011


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DEDICATED TO

The Holy Prophet Mohammad (PBUH) from where all systems and standards for qualitycan be downloaded directly, which are applicable everywhere; from daily life to the

dynamically changing business environment

&

To My Dear Parents who taught the true meaning of life.

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ACKNOWLEDGEMENT

The university of Faisalabad and its Management has played very vital role for the successful

conduction of commerce discipline. Thanks to my respectable teachers who are motivating force to

promote us and Honorable Mr. Babak Mahmood Head of Commerce department and respectable

Teachers and whose kind and encouraging personalities inspired me to devote my time to get

maximum practical knowledge within a specific span of time available for me in my study period.

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TABLE OF CONTENTS

Sr.# TITLE Page #

1. HISTORY 5

2. Vision And Mission Statement 6

3. Corporate objective 7

4. Quality and ISO 9000 7

5. Quality control system 8

6. Departments of the company 10

7. Financial Management Policies 25

8. KYK & NESS Products 26

9. Ratios Analysis 32

10. Common Size Analysis 38

11. Index Analysis 40

12. Pro forma Statement 41

13. Capital Structure 44

14. Working Capital Policy 45

15. SWOT analysis 47

16. PEST Analysis 50

17. Out Comes 52

18. Suggestions 53

19. Conclusion 54

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HISTORY

Kyk & nesss Limited was established in 1984 by Chauhdary Nazir Ahmed which is located 32 kmSheikhupura road Faisalabad with its apparel Division located in center of city producing quality

garments. KYK & NESS is the only textile in the Pakistan with latest computerized bar code

system, which assures quality in every operation from spinning to packing. Products of each dept

carry bar coded stickers which bear all the details and history of the operation of that product

Hence if any problem accurse one can trace back the root of the problem and enables to prevent the

root cause of the problems in future.

Besides this, Masood is one of the few textile mills of Pakistan which has in house Ginning

Spinning, Knitting, Fabric, Dyeing, Processing, Laundry and Apparel Manufacturing facilitiesMasood has also a pride of work with the world best labels.

The vertically integrated operations help as in achieving shorter lead times and greater flexibility to

cater the demand of the customers. The approximate turn over per annum in us $ 30 Million

KYK & NESS is working from 1995 which 75 sewing machines at start and now has the 2000

sewing machines. In 1996 company management has made the plan to use its own production of

yarn for producing value added products because of the slump in international and local yarn

market. For implementation this plan company made heavy investment in 1997 for modernization

and expansion of production facilities towards value added operations. For this purpose six dyeing

machines were installed and further knitting dyeing and finishing machinery was being imported.

Building was also constructed to install more stitching machines for producing value added products

The company believes that totality of these factors will make him distinguish qualified to stand as a

symbol of elegance and quality and to gain more honor throughout.

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VISION STATEMENT

A leading producer of textile products by providing the highest quality of products and

services to its customers.

To strive for excellence through commitment, integrity, honesty and team work.

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 andfriendly environment place of work to its employees and to project Pakistans image in the

international market.

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CORPORATE OBJECTIVES

1. Maximization of wealth of shareholders.

2. To increase market share.

3. To achieve customer satisfaction.

4. Making arrangements towards achieving total quail.

5. To get growth through professional management.

6. To reduce the cost of production up to minimum level.

7. To control the atmosphere by installation of latest machines.

QUALITY AND ISO 9000 IN MASOOD TEXTILE

Masood has ISO 9002 certification and the registration # 99086699. We have the logo of three

accreditation bodies ANSI RAB USA, UKS UK. DAR/TAG Germany and the audits were

conducted by MOODY.

What is ISO (International Standards Organization) a world wide body that prepares and issues the

standard?

What is quality? Performance on the parameter or customer satisfaction is called quality.

What is quality assurance? All actions necessary to ensure that a product and services will be satisfy

all quality requirements and provide the consistency in the product.

What is Total Quality Management (TQM)? A management approach based on the participation in

the quality of every member of an organization to delight all customers.

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QUALITY CONTROL SYSTEM AT MASOOD

There are quality checks at every stage of manufacturing starting from Raw Cotton , Yarn Fabric

Processing , Cutting , Stitching & Packing.

Before the fabric is cut, it is checked whether it conforms to the customers standards of shrinkage,

finished g/cm 2 etc. After each lot of fabric is cut, 100% cut parts inspection is conducted to ensure

that only good quality pieces move to the stitching units.

During the process of sewing, each and every process is inspected by in line inspectors. The

inspectors make sure that only good parts move to the next stage. An individual tracking number is

sewn inside each garment. After trimming and pressing of the garments, each garment is inspected

by highly experienced final inspectors. The Quality assurance team monitors the performance o

every individual inspector b picking up the inspected garments and checking the quality of these

garments.

To ensure that the garments are packed as per the requirements of our valued customers, we can

even track & check, which ease the garments, has been packed in. With the help of this, we plan to

achieve the Zero Defect Level.

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Corrective and Preventative Action

Masood has a very strong corrective and preventative action plan. Masood has centralized the

corrective action and controls the non-conformity arising in the system. If necessary the relevant

person immediately takes the corrective action. For preventative action, the record is kept by th

department head. Electronic records are kept by the Information Technology Department.

ISO & TQM

ISO department provides a management system at Masood, which is free of non-conformance. The

department has training system that creates awareness of Total Quality Management System (TQM)

All the departments and people at all involved in this program. Masood has a team of qualified and

certified auditor who would check, improve and ensure the consistency in the system.

CALIBRATION

Masood has own calibration laboratory. Before using any instructions, they are calibrated as per the

international standards.

DEPARTMENTS

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Departmentalization is the arrangements of individual jobs and activities into groups and these

groups are combined to form larger department and units to form the total organization.

The Departmentalization in Masood Textile is very clear. These departments are production

marketing, finance, export, purchasing, administration and quality assurance. Except quality

assurance, all departments are under the supervision of General Manager.

PRODUCTION DEPARTMENT

Production target is given to the production department by the top management after settling the

customer demands and requirements. Then given target is fulfilled under the guidance of the factory

manager. Production department is conducted and supervised under the guidance of factory

manager production manager planning and production control and assistant quality managers work

under the factory manager. Basic raw material for production department is fabric, which is issued

by t he store on demand. When material is issued it is sent to the laboratory for testing purpose.

When the Lab. Test the material and proves that material is according to the required standard. After

Testing, material is sent to the cutting department. In cutting department the trained workers cu

fabrics on the machines. While cutting the Fabric, customer orders and needs is kept under

considerations. After cutting the Fabric all material is sent to the stitching department, when various

workers sew it on heavy machines. It ever level, quality is checked by the Quality controller andfinally checked by the quality assurance. If these products are sent to next department where

products are packed in accordance with the customer demand. The quality audit instructions are no

ignored in this respect.

SPINNING

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Spinning is the process of combination of all processes which are involved in conversion of fiber

into yarn. In textile when we say spinning then we mean to say about the final process in the

transformation offiberinto yarn or thread. The object of spinning and of the processes that precede

it is to transform the single fibers into a cohesive and workable continuous-length yarn. In spinning

process the most important thing is fiber, which is the base of thread/yarn and thread/yarn is end

product of spinning department.

"Assem bly L ine"

Packing Depar tment

A u t o C o n e

Rin g D ep artmen t Simp le x D ep artmen t

Simp lex D ep a rtme n t Dra w in g Fin is h e r

Drawin g Fin is h e r Co mb er

Drawin g Brea ke r La p Fo rma tio n

Carding

Blo w Ro o m

M ixing Ha ll

C om bing F l

Star

C a r d e

F l o w

Function & Operation of Spinning Section

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Mixing Section

Mixing section is basically designed for the purpose of mixing different lots, because these lots are

purchased from different regions and areas and contain different colors, shades and brightness rangesdue to following factors,

Moisture

Weather

Picking condition (manual or mechanical)

Treatment during transportation

Objects of Mixing Hall

Cotton Opening

Mixing

Removing of foreign particulars like jute, and pieces of cloth etc

Blow Room

The cotton is received in blow room through condensers from the mixing section. In blow room this

cotton is stocked for 12 to 16 hours for conditioning according to the temperature of blow room, in

the form of layers horizontally and cut vertically which is very old method of mixing the cotton of

different regions and characteristics. This process is called Sandwich Process and this way is

Conventional way of mixing. All wastage extracted in the blow room is called trash.

Objects of Blow Room

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Mixing

Opening (tuft to tuft)

Cleaning (up to 60%)

Lap Formation

Processing Flow of Blow Room

The major object of different processes in blow room revolves around mixing, opening, cleaning

(wastage like cottonseed or bigger particles) and lap formation. Blow room consists of following

flow of machines.

Bale Breaker Multi Mixer

Fine Opener VO1 Axi Flow MS Opener

Step Cleaner HR6 Fine Opener VO2

Distributor RVK Opener

Blending Harper Feeder

Skutcher

Carding Section

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In carding section laps are converted into sliver. In carding machines laps are feeded and slivers are

received as an end product in cans or boxes.

Object of Carding Section

Mixing

Opening (fiber to fiber)

Cleaning (about 99% of whole spinning process)

Sliver Formation

Drafting

Elimination of Short fibers (about 1%)

Sliver formation

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Drawing Section

Drawing section consists of two sub-sections:

i) Breaker Drawing

ii) Finisher Drawing.

Drawing is a process in which different slivers are combined together to produce single sliver

Normally 8 slivers are feeded behind one drawing machine and get an end product in form of single

sliver in cans or boxes, which has the same weight as of single sliver. The purpose of doing this is

that to create uniformity and average out the weight of each sliver. This process is also called 8/8

process

Objects of Drawing (Breaker)

Uniformity

Parallelization

Orientation

Dust removal

Combing Section

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In this process short fibers are removed and wastage of combing is called Comber Noil20% of

lap is extracted or removed in the form of Comber Noil during combing process. Combs are feeded

in comber machine to do this process. Lap received from lap former is its input while its end product

or its output is sliver, which is called here comber sliver.

Objects of Combing Section

Removal of Short Fiber

Doubling

Sliver formation

Simplex Section

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Finisher sliver is input of simplex machine while roving is its end product. Roving is a big bobbin

having refined sliver (in the form of package) but thin and slim than sliver. In this process, twisting

is done on roving. Here the twist per inch (TPI) is approximately 1.004. Roving is further used in

Ring Department for making of small bobbins after that making of cones. One package normally

contains 3,000 meters roving.

Objects of Simplex Machine

Drafting

Twisting

Package formation (conversion in roving from sliver)

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Ring Section

In ring section, final spinning process starts. Here in this section roving from simplex section is

turned into fine & sophisticated yarn of different counts. Pulling effect makes counts. Spindle is a

smaller tapering rod; the rotation of which gives the twist and around which the thread is wound as it

is twisted. (There are 14,400 spindles in KYK & NESS) These bobbins are further sent to the Auto

Winder or Auto Cones department, where cones are made from them.

Objects of Ring Section

Drafting

Twisting

Package formation (conversion in bobbins from roving)

Packing Section

Finally cones are sent to packing section where these cones are thoroughly examined under ultra

violet lights. Contamination is checked after that cones are kept in the temperature of packing hall

for 24 hours for conditioning. Then these cones are packed in cartoons, after wrapping in pollythane

bags. 24 cones are packed in one cartoon.

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KNITTING

Knitting is a process of making fabric by interlacing of the loops, instead of two sets of yarns

crossing each other in weaving.

The single knitting yarn is looped through itself to make a chain of stitches. These chains or rows

are connected side by side to produce knitted fabric Knitting is derived from the knot and in the

process of knitting we knot the yarn in a specific way that fabric is made. Complex fabric forming

technique in which, a continuous yarn is interloped to form a cloth. Needles are used to create each

loop and drawn it through a previously formed loop. Thus developing a cloth from a series of inter

linked chainlike stitches. The knit stitches that occur in vertical columns are called Wales, and those

in horizontal rows are called courses.

Types of Knitting:

Basically knitting is of two types.

1- Circular Knitting

2- Flat Knitting

In circular knitting developed fabric is in tubular form and has no open width in both sides, while in

flat knitting fabric is in flat form rather than tubular form. In flat knitting developed fabric has

particular open width. Both types of knitting have further two more types.

1- Single Knit

2- Double Knit

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Knitting Faults

Knitting faults are those faults that occurred during knitting process of fabric and these are

mentioned under,

Oil Spots

Jersey Trim (Heavy yarn)

Jersey Trim (Thin yarn)

Cut & Holes (Due to bad needle)

Lint Hole

Jersey 100% Cotton knot hole

Jersey rundown broken needle

Press off end out

Barriness

Fluff knit

Lycra short

Yarn short

Feeder tight (Tension problem/direct yarn feeding)

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DYEING

Dyeing is a process in which textile raw material is completely immersed in dye liquor. In simple

words dye is a process in which colors are shifted into textile raw material.

Printing is a process in which pigments or dyes are fixed on the fabric with the help of suitable

binders. In printing dyes are fixed on the fabric but in dyeing, fabric is immersed or dip in liquor

dyes.

In KYK & NESS for completion of dyeing certain sections are performing different functions these

are from lot making of fabric to getting finished fabric. Some major functions are,

Lot Section

Dyeing Section

Finishing Section

Quality, Final Inspection & Packing Section

Laboratory (Lab. Section)

Types of Dyeing

There are basically three types of dyeing,

Reactive Dyeing

Sulfur Dyeing

Disperse Dyeing

Two other processes are also done separately with dyeing process, these process are,

Optical White

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Washing

FINANCE DEPARTMENT

Finance department has major hold in Kyk & nesss. This department plays an important role in any

project investment, product analysis and its budgeting. This department also performs investmen

decisions and asset management decision functions. How the working capital managed. How deb

is used in asset management. How and when the liabilities are to be paid. What are the

achievements of the organization by implementing decisions? Past financial decisions are reviewed

and imposed with new trends and requirements.

The function performed by the finance department is to collect and raise funds with the varyingdemands of KYK & NESS. Funds are created through loans or by issuing share of the organization

This department also makes financial analysis; cash flow and profit and loss account finance

department is headed by director finance manager is marked. Under there personnel, many sub-

ordinates are worked like account officers and assistant account officers.

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MARKETING DEPARTMENT

Marketing managers who directly report to the general manager control the marketing department

The major responsibility of this department is to access the customers needs and wants and set the

products according to the customers satisfaction. Products distribution and promotion are also the

part of this department. This department plans for future market and maintain strategies for existing

markets. This department remains always in struggle for attracting new customers. The

merchandising department works in the following manner.

Receive development sheet from production planning and control department.

Pricing from concerned department.

Development of new inquires.

Proto/pattern development.

Fabric development

Lab dips development

Salesman sample if required

Size set in original fabric & color

Pre production approval

Imported accessories follow up

Complete follow up & monitoring of purchase order start from yarn to shipment.

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PURCHASE DEPARTMENT

The basic function of this department is to procure raw material for the organization. The marketing

department sends the demand and requirement. But in this department assistant manager of quality

assurance role cannot be neglected. Because quality required for the quality assurance personnel set

out manufacturing and production department, purchasing department is liable to procure raw

material according to given specification. This department is headed by the assistant management

procurement. There are some junior positions that work under the assistant manager.

ADMINISTRATION DEPARTMENT

The admin manager is the head of this department. This department is helpful in creating the

coordination among the personnel. It also integrates the activities running in the organization. If

persons are required in any departments the admin department fulfills it.

QUALITY ASSURANCE DEPARTMENT

Quality assurance is controlled by A.M. quality assurance. This manages directly controlled reports

to the CEO. That is the reason company is performing its activities in accordance with international

standards for the satisfaction of the customers. In this regard company has got ISO- 9002 certificate

on 30 September 1999 for apparel division of the company.

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FIANCIAL MANAGEMENT POLICIES

FINANCIAL INSTRUMENT & RISK MANAGEMENT POLICIES

The company issues financial instruments mainly to finance its operations. In additions financia

instruments such as trade debts and trade creditors arise from the companys operations.

The company finances its operations primarily by a mixture of issue share capital, retained profit,

sponsor loans and long and short-term loans and liabilities. Company borrows funds is usually a

fixed rate of interest.

Overall risk rising from the companys financial instruments is limited.

INTEREST RATE RISK

Since the company borrows funds usually at fixed interest rates, the risk arising is minimal.

FOREIGN EXCHANGE RISK MANAGEMENT

Foreign currency risk on financial instruments, receivable or payables in foreign currency is also

not material as trend of devaluation of Pak rupees on export based industry is positive.

CREDIT RISK

The company deals with most of regular and permanent customers who pay the instruments on

due dates. Company considers the credit risk on normal.

FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

The carrying values of all financial assets and liabilities reflected in the financial statements

approximate at their fair value.

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KYK & NESS PRODUCTS

Masoods Collection has a wide selection of quality garments including T-shirt, Polo shirts, Jogging

suit, Henley shirt, Raglan shirt, and Tank top, Bikini, Shorts, Pants and Sleep wear. The products can

be categorized in following formats:

YARN

Masood textile produces highest quality yarn to be bothered the core values of customers.

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FABRICS

To pursue the highest quality in their vision Masood textile produces following types of fabric to be

used in the production of garments.

Single Jersey Pop_corn_Pique

Bird eye Jersey Mesh Pique

Single Pique / pique Locast Rib

Honey Combed pique Interlock

GARMENTS

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Athletic

Our pro-cotton, blended and polar fabrics when stitched by our skilled hand, become a rich source of

ease, flexibility and vigor

Sports Wear

Sports were never so entertaining. Our yarn dyed polos fashioned crew necks and pants have added

more delight to the worlds of sports.

Active Wear

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One can fine enough energy and more drive while wearing Masoods active wears.

Sleep Wear

Masoods defines sleep as pleasure, charm and fantasy and our products do reflect more than that

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KYK & NESS CUSTOMERS

KYK & NESS strives to achieve rapid introduction of new and improved products by adopting a

disciplined and customer focused approach to product development. We recognize the importance of

keeping abreast of new concepts and technologies within our chosen product ranges and therefore,

we are keen to work with customers who continually bring forward innovative and existing new

concepts

Champion Chaps

Calvin Klein

Dockers

www.championusa

.com

www.polo.com www.cklien.com www.dockers.com

GAP Hanes JC penny Levis

www.gap.com www.hanes.com www.jcpenny.co

m

www.levis.com

Nautical Polo Polo R.L Russell

www.nautica.com www.polo.com www.polo.com www.russellcorp.c

om

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Speedo Tommy Hilfiger Tom Tailor Vant
http://www.championusa.com/http://www.championusa.com/http://www.cklien.com/http://www.dockers.com/http://www.gap.com/http://www.hanes.com/http://www.levis.com/http://www.nautica.com/http://www.polo.com/http://www.russellcorp.com/http://www.russellcorp.com/http://www.russellcorp.com/http://www.polo.com/http://www.nautica.com/http://www.levis.com/http://www.jcpenney.com/http://www.hanes.com/http://www.gap.com/http://www.dockers.com/http://www.polo.com/http://www.championusa.com/http://www.championusa.com/http://www.championusa.com/http://www.cklien.com/http://www.dockers.com/http://www.gap.com/http://www.hanes.com/http://www.levis.com/http://www.nautica.com/http://www.polo.com/http://www.russellcorp.com/http://www.russellcorp.com/


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FINANCIAL ANALYSIS

www.speedo.com www.tomy.com www.tomtailor.co

m

www.vantageappare

l.com

Sears Jockey Guess Foot Locker

www.sears.com www.jockey.com www.guess.com www.footlocker.co

m

32
http://www.speedo.com/http://www.vantageapparel.com/http://www.vantageapparel.com/http://www.sears.com/http://www.footlocker.com/http://www.footlocker.com/http://www.footlocker.com/http://www.guess.com/http://www.jockey.com/http://www.sears.com/http://www.vantageapparel.com/http://www.tom-tailor.com/http://www.tommy.com/http://www.speedo.com/http://www.speedo.com/http://www.vantageapparel.com/http://www.vantageapparel.com/http://www.sears.com/http://www.footlocker.com/http://www.footlocker.com/


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Equity and Liabilties: 2006 2007 2008

Authorized Share Capital

30000000 ordinary share of Rs.10 each 300,000 200,000 200,000

Issued,Subscribed and paid up capital

20000000 ordinary share of Rs. 10 each 200,000 200,000 160,000

Fully Paid In Cash

Revenue Reserve General 14,500 19,500 19,500

Accumulated Profit/(Loss) 4,332 (85,988) (178,867)

218,832 133,512 633

Surplus on revaluation of operating 304,231 304,262 307,952

Fixed Assets

Deffered Income On Sale & Lease 1,049 1,312 -

Back Of Operating F. AssetsNon-Current Liabilities:

Sponsor's Loan Interest free - - 30,000

Redeemable Capital 105,332 131,903 158,500

Lond Term Loan 240,750 240,750 240,750

Liabilities Against Assets Subject to 67,529 15,728 3,541

Finance Lease

Deffered Liability For Gratuity 22,266 15,813 12,530

435,877 404,194 445,321

Current Liabilities:

Current Portion Of Long Term Liabilities 59,789 34,089 42,828

Short Term Finances 511,449 422,773 446,081

Creditors,Accrued And Other Liabilities 259,025 256,149 153,906

Worker's Participation Fund 5,616 5,975 4,529

Provision For Taxation 32,172 34,237 18,565

Proposed Dividend To Minority shareholders 4,692 4,692 -

Unclaimed Dividend 459 315 315

873,202 758,230 666,224

Contingencies & Commitments 1,833,191 1,601,510 1,420,130

MASOOD TEXTILE MILLS LTD.

BALANCE SHEET

As At 30, September 2006, 2007, 2008

Rupees In Thousands

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Assets: 2006 2007 2008

Non-Current Assets:

Tangible Fixed Assets

Operating Fixed Assets 704,027 760,808 702,679

Assets subject to Finance Lease 95,840 22,018 4,031

Capital work In Progress 18,906 2,387 20,327

818,773 785,213 727,037

Long Term Advances , Deposits & Deffered

Cost 77,709 76,312 66,772

Current Assets:

Stores & Spare Parts 87,080 62,820 54,534

Stock-in-trade 306,578 141,405 100,434

Trade Debts 228,575 290,881 285,823

Advances,deposits,pre-payments & Other

recievables 293,751 229,884 168,810

Cash |& Bank Balance 20,725 14,995 16,720936,709 739,985 626,321

Total Assets 1,833,191 1,601,510 1,420,130

2006 2007 2008Sales 1,248,409 1,737,435 1,642,469Cost Of Goods Sold 973,520 1,344,972 1,237,458

Gross Profit 274,889 392,463 405,011Administrative, Selling & GeneralExpenses 135,191 199,955 212,639

Operating Profit 139,698 192,508 192,372Other Income 2,429 2,724 1,820

EBIT 142,127 195,232 194,192Financial Charges 51,555 76,014 82,064Worker's Participation Fund 4,529 5,975 5,616

56,084 81,989 87,680

Profit Before Taxation 86,043 113,243 106,512Provision For Taxation 16,564 15,672 16,500

Profit After Taxation 69,479 97,571 90,012Previous Year's Loss Brought Forward (248,346) (178,867) (85,988)Profit (Loss) Available For Appropriations (178,867) (81,296) 4,024

Appropriations:

Transferred From Revenue General - - 5,000Proposed Dividend To Minority - (4,692) (4,692)Shareholders

- (4,692)Accumulated Profit / (Loss) Carried TOBalance Sheet (178,867) (85,988) 4,332

Earning Per Share 4.34 4.88 4.50

Rupees In Thousands

Rupees In Thousands


PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED ON 30 SEPTEMBER 2006,2007,2008


BALANCE SHEET

As At 30, September 2006,2007,2008

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L I Q U I D I T Y R A T I O S ( I N T IM E S )

C u r r e n t R a t io :

C ur r e n t A sse t / Cu r r e n t L i a b i li t ie s

2 0 0 6 2 0 0 7 2 0 0 8

0 .9 4 0 .9 8 1 .0 7C O M M E N T S :

C ur r e n t r a ti o show s tha t a s se t s o f t he c om pa ny a r e no t i n a pos i t i on t o f u l f il l

t he f i na nc i a l ob l iga t ions i t i nc r e a se d i n t he ne x t y e a r bu t be low the s t a nda r d i n

20 08 i t f u r the r inc r e a se d t o 1 .07 w h ic h show s tha t f ir m ' s as se t s c a n f u l f i ll t he

f ina nc i a l ob l iga t ions o f t he bus ine ss .

C a s h r a t io :

C a sh I n H a nd / Cur r e n t L i a b i l it i e s

2 0 0 6 2 0 0 7 2 0 0 8

0 .0 2 4 0 .0 2 0 .0 2 5

C O M M E N T S :

C a sh r a t io show s the mo s t re a d i ly a va i la b l e f unds a va i l a b l e to m e e t fi na nc i a l

ob l iga t i ons o f t he c om pa n y . T h i s r a t io is be low the s ta nda r d s i n t h r e e y e a r sw h i c h i s n o t a g o o d s i g n f o r th e c o m p a n y .

A c i d T e s t R a t io :

C ur r e n t A sse t s - s toc k I n T r a de / C ur r e n t L i a b i l it i e s

2 0 0 6 2 0 0 7 2 0 0 8

0 .6 2 0 .7 1 0 .7 1

C O M M E N T S :

A c id t e s ty r a t io show s the m or e l iqu id p os i t i on o f t he c om pa ny . I t i s no t m e e t in

the r e qu i r e me n t o f the c om pa ny bu t i n sa t i s fa c to r y pos i t ion .

L e v e r a g e R a t io s ( i n t i m e s ) :

D e b t to A s s e t R a t io :F i x e d A s s e ts / S h a r e h o l d e rs F u n d s

2 0 0 6 2 0 0 7 2 0 0 8

0 .6 0 0 .6 4 0 .6 6

C O M M E N T S :

D e b t t o a s s e t r a ti o m e a n s t h a t h o w m u c h a s s e t s a r e fi n a n c e d b y t h e b o r r o w i n g

in 200 7 1 :0 .64 t ha t i s ve r y h igh p r opo r t ion a s c o m pa r e t o t o t a l a s se t i t m e a n

0 .64 t im e the de b t i s fi na nc e d b y t he t o ta l a s se t o f t he c om pa ny . T h i s ra t i o ha s

inc r e a s ing t r e nd i n t he ne x t y e a r.

D e b t to e q u i t y R a t io :

T o t a l L o n g T e r m D e b t s / S h a r e h o l d e rs F u n d s

2 0 0 6 2 0 0 7 2 0 0 8

5 .0 5 4 .5 5 5 .1 9

C O M M E N T S :

D e b t t o e q u i ty r a ti o s h o w s t h a t h o w m u c h p r o p o r t i o n o f d e b t i n t h e e q u i t y o f th

c o m p a n y i n 2 0 0 6 i t w a s 1 : 5 .0 5 t h e n r e d u c e i n 2 0 0 7 t o 4 . 5 5 a n d t h e n i n c r e a s i n

2 0 0 8 u p t o 1 : 5 . 1 9 w h i c h s h o w s t h a t th e d e b t i s g r e at e r t h a n e q u i ty w h i c h m a d e

im pr ove m e nt i n t he bus ine ss a nd c a p i t a l st r uc tu r e be a c a use 60 :40 i s de s i r a b l e i

R A T I O A N A L Y S IS

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Coverage Ratio (in times):

Interest Coverage Ratio:

Net Profit Before Interest & Tax/ Fixed Interest Charges

2006 2007 2008

2.00 3.00 3.00COMMENTS:

Interest coverge ratio is 1:2 in 2006 increased in 2007 and remain same in 2008.

It means EBIT is fulfilling financial charges of the company 2 times in 2006 and

3 times in 2007 & 2008 which shows better position of the company.

Cash coverage of interest ratio:

2006 2007 2008

3.00 3.00 4.00

COMMENTS:

The cash coverage of interest ratio how many times the EBIT + Depreciation

meet the financial charges of the company. This ratio trend is as 3:1 in 2006

next year remain same & in 2008 it increased upto which means the company

can meet the financial charges 4 times in a period.

Activity Ratio:

Activity ratio shows that what are the firm's activities during the year means

that how the firm used the asset in the operation of the business

A/R turnover ratio (in times):

Net Credit Sales / Av. Trade Debtors

2006 2007 2008

4.37 5.97 7.19

COMMENTS:

In 2006 4.37 times the A/R are generated but this ratio increased in 2007 upto

5.97 and further increased in 2008 upto 7.19.It means the A/R in 2006 are converted

into cash in 50.07 days that is very better for the company to collect from its customers.

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Inventory turnover (in times):

Net Sales / Av. Inventory At Cost

2006 2007 2008

3.14 6.59 6.28

COMMENTS:

The inventory turnover ratio show the ratio as in 2006 3.14.It increase in 2007but decrease in 2008. That is a bad position for the company it means the inventory

is 3.14 times converted into C.G.S after 114.6 days

A/R turnover ratio (in days):

No. Of Working Days/ Debtor's Turnover Ratio

2006 2007 2008

50.10 60.27 82.42

Inventory turnover (in days):

Net sales / Av. Inventory At Selling Price

2006 2007 2008

114.60 54.63 57.30

Total asset turnover (in times):

Net Sales / T.assets

2006 2007 2008

0.88 1.08 0.90

COMMENTS:

Total asset turnover ratio is also improve in 2007 from 0.88 to 1.08 and reduced

in 2008 to 0.90 as compare to 2007. It shows that how many times the sales

are generated due to total assets.It shows the capacity of total assets and

utilization of total assets.

Profitability Ratio (in % age):

Gross Profit Ratio:

Gross Profit / Net Sales * 100

2006 2007 2008

22.02 22.59 24.66

COMMENTS:

There is a increasing trend in the profitability of the firm as compare to previous

years .G.P margin is 22.02 in 2006 increased in 2007 to 22.59 and in 2008 it

increased to 24.66 which is high as compare to other years.

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Net Profit Ratio:

Net Profit After Tax / Net sales * 100

2006 2007 2008

5.48 5.62 5.57

COMMENTS:There is a little bit increase in this ratio from 2006 to 2008.The raeson for this

may be the increase in sales with decreasing trend.As compare to previous year

the operating expenses also increase and increase the financial charges that

directly effect the net profit.

Return on investment (assets):

Net Profit / Shareholders Fund * 100

2006 2007 2008

4.90 6.09 4.90

COMMENTS:Return on investment measures overall effectiveness in generating profit ,

assets , earning power of invested capital , this ratio increase in 2007 but decrease

in 2008 from 6.09 to 4.9. the reason is simply that due to other investment reduce

effective utilization of total assets.

Return on equity:

Net Profit After Tax - Preffered Dividend / Equity Share Capital * 100

2006 2007 2008

38.71 44.23 41.13

COMMENTS:

Return on equity also has increasing trend which shows that in 2006 it was 38.71and increased in next years upto 41.13 which is a good sign for the company.

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2006 2007 2008

% % %

Equity and Liabilities:

Issued , Subscribed And Paid Up Capital 11.00 12.49 16.36

Revenue Reserve 1.37 1.22 0.79

Accumulated Profit/Loss 12.60 5.37 0.24

Surplus On Revaluation On Fixed Assets 21.68 18.10 16.60

Deferred Income In Sale - 0.08 0.06

Non Current Liabilities:

Sponsor Loan Interest Free 2.11 - -

Redeemable Capital 11.00 8.00 6.00

Long Term Loan 17.00 17.00 17.00

Liabilities Against Assets F. Lease 0.25 0.98 3.68

Deferred Liabilities For Gratuity 0.88 0.99 1.21


Current Portion Of Long Term Liabilities 3.02 2.13 3.26

Short Term Finances 31.41 26.39 27.89

Creditors, Accrued And Other Liabilities 10.84 15.99 44.13

Workers Participation Fund 0.32 0.37 0.31

Provision For Taxation 1.31 2.14 1.75

Proposed Dividend To Shareholder - 0.29 0.25

Unclaimed Dividend 0.02 0.02 0.02

Total 100.00 100.00 100.00

Assets:

Non-Current Assets:

Tangible Assets:

Operating Fixed assets 49.48 47.50 38.40

Assets Subject To Finance Lease 0.28 1.37 5.23

Capital work in process 1.43 0.15 1.03

Long term advances, deposits & deferred cost 4.70 4.76 4.24

Current Assets:

Store & Spare Parts 3.84 3.92 4.75

Stock In Trade 7.07 8.83 16.72

Trade Debts 20.13 18.16 12.47

Advances , Deposits , Pre-payments & Other Recie 11.89 14.35 16.02

Cash & Bank 1.18 0.94 1.13

Total Assets 100.00 100.00 100.00

Balance Sheet

Masood Textile Mills Limited

Common Size Analysis

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2006 2007 2008

% % %

Sales 100.00 100.00 100.00

Cost of good sold 75.34 77.41 77.98

Gross profit 24.66 22.59 22.02

Operating expenses 12.95 11.51 10.83

Operating profit 11.71 11.08 11.19

Other income 0.11 0.16 0.19

EBIT 11.82 11.24 11.38

Financial charges 5.00 4.38 4.13

Workers participation fund 0.34 0.34 0.36

Profit /Loss before taxation 6.48 6.52 6.89

Provision for taxation 1.00 0.90 1.33Profit /Loss after taxation 5.48 5.62 5.57

MASOOD TEXTILE MILLS LIMITED

PROFIT AND LOSS A/C

COMMON SIZE ANALYSIS

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2006 2007 2008

% % %

Equity and Liabilities:

Issued subscribed and paid up capital 125.00 125.00 100.00

Revenue reserve 74.36 100.00 100.00

Accumulated Profit/Loss (2.42) 48.07 100.00

Surplus on revaluation on fixed assets 98.79 98.80 100.00

Deferred income in sale - - -

Non Current Liabilities:

Sponsor Loan Interest Free - - 100.00

Redeemable capital 66.46 98.80 100.00

Long term loan 100.00 114.29 100.00

Liabilities against assets F. lease 1,907.06 444.17 100.00Deferred liabilities for gratuity 177.70 126.20 100.00


Current portion of long term liabilities 139.60 79.60 100.00

Short term finances 114.65 94.77 100.00

Creditors, accrued and other liabilities 168.30 166.43 100.00

Workers participation fund 124.00 131.93 100.00

Provision for taxation 173.29 184.42 100.00

Proposed dividend to share holder - - -

Unclaimed dividend 145.71 100.00 100.00

Assets:

Non-Current Assets:

Tangible Assets:

Operating fixed assets 100.19 108.27 100.00

Assets subject to finance lease 2,377.57 546.22 100.00

Capital work in process 93.01 11.74 100.00

Long term advances, deposits & deferred cost 116.38 114.29 100.00

Current Assets:

Store and spare parts 159.68 115.19 100.00

Stock in trade 305.25 140.79 100.00

Trade debts 79.97 101.77 100.00

Advances, deposits, prepayments & Other Recieva 174.01 136.18 100.00

Cash and bank balance 123.95 89.68 100.00


INDEX ANALYSIS

BALANCE SHEET

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2006 2007 2008

% % %

Sales 131.56 139.17 100.00

Cost of Good Sold 127.11 138.16 100.00

Gross Profit 147.34 142.77 100.00

Operating Expenses 157.29 147.91 100.00

Operating Profit 137.71 137.80 100.00

Other Income 74.93 112.14 100.00

EBIT 136.63 137.36 100.00

Financial Charges 159.18 147.44 100.00

Workers Participation Fund 124.00 131.93 100.00

Profit /Loss Before Taxation 123.79 131.61 100.00

Provision For Taxation 99.61 94.61 100.00

Profit /Loss after Taxation 129.55 140.43 100.00

2006

Sales 1,642,369

Cost Of Good Sold 1,237,358

Gross Profit 404,911

Operating Expenses 212,539

Operating Profit 212,539

Other Income 192,272

EBIT 1,720

Financial Charges 194,092

Profit / Loss Before Taxation 81,964

Provision For Taxation 5,516Profit / Loss After Taxation 87,580

MASOOD TEXTILE MILLS LIMITEDPROFIT AND LOSS A/C

INDEX ANALYSIS


PROJECTED STATEMENT OF

PROFIT AND LOSS A/C

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2006

Equity And Liabilities:

Authorized Share Capital

30,000,000 Ordinary Shares Of Rupees 10 each 4,50,000

Issued, Subscribed And Paid Up Capital

20,000,000 Ordinary Share Of Rs.10 each Fully Paid in Cash 2,00,000

Revenue Reserve-General 10,782

Accumulated Profit / (Loss) 4,550

2,15,332

Surplus On Revaluation Of Operating Fixed Assets 3,04,200

Deferred Income On Sale & Lease Back Of Operating F. Asstes 839

Non current Liabilities:

Sponsor's Loan Interest Free -Redeemable Capital 84,113

Long Term Loan 240,750

Liabilities Against Assets Subject To Finance Lease 489,935

Deferred Liability For Gratuity 31,353

8,4 6,151


Current Portion Of Long Term Liabilities 204,864

Short Term Finances 618,,700

Creditors, Accrued and Other Liabilities 361,,926

Worker's Participation Fund 5,278

Provisison For Taxation 30,232Proposed Dividend To Minority Shareholders 4,692

Unclaimed Dividend 669

1,126,361

Contigencies & Commitments 2,592,883


PROJECTED BALANCE SHEET

AS AT SEPTEMBER 30, 2008

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2005

ASSETS:

Non Current Assets:

Tangible Fixed Assets:

Operating fixed assets 6,51,506

Assets subject to finance lease 4,71,172

Capital work-in-progress 1,49,743

1,272,421

Long Term Advances, Deposits and deferred cost 79,131

CURRENT ASSETS:

Stores and spare parts 120,710

Stock-in-trade 308,433

Trade debts 408,189

Advances, deposits, prepayments and other receivables 375,355Cash & bank balance 28,644

1,291,011

Total Assets 2,592,883

NOTE:

Projected Statement On The Basis Of Growth Formula As Given Below:

FORMULA:

Ending - Beginning / Beginning * 100

It shows how much change would be in next year


PROJECTED BALANCE SHEET


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Rupees in

Thousands

EQUITY CAPITAL: 2007

Issued , Subscribed , And Paid Up Capital

20000000 Ordinary Shares Of Rs. 10

each fully paid up in cash 200,000

evenue reserve general 14,500

Accumulated Profit / ( Loss) 4,332

Total 218,832

DEBT CAPITAL:

Long Term Loan 240,750

Liability Against Assets Subject To Finance Lease 67,529

Defferred Liability For Gratuity 22,266Total 330,545

Total Capital = Equity Capital + Debt Capital

CAPITAL STRUCTURE



The capital evaluation shows that the firm is using a mixed structure comprising of both the equity

and debt. The proportion of debt is more than the equity its mean the firm focus on debt financing as

compare to equity. The use of debt financing can increase the leverage of the business earning and

the use of common stock has the least cost of financing.

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CURRENT LIABILITY TO TOTAL ASSETS

Years 2006 2007 2008

Current liabilities to total assets (in times) 4.70 4.70 4.80

Comments:

The ratio of current liability to total assets shows the percentage of total assets that has been financed

with the total assets. The current liabilities to total assets use for the level of firms current liabilities

effect on profitability. So this ratio is same as compare to three years. So there is no effect of

profitability.

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SWOT ANALYSIS

Managers of KYK & NESS always review the mission and goals and then they scan the internal and

external environment to identify elements that influence the organization performance. To

determine such elements SWOT analysis is conducted.

SWOT is a method that helps managers identify the organizational

Strengths (S)

Weakness (W)

Opportunities (O)

Threats (T).

STRENGTHS

Latest machinery

The mill has latest machinery, which they have imported from foreign country to meet the

international quality standards.

ISO 9002 Certificate

The company has got ISO 9002 certificate which insure the quality standards.

High Financial Resources

The company has high financial resources.

Strong market image

The company has strong market image in foreign market. The buyer can purchase same

product from the competitor at low price but due to strong marker image they purchase from

KYK & NESS.

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Proven management

KYK & NESS has proven management. All management is very competent. They know

how to satisfy their customers.

Products innovation abilities

The management has product innovation abilities.

WEAKNESSES

Centralized management

The management at KYK & NESS is centralized. All type of decisions is made at top level

Due to centralized delegation of power only managers have no authority to make decision.

High cost of production

The cost of production increased, such as material labor quota charges and other production

accessories.

Small international market share

The KYK & NESS has small market share at international level.

No motivated staff

The staff is not properly motivated due to lake of incentives and less wages offered by the

company.

Less promotional activities

The company has very less promotional activities in local an international media.

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OPPORTUNITIES

Potential in market

Entering new markets

Addition new product line

Faster market growth

Potential in market

THREATS

Political instability in country

Economic instability

Though competition

Adverse government policies

Easy access of buyers in world markets

New competitors inter in the market

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PEST ANALYSIS

Every nation has unique features that must be understood. A nations readiness for different products

and services depends on its Situation/PEST analysis. PEST analysis is a method that helps the

manager to identify the nations:

Political (P)

Economic (E)

Social (S)

Technological (T)

POLITICAL

The political risk is a major factor, which effect the over all business performance. The political

condition of our country is not satisfactory. Every government has its own policies. Every

government deletes the policies of previous Government also is trying to implement new tax policies

and other regulation to encourage the economy. When the political environment is not satisfactory

the foreign investors would not like to come and make investment due to which foreign investment

would go down. So govt. should implement policies, which are benefited for local as well as foreign

investors.

ECONOMIC

KYK & NESS is operating its business in present economy. The economic condition of this country

is not up to mark. Heavy loans and increasing inflation rate make the business environment strict

Increasing inflation rate cause of production due to which our countries products well out at a high

prices with low margin. But KYK & NESS is exporting its products in a very food way. Its sale i

increasing year by year the company has overcome any difficulty which arises through economic

hindrances by are some economic obstacles e.g. balances community in the country.

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SOCIAL

In this environment, many processes can effect the organization like attitudes, values behavior and

beliefs of people living in different areas. KYK & NESS is producing its products according to the

varying demands and charging life style. So KYK & NESS examine the consumers indifferen

countries think about and use certain products before planning making good efforts in producing

those products. This matches the customer liking and buyers demand.

TECHNOLOGICAL

Technical achievement is very important tool to produce quality product KYK & NESS has

imported machinery and equipment that is sufficient for meeting the customer changing demands

The development and application of advanced technology help this organization to compete in the

global market place.The``1 KYK & NESS has injected funds to enhance the value added operations

and also to modernize the existing production facilities to compete in the international market.

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OUTCOMES AND SUGGESTIONS

OUTCOMES

1. There is not 100% stability in the organization relating to the order meeting.

2. The use of information technology is not proper.

3. There is somewhere influence of other departments to the IT department.

4. The marketing strategies are not so much satisfied.

5. There is a fluctuation in the working of the factory.

6. The IT department is doing some other jobs relating to the other departments.

7. The internal customers (employee) are not satisfied about their job

8. High turnover of employees (not retention).

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SUGGESTIONS

1. The KYK & NESS should apply IT in the whole organization that interlock between the

departments should be quickened.

2. The production units are not using computers. So that the IT department is responsible for the

barcode tickets responsibility of unit in charges.

3. The organization including garment division, textile unit and head office should interlock

through wide area network.

4. The organization should expand the span of production to meet the orders in time.

5. The company has to ensure the employees for their existence is the organization.

6. The entire department should be interlinked but independent for their working operations.

7. The promotion of the products may be taken place through web page or other electronic

media.

8. The employees should be assigned jobs according to their qualification.

9. Control on the turnover of employees

10. Continuous improvement the total quality system.

11. To improve the policies of retention of employees.

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CONCLUSIONS

Its a period of Globalization, any organization or institute who ignore the element of globalization

automatically kick out from the market. Only those can be survived who compete this global marke

perfectly. There is a Survival of the fittest.

So the Kyk & nesss has the opportunity to survive the global market because it has the better good

will and positive earning per share it can capture all the global market.

Kyk & nesss is also faces a tenor in which there is both opportunities and threats for it to be able and

survive and growth. But many of the challenges that shall occur will be outside of the control of the

Mills.

However, this does not absolve the government of Pakistan and the local Textile industry from its

responsibility to best deal with the climate both locally and internationally and prepare itself for even

greater challenges

Now there is need that the Govt. and industry realize that a sincere and positive approach has to be

made to meet the challenges of the present day competition environment. In this regard adequate

finance for capital investment, working capital and development of comprehensive longterm

strategies and the stable government is needed.

Documents

New Report Saaad Masood Gill