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ACKNOWLEDGEMENT
First of all we would like to thank Almighty Allah, Who helps us
in every aspect of life and then we are very thankful to our respected teacher
SIR.USMAN who provided us the opportunity to learn the new ways
of research and to integrate the researched market data.
I am also thankful to YASIR USMANI & TASNIM
HAIDER who are Marketing & Finance manager of NISHAT TEXTILE
MILLS and all the people that help us in any way to collect the data and
understand the information on which we have made the projections and
summaries.
Executive Summary
Nishat has grown from a cotton export house into the premier business group of Pakistan with 5 listed companies, concentrating on 4 core businesses; Textiles, Cement, Banking and Power Generation. Today, Nishat is considered to be at par with multinationals operating locally in terms of its quality products and management skills.
The difference between the success & failure is doing things right and doing things nearly right, & NML has always tried for success & that is why it is known to be one of the leading organizations in Pakistan. It is discuss about the 7ps.
We have conducted all the financial ratios of the company and interpreted them. And analysed all the internal and external factors that are affecting the company profile. We have analysed space , BCG , IFE & grand strategy matrix.we have described the main factors of the value chain and cooperate governance. At the end we have made some recommendations.
INTRODUCTION OF TEXTILE SECTOR
THE PAKISTAN TEXTILE INDUSTRY
According to the Pakistan Ministry of Textiles, an export target of 13 billion USD has been
fixed for the year 2008-09. Hence, the textile units in Pakistan have an opportunity to expand the scope.
ESTABLISHED CAPACITY
The textile industry of Pakistan has a total established spinning capacity of 1550 million kgs of
yarn, weaving capacity of 4368 million square meters of fabric and finishing capacity of 4000 million
square meters. The industry has a production capacity of 670 million units of garments, 400 million
units of knitwear and 53 million kgs of towels. The industry has a total of 1221 units engaged in
ginning and 442 units engaged in spinning. There are around 124 large units that undertake weaving
and 425 small units. There are around 20600 power looms in operation in the industry. The industry
also houses around 10 large finishing units and 625 small units.
Pakistan’s textile industry has about 50 large and 2500 small garment manufacturing units.
Moreover, it also houses around 600 knitwear-producing units and 400 towel-producing units.
CONTRIBUTION TO EXPORTS
According to recent figures, the Pakistan textile industry contributes more than 60% to the country’s
total exports, which amounts to around 5.2 billion US dollars. The industry contributes around 46% to
the total output produced in the country. In Asia, Pakistan is the 8th largest exporter of textile products.
CONTRIBUTION TO GDP AND EMPLOYMENT
The contribution of this industry to the total GDP is 8.5%. It provides employment to 38% of
the work force in the country, which amounts to a figure of 15 million. However, the proportion of
skilled labor is very less as compared to that of unskilled labor.
Textiles Exports from Pakistan
Textiles constitute a major exporting sector for Pakistan, which accounts for about 60%of the
country’s total foreign exchange earnings. The major export items are yarn; gray Cloth, finished cloth,
towels and bed sheets and their major customers are the USA, EU, Japan and Hong Kong. Many textile
exports take place under quota arrangements With the EU and the United States. Gray cloth constitutes
roughly 16- 18% of total cloth.
Exports from Pakistan.
Nishat gray cloth exports account for roughly 20 % of Pakistani gray cloth exports. The firm has
been exporting to the USA for many years, and has only recently started to export to EU countries. In
Pakistan, the cotton crop season runs approximately from August to March. Prices are generally high at
the start of the season in August/September, and fall later on as supply increases. Following income tax
law, the fiscal year runs from October to September for textiles sector.
History
NISHAT MILLS LIMITED (NML) commenced business in 1951 as a partnership concern, which
was converted into private limited company in 1959. In 1961, the company went public and was listed
on the Karachi stock exchange, the only stock exchange in the country at that time. NML started out as
a weaving unit with 500 semi-automatic looms; later 10000 spindles were added, laying the foundation
on nation’s biggest textiles composite project. Composite project at Nishat mills limited Faisalabad
covering 98 acre of land is providing all production process under one roof i.e. spinning, weaving,
processing, stitching and power generation.
The Founder
A man of vision, courage and integrity, Mian Mohammad Yahya was born in 1918 in Chiniot. In
1947 when he was running a leather business in Calcutta, he witnessed the momentous that swept the
indo-pak sub-continent and resulted in the emergence of Pakistan. Like many of his contemporaries, he
also migrated to the new country to help establish its industrial base. His is a story of success through
sheer hard work and an undaunted spirit of enterprise. Beginning with a cotton export house, he soon
branched out into ginning, cotton and jute textiles, chemicals and insurance. He was elected Chairman
of All Pakistan textile Mills Association (APTMA), the prime textile body in the country. He died in
1969, at the age of 51 having achieved so much success in so short period.
The Chairman
Today Mian Mohammad Mansha, the chairman of Nishat Group, like his father, continues the spirit
of entrepreneurship and has led the group to become a multi dimensional corporation, with wide
ranging interests. Nishat has grown from a cotton export house into the premier business group of the
country with 5 listed companies, concentrating on 4 core business, Textiles, Cement, Banking, and
Power Generation. Today, Nishat is considered to be at par with multinationals operating locally in
terms of its quality products and management skills. 4 - Nishat Mills Limited Firmly believing in
‘Growth through Professional Management’ our corporate culture is based on decentralization,
delegation of authority, encouraging the acceptance of responsibility and inculcating quality
consciousness. It is our conviction that every successful organization is a reflection on the commitment,
dedication, and team spirit of its employees, and Nishat is no exception. Our people are all imbued with
the spirit, a fact manifested in our rapid growth and low turnover Nishat continue to strive to be a better
group today than what they were yesterday, for their customers, for their shareholders, for their
investors, for the environment, for the community and for their employees, for it is with them that
Nishat has achieved so much success in last fifty years.
TEXTILE CAPACITY
Production process consists of spinning, weaving, processing, and finishing. The processing
includes dyeing, engraving. The textile capacity of the group is the largest in the country. An addition
of 20000 new spindles, 100 new air jets looms and new dyeing plant has increased the existing capacity
of 24000 spindles, 740 looms and dyeing and finishing capacity of 5 million meters. The group is the
largest exporter of textile products from Pakistan for more than a decade.
Export Oriented Organization
Nishat mills limited are an export-oriented organization. Nishat mills limited exports more than 90% of
its products mainly to the Far East, Europe and United States.
COMPANY INFORMATION BOARD OF DIRECTORS:
Mian Umer Mansha Chairman/Chief Executive Mian Hassan Mansha Mr. Muhammad Nawaz Tishna (NIT) Mr. Khalid Qadeer Qureshi Mr. Muhammad Azam Rana Muhammad Mushtaq Ms. Nabiha Shahnawaz Cheema
AUDIT COMMITTEE:
Mr. Khalid Qadeer Qureshi Chairman/Member Mr. Muhammad Azam Member Ms. Nabiha Shahnawaz Cheema Member
CHIEF FINANCIAL OFFICER:
Mr. Badar-ul-Hassan
COMPANY SECRETARY:
Mr. Khalid Mahmood Chohan
AUDITORS:
Riaz Ahmad & Company Chartered Accountants
LEGAL ADVISOR:
Mr. M. Aurangzeb Khan, Advocate, Chamber No. 6, District Court, Faisalabad.
MILLS:
Nishatabad, Faisalabad (Spinning units and Power Plant) 12 K.M. Faisalabad Road, (Weaving units & Power Plant) Sheikhupura. 21 K.M. Ferozepur Road, Lahore. (Stitching unit) 5 K.M. Nishat Avenue (Weaving, Dyeing & Finishing unit, Off 22 K.M. Ferozepur Road, Lahore. Processing unit, Stitching unit and
Power Plant) 20 K.M. Sheikhupura Faisalabad (Spinning unit)
Road, Feroze Watwan
REGISTERED OFFICE
Nishat House,
SHARES DEPARTMENT
53 - A, Lawrence Road, Lahore. Tel: 042-6367812-16, 042-111 113 333 Fax: 042-6367414
HEAD OFFICE:
7, Main Gulberg, Lahore. Tel: 042-5716351-9, 042-111 332 200 Fax: 042-5716349-50 E-mail: [email protected] Website: www.nishatmillsltd.com
LIAISON OFFICE:
Ist Floor, Karachi Chambers, Hasrat Mohani Road, Karachi. Tel: 021-2414721-23
Fax: 021-2412936
Plant locationPlant location is one of the main long-term strategic decisions normallytaken by top management. Nishat mills limited is ideally located in,Nishatabad Faisalabad.12- K.M Faisalabad road Shiekhupura.21- K.M Ferozepur road Lahore.5 K.M Nishat Avenue Lahore.Off 22.K.M ferozepur road Lahore.20-K.M Shiekhupura Faisalabad (ferozewatan)Main factory is located at Niashatabad. It is a composite unit.Composite unit means all the process i.e. from spinning to stitching takes placeunder one roof. Product process includes spinning, weaving, processing, finishing and
stitching units.
Vision Statement
To transform the Company into a modern and dynamic yarn,
cloth and processed cloth and finished product manufacturing
Company with highly professionals and fully equipped to
play a meaningful role on sustainable basis in the economy of
Pakistan.
To transform the Company into a modern and dynamic power
generating Company with highly professionals and fully
equipped to play a meaningful role on sustainable basis in the
economy of Pakistan.
Mission Statement
To provide quality products to customers
and explore new markets to promote/expand
sales of the Company through good governance
and foster a sound and dynamic team, so as to achieve
optimum prices of products of the Company
for sustainable and equitable growth
and prosperity of the Company.
.
Mission statement Analysis of Nishat texitle
components of mission statement
Customer
product /services Markets
Technology
Philosophy
NO NO NO NO NO
self concept
concern of employees concern of public image
NO YES
YES
concern of survival growth and profitability
YES
Spinning Section
The year 2009 mainly started with difficulties in the shape of the bullish and uncertain cotton
market. Ever highest cotton prices were seen this year in Pakistan. Cotton prices started with Rs.
2,900/maund and went up to Rs. 4,000/ maund during this year. Most of the Spinning mills remained in
a serious cotton crisis through out the year.
We have, however, by passed these crises by following our one time cotton buying policy and same has
also helped us to maintain steady quality results. Demand of 100% grey cotton yarn remained steady
and we tried to uphold the prices along with market and to keep over all spinning in profits. by the end
of year, far east market. showed good response in terms of demand and prices of carded & combed
yarn. Far East remained our main selling market of cotton yarn. USA had some steady demand during
this year, where as in Europe demand of cotton yarn was reduced more. Development in terms of
machinery is in progress for better quality of yarn. Installation of state of art ring frames is under way at
one ofour spinning units.
Weaving Section
During the year under review, we have observed highest ever yarn prices which made the job more
difficult. The increases in the yarn price was not absorbed by the fabric prices. We faced a lot of
difficulties to win the business in international market because of high raw material prices. Moreover,
political instability, law and order situation and energy crisis (Oil, Gas and Power shortage), increased
our cost of production and held our product uncompetitive in international market. It is becoming
difficult to maintain our performance in the present scenario. Fareast market showed difficult on
ground of price. Business in South America reduced by 80% in comparison with previous period
because of the bullish yarn market and cheaper prices from competitors. Our wider width looms / home
textiles greige capacity continued facing decline in prices. Our strategy in this competition was to
diversify ourselves customer wise, market wise and product wise. This was the only way to survive in
such uncertain market. Another strategy was to cut costs by bringing innovative technologies. We
continued to replace our old looms with the new state of the art looms and got new looms in different
widths to meet the varying requirements of all our customers.
Processing and Stitching Section
The year 2009 was a difficult year for fabric processing mills as in addition to the domestic
challenging scenario, recession of American market further slowed down the entire business
cycle. Retailers were stuck up with high inventory levels, which hindered new ventures. Unanticipated
bankruptcy of some major textile businesses including, Dan River, Linen & Things, Goody’s Family
Inc also gave unprecedented setback to an already fading market. This
situation did not allow suppliers to increase any prices to overcome excessive overhead costs
and ease out the worsening condition. Even though all major concerns were facing
a perpendicular decline in the revenues, our company was able to sustain its sales in step with the plant
efficiency. A particular focus was conferred upon enhancing production
efficiency are drawing more production in less number of hours and with optimum workforce. With
reference to this cost cutting strategy, an important step was taken by shifting the Faisalabad stitching
unit to Lahore, adjacent to the processing plant.
Nishat Dyeing & Finishing – (NDF)
Given the circumstances of textile industry and all challenges, NDF managed to perform quite well.
NDF not only managed to retain all its major customers despite the cut throat price competition, but
also increased its customer base both in US as well as in Europe. Thereby the low demand by existing
customers due to poor retail was covered well by addition of this new business. This increase in
customer base was both due to the complete verticality offered to customer for fabric till finished
garments. as well as to the increased marketing activities on tapping new customers. The overall picture
is not expected to improve Much in the next fiscal year as in the market still remains highly unstable.
All the factors contribution to the current inflationary pressures and weak demand are still present and
far from being settled. As much as it is hard to establish a firm marketing strategy in such a volatile
market, NDF has formulated the key principles follow in the next fiscal year.
These revolve around a further expansion in its customer base, retaining the current major customers,
increasing marketing efforts in the still profitable European market and concentrated
effort towards specialized finished over regular run-of-the-mill products to fetch better margins.
Power Generation
Nishat has 80 MW of self power generation facilities at different sites. We have always
concentrated on installation of most modern and efficiency to power generation machine to get
more with less fuel consumption. Out of the total generation capacity, 46 MW generation is done
through most modern and highly efficiency gas fired generators and their design is based on “tri-
generation” concept i.e. besides generating power these plants are producing steam for use in
processing, for further power generation and hot water for process use or air conditioning. This concept
makes it possible to use the precious energy to to maximize profitability of the company and help
reduce environmental pollution. Keeping in view the current power shortage in the country, Nishat has
responded to beckon of the Government and sold its excessive power
from different locations to the local distribution companies.
Pest Analysis
Political
Marshal law is always being threat to our industry. Poor law and order situation is a serious threat for Pakistan textile industry. Changing tax rates are also effecting our textile sector. Import and export restrictions is barrier for the development of textile sector. Due to the rapid change in government every government sets its own trade policies.
Economical
Devaluation of dollar against rupee played a key role in improving sales and resulted in higher profitability in previous year which is $1137.1790
But in current year it remains stable in against rupee and eventually caused lower profitability which is $1010.491
Increase in consumption rate of local and imported cotton raised the production cost as compare to previous year.
Finance cost decreased by 25.82% which is Rs 546.823 million as compare to last year Rs 737.156 million.
High cost of production due to higher cotton prices 20% increase in imported input prices. Decrease in the prices of grey fabrics due to fluctuating currency rate which decreased the
profitability.
Social
Increasing competition from regional countries. Increasing abrasive fabric business mainly due to rival of the car industry. Higher prices are causing buyer extremely cautious in placing order
Technology
Coupled with nishat capability and competency vertical production facility that can convert raw cotton to final finished consumer product always attract attention of customer.
Focused to add further value added product and system. Nishat has upgraded its machinery with erection of most modern and efficient ring frames and
cone winding machines in two spinning units and further replacement of similar machines of other units to help increase in automation and reduce labour cost and produce better quality yarn.
Expansion of production capacity at one unit by installing 50 new state of the art toyotel air jet looms which are operationalized in march 2010
Latest yarn dying plant is installed with the capacity of 7 tons a day.
5 Forces model
Bargaining power of buyer
The bargaining power of buyer is increasing day by day. The buyer demanding more and improved quality in very cheap price weather customer are from foreign or are from local market. The competition at international level as increased to much. If we see the export to USA of textile industry from all over the world and especially from asian countries then we can easily found that Pakistan is offering most less export prices to USA which is $0.91 per-meter. But the other countries are getting more than these prices and in these countries Bangladesh is on top that is getting $3.15 per-meter from USA. Although we are offering lowest prices but due to poor quality and present condition off the textile industry. Pakistan is losing customer for there textile industry.
Bargaining power of supplier
Bargaining power of supplier is increasing as Pakistan government has put a barrier on import of raw material for textile which is reduced up to 70%. Due to which local suppliers are getting edge and providing raw material at expensive price. As our local cotton is not enough to fulfill all textiles so the bargaining power is increased. On other hand government has increased gas and petroleum prices.
Rivalry
The competition in the textile industry is becoming very tough. The textile mills are competing with each other on the basis of their prices they offer for the quality which they produce. Competition at international level is very furious for Pakistan textile industry. The major exporter’s for textile products are;
1) Nishat textile2) Saphire textile3) Chenab textile4) Kohinoor textile5) Al-karam textile6) Sitara textile7) Gulistan textile
In international market major countries are;
1) China2) Indai3) Vietnam4) Bangladesh5) Korea6) Pakistan7) Iran
Threat of new entrance
Threats of new entrance is always there. But it is neglected as new company has to face a number of challenges and competitors in the market. And existing companies are already a big giants for new entrance. On the other hand prices of labour , fuel , are very high. Technology is also very expensive due to higher dollar prices. political instability is also playing a key role of barriers to new entrance.
Threat of substitution
Textile products and cloths are basic necessity which has no substitute. But now a days some local designers and companies have started there on designed production. The products they are making is according to peoples and customer demand. Such as Aroshe , Bareeze , needles impression etc.. they can be substitutes but not a big threat for the company.
Competitive profile matrix
Nishat Sapphire Azgard9
Critical success factor Weight Rate Score Rate Score Rate Score
Product quality
0.13 4 0.52 3 0.39 3 0.39
Customer’s 0.10 3 0.30 2 0.20 2 0.20
Advertising 0.08 2 0.16 2 0.16 1 0.16
Management skill 0.13 4 0.52 3 0.39 3 0.39
Design 0.12 3 0.36 3 0.36 2 0.24
Modern tools 0.12 4 0.48 3 0.36 3 0.36
On time delivery 0.10 3 0.30 2 0.20 2 0.20
Organized and work 0.07 3 0.21 2 0.21 3 0.21
Financial systematic position
0.07 2 0.14 2 0.14 2 0.14
Market share 0.08 2 0.16 3 0.24 2 0.16
Total 1.00 3.15 2.65 2.45
Analysis The average total weight is 2.5.The result for CPM matrix is Nishat score 3.15 that is slightly above from the average. That is showing that better than Sapphire and Azgard9. Sapphire also better than Azgard9. Sapphire score 2.65 and Azgard9 score below average 2.45.
EFE MATRIX FOR NISHAT TEXTILE
KEY EXTERNAL FACTORS
OPPERTUNITIES Weight Rate Score
Organization Can expand product lines
0.11 3 0.33
Organization Can hire more well-educated and experienced person
0.12 2 0.24
Organization Can reduce the cost by proper utilization of resources
0.10 3 0.30
Organization Can capture new market segments around the world
0.10 4 0.40
Potential of sales increase through quality services and in time delivery
0.09 2 0.18
Introduce its garments in the local market
0.08 3 0.24
Threats
New entrance 0.10 3 0.30
Political instability 0.10 3 0.30
Economic instability 0.09 2 0.18
Changed of government policies 0.11 3 0.33
TOTAL 1.00 2.80
Analysis
The average total weight is 2.5.The result for EFE matrix is 2.80 that is slightly above from the average. That is showing they can effectively take advantage of existing opportunities and can minimize the adverse effect of external threats.
IFE MATRIX
KEY INTERNAL FACTORS
Strength Weight Rate Score
Strong Security System 0.10 3 0.30
Latest mechanized machinery.
0.10 4 0.40
Adequate financial resources
0.12 4 0.48
Better delivery of services 0.10 3 0.20
Highly qualified and skilled management
0.10 4 0.40
Quality products
Own power generation
0.09
0.09
3
4
0.27
0.36
weakness
High cost of production 0.10 2 0.20
Centralized decision making
0.05 1 0.05
Small international market share
0.10 2 0.20
Less promotional activities
0.05 2 0.10
TOTAL 1.00 2.96
Analysis
For the matrix the average score is 2.5 and our score is 2.96 which is above average so this above average score show a strong internal position of the Nishat textile.This means that the Nishat textile is above in its internal strength.
Detail of SWOT Analysis
Strengths:
ISO 9001-2000:
Nishat textile is certified under ISO 9001-2000 and so it meets the requirement of international standard and has a value in the mind of concern people.
Strong Security System
Nishat textile limited has a greater security system. There are different hidden security cameras which capture the all moments.
OKTEX 100:
Nishat is also Oktex 100 certified its mean that Nishat is satisfied to not using hazard chemical using.
High quality product
Nishat textile limited using advance technology like they have modern machinery by which the quality of product produced is very high.
Latest mechanized machinery.
They are using modern looms which they have purchased from Japan and France. And by using that latest machinery the productivity of the employees are very high.
Tremendous market positioning
Nishat textile is one of the pioneer textiles in the Pakistan so it got the position in the mind of its customer. And being an old textile company people are loyal with it. Nishat has a better position in the mind of its customers.
Highly qualified and skilled management
The management of Nishat is skilled they have hired the foreign graduate people in their management and also experienced people from all over the country.
Highly Motivated Workforce
They are providing better pay to their employees and also bonus to them which motivate the workforce and they are doing well at work setting.
Adequate financial resources
The owner of the Nishat is one of the richest persons of the Pakistan and they have more plant and investment in other industries like cement, Bank, They have adequate financial resources to meet their requirements.
Competitive advantage
Because it is an old textile and it has still keep its position in the textile market on all others competitors in the nation wide which is its competitive advantage.
Equipped with MIS System
They have a management information system by which the departments and employees are connect with each other and they have a data ware house by which they can share their resources easily.
Own power generation plant
They have own power generation plant and Nishat is the pioneer in the private organization who start the power generation. And also selling to the WAPDA its produced power.
Weaknesses:[
High cost of production
The production cost is high because of not properly utilization of its resources.
Centralized decision making
The decisions are made by the upper management which is weakness of the Nishat because they have no proper idea about the situation and their decision can be not fruitful for the company.
Weak image in the international market
Because of the other textile specialized countries like China, Bangladesh etc the international image in the textile sector is very weak. Those countries providing cheap product to the market then Pakistan’s textile industries.
Small international market share
Although Nishat has very strong in the national wide but it has small market share in the global textile industry due to the sound competitors like china, and Bangladesh etc
[
Less promotional activities
The advertising and promotional cost of the Nishat textile is very low it can take advantage for more turnouts.
Lack of benefits and rewards for the employees
Some facilities that other providing to their employees like Transport and medical fee etc Nishat not providing to their employees because of which the productivity of the employees decrease.
Opportunity:
[
Organization Can expand product lines
Currently the Nishat not dealing in knitwear they can expand their product line by producing knitwear. They have plants and the extra cost for the production will be low for Nishat. And they also have better market repute.
Organization Can reduce the cost by proper utilization of resources
If the cost of different matters which is not utilizing properly is controlled by the Nishat management they can produce more in a few costs. It has to develop a further systematic process for controlling and managing resources.
Organization Can hire more well-educated and experienced person
They can take advantages by hiring more skilled people and they should hire young, fresh and energetic staff for their betterment.
Threats:
Buyer needs demands changes
Because of the research and development the design and the product of Nishat is just satisfactory as compare to competitors in the globally and they are not fulfilling the demand of customer.
Political instability
Political instability effects the Nishat because of the quota system the company can be restrict by the government to export.
Changed of government policies
Government policies are changing day to day so it is a threat for the Nishat to survive in such a changeable situation.
Globally Economic instability
Because of the economic instability the Nishat affected a lot. Dumping system which is rising on daily basis in the world can create many problems for the company and any uncertainty in the world like 9/11 may affect also the overall export.
7P,s
There are the following 7p,s.
1. Product
2. Price
3. Place
4. Promotion
5. Packaging
6. Positioning
7. People
1-PRODUCT
PRODUCT LINE
Products line of Nishat mills limited consists of following items,
BEDDING
Sheet sets
Quilt cover sets
Bed spreads
Comforters
Bed skirts
Oxford pillow cases
Blanket covers
Sleeping bags
CURTAINS & ACCESSORIES
Embroidered curtains
Pencil pleat tape curtains
Pinch pleat lined & unlined curtains
Tab top & rod pocket curtains
Assorted pelmets and window dressings
Oxford cushion covers
Frilled and piped cushion covers
Frilled, piped and pleated tie backs
TABLE, FURNITURE & KITCHEN ACCESSORIES
Tea cozy
Table mats
Table cloth and napkins
Aprons
Kitchen gloves
Pot holders
Chair pads with circle tacks
Couch cove
Nishat textile’s main products are grey fabric and abrasive fabric.
Grey fabric is the form of fabric which is in finalized condition means it has gone through the process of spinning , dying. Abrasive fabric is processed fabric but is not in finalized form.
Nishat is famous for its fabric. Fabrics which are available in market are cotton, lawn and satin.
In above picture winter variety is shown by maira Hassan. Winter designs of satin.
QUALITY SYSTEM
I. System Procedure
ISO 9001 requires that there should be proper system for each work. Standardization of work is necessary for achieving
effective certification.
II. Standard Operations
Nishat mills limited have established a quality control lab, which ensures quality products to their customers. Objective
at Nishat is to provide only quality products to their customers. That’s why they achieved quality certification like ISO
9001.
III. Quality Planning
Effective planning is required for the success of organization. If plans are well planned, they bring success to firms. For
this production and planning department has been established.
2-PROMOTION
When ever you think about quality and style a suddenly you will get a name of nishat. However is Nishat is promoting its product through fashion magazines. Nishat is promoting its product through models who are showing the variety of nishat satin, cotton , lawn, and some other varieties. These promoting adds are published according to the season. These adds are published in style360 , styleablaze and some other magazines more over nishat participates in fashion shows at Karachi. Maira Hassan is brand ambassador of Nishat satin.
When one think of winters, it’s like a rainbow of colors that appear in mind which primarily include
brilliant shades of red, burgundy, wild orange, mustard yellow hues, beautiful browns, and among other
rather darker riches hues, eternal whites possess center place.
Nishat Textile Mills are among the few great names in Pakistan’s Textile Industry, produce high quality fabrics and flirt with glorifying colour.
1. Meeting with buyers
Marketing manager meets with buyer, introducing Nishat products to prospective buyer. This strategy helps manager to
understand the needs and requirements of buyers as well as marketing people are aware of current trends of market.
Through negotiation you win the sympathy of buyers and business for the company.
2. Company Profile
Nishat mills limited has also published it profile introducing its key products to customer. This booklet is send to
various agencies dealing in purchase of cotton, fabrics and made-ups. This strategy helps to introduce the company in
out side world. Various broachers are also published.
3. Buyers Visit
Sometimes buyer’s visits are arranged to familiarize them with products, Nishat is offering for their valuable
customers. Theses visits are crucial for the growth of the company because they help in introducing products to others
and also win a lot of business for the company. Nishat marketing department frequently invites buyer to show them
excellent production process and quality productions.
4. Free Samples
This strategy is widely used to boost up exports. Free samples are delivered to customers to show how best our
products are? Free sample is useful techniques in winning the loyalty of customers. When new product is made, free
samples are sent to loyal customer to show firms concern for them. Customer’s satisfaction is a important aspect
because customer is a person who gives meaning to company.
5. Contacts with Agents
Nishat mill limited is an export-oriented organization. More that 85% of its sales constitutes exports. So to capitalize
foreign market, Nishat has long list of its agents working in foreign market. This strategy is useful when company is
not able to communicate with buyers; it can hire services of agents who for commission introduce their products in
market. Relationships with distributors or agents are recognized as critical success factors so lot of importance is paid
to agents who are valuable asset of firm.
3-PRICE
Nishat is providing its product at lowest price all over the world. It is providing grey fabric at $0.98 per meter which is the lowest offered price all over the world. Nishat aim is to provide best quality at lowest price. By comparing it to other industries of Pakistan you will came across a fact that Nishat is providing better quality at low price.
4-PLACEMENT
Nishat is situated on very ideal places. It is situated in Faisalabad and Lahore. Nishat fair price shops are also available for consumers so they can get there desired fabric according to there need depended upon the availability of the fabric.
lDistribution channalWhole sellers place the order in bulk and sell it to the small retailers. customer purchases their needed fabric from retailer.
5-POSITIONING
Nishat has positioned its self on high quality at low price base. Whenever you think about new variety you will suddenly get a name of nishat because nishat is providing a variety of colours for a variety of products. Nishat is a name of high quality. That’s why nishat has attain a share of 40% of local fabric market . nishat is also ISO 9001-2000 certified. For the better quality of a product nishat is using latest technology equipment so they can provide better quality. In local market nishat has set up a quality mark for other companies.
6-PACKAGING
Packaging of the product is also standardized. Proper packing is used for every kind of product. Every product is properly sealed in to the polythene sheets so the product remain clean from outer dust till it reaches in the hands of customer.
Some of the products are packed according to the demand of the purchaser. Such as 25 meter and 32 meter bundles of cotton and lawn cloth.
7-PEOPLE
It is very important that what people think about the organization whether they are in the organization or from the external environment. In nishat textile there are 32150 workers working. They are provided medical facilities bonuses etc. in external environment Nishat is the leading company with the market share of 40% and become the most famous brand in textile products.
ConsumerRetailerDistributorCompany
The Space Matrix
Internal Strategic Position External Strategic Position
Financial Strength (FS) Environmental Stability
Return on investment 3 Technological Changes -2
Leverage 5 Rate of Inflation -3
Liquidity 4 Price Range of Competing Product -3
Working Capital 2 Barriers to Entry into Market -2
13 -10
Competitive Advantage (CA) Industry Strength (IS)
Market Share -1 Growth Potential 3
Product Quality -3 Profit Potential 5
Product Lifecycle -4 Financial Stability 4
Technological Know How -4 Resources Utilization 4
-12 16
FS average=3.1
ES average=-2.5
CA average=-3
IS average=4
Directional Vector Coordinates X-axis; -3+ Y-axis; -2.5+ (+3.1) =+0.6
This graph shows that Nishat mills is in third second quadrant which is a aggressive strategy quadrant.
Aggressive strategy In aggressive strategy the company may use one of the following strategies, Market penetration, Market development, Product development. Graph shows that the company is financially strong. .
BCG matrix shows that Nishat Apparell is a question mark. As we donot know any thing about it that
whats the future of Nishat Apparell is in the market. On the other hand Processing is on the STAR
place with the highest Market share and Growth. Where as Spinning & Weaving is a cash cow for
Nishat with the Highest market share.
Grow & Build
Market PenetrationMarket DevelopmentProduct DevelopmentBackward IntegrationForward IntegrationHorizontal IntegrationHold & MaintainMarket PenetrationProduct Development
Harvest or DivestRetrenchmentDivestitureLiquidation
Grand Strategy Matrix Rapid Market Growth II I
1. 1. Market Development 1. Market Development2. 2. Market Penetration 2. Market Penetration3. 3. Product Development 3. Product Development4. 4. Horizontal Integration 4. Forward Integration5. 5. Divestiture 5. Backward Integration6. 6. Liquidation 6. Diversification
III IV
1. Retrenchment 1. Concentric Diversification2. Concentric Diversification 2. Horizontal Diversification3. Horizontal Diversification 3. Conglomerate Diversification4. Conglomerate Diversification 4. Joint Ventures5. Divesture6. Liquidation
Slow Market Growth
According to the GRAND STRATEGY matrix NML is doing a rapid market growth and have a strong
competitive position in the market.
Objectives
Financial objectivesCompanies financial ojective is to attain the annual turn over of RS 29 billion in 2010 where as in 2009 it was RS 16 billion.
Strategic objectivesTo achieve the turn over of Rs 29 billion company should do following things
Introduction of value added products. Attaining bigger international market share. Upgrading all the technological equipments to increase production.
Value chain analysis.
Suppliers Suppliers of the company in local market is Cotton development and research institutes, local cotton producers and cotton whole sellers. In foreign market NML is purchasing maximum from ZHANGJIAGANG NEW TIANHAI IMP & EXP CO., LTD .
ENERGY suppliers Energy suppliers of NML is Wapda and NML also have its own power generation plants.
Production costsPlant layout plant layout is important fator in production cost however NML is aware of its importance so all the plants and other units are on easy access.
MaintenanceNML is properly maintaining its mavhinery and equipments. NML upgrades its equipment according to the need this year it spent Rs130 million approx
Management cost. Salaries and other benefits This year NML paid for salary and other benefits is Rs 32million.
Legal and professional charges NML paid Rs 4.8 million for legal and professional cunsultancy
FINANCIAL ANALYSIS OF THE COMPANY
1. RATIO ANALYSIS
A) LIQUIDITY RATIO
B) TURNOVER RATIO
C) PROFITABILITY RATIO
D) LEVERAGE RATIO
RATIO ANALYSIS
The term "accounting ratios" is used to describe significant relationship between figures shown on a
balance sheet, in a profit and loss account, in a budgetary control system or in any other part of
accounting organization. Accounting ratios thus shows the relationship between accounting data.
Advantages of Ratios Analysis
Helps in planning:
Facilitates inter-firm comparison:
Simplifies financial statements:
Makes inter-firm comparison possible:
Help in investment decisions:
Current Ratio:
Current ratio may be defined as the relationship between current assets and current liabilities. This ratio is also known as "working capital ratio". It is a measure of general liquidity and is most widely used to make the analysis for short term financial position or liquidity of a firm. It is calculated by dividing the total of the current assets by total of the current liabilities.
current ratio current assets/current liabilities
year2008 2009
Nishat 1.19 0.99
Azgard 9 1.08 0.87
Sapphire 1.28 1.17
Comments:
Current Ratio clears the extent to which the claim of short term creditors can be met by assets that are to become cash within a year. The best standard ratio is 2:1 so, the Azgard Nine has current ratio below standard. Current ratio shows that how many times current assets are available to meet its current liabilities. Azgard Nine current ratio shows mixed trend and it has grater than 1:1 but only in 2008 it is higher than other years. Sapphire also shows mixed trend in current ratio. Nishat current ratio has decreasing trend in 2008 and 2009.
Turnover/ Activity ratios:
Activity ratios are measures of how well assets are used. Activity ratios -- which are, for the most part, turnover ratios -- can be used to evaluate the benefits produced by specific assets, such as inventory or accounts receivable. Or they can be use to evaluate the benefits produced by all a company's assets collectively.
Fixed Assets Turnover Ratio:
Fixed assets turnover ratio is also known as sales to fixed assets ratio. This ratio measures the efficiency and profit earning capacity of the concern. Higher the ratio, greater is the intensive utilization of fixed assets. Lower ratio means under-utilization of fixed assets.
Formula = sales / Fixed Assets
year
2008 2009
Nishat 1.53 0.66
Azgard 9 0.86 0.60
Sapphire 2.19 1.9
Comments:
It shows the utilization of fixed assets, Azgard Nine decreasing the utilization of its fixed assets but it has lower times than Sapphire which has more utilization of fixed assets and at highest level in 2008. Nishat shows the decreasing trend in year 2009 . Nishat has less utilization than Sapphire and high utilization then Azgard Nine in 2009.
Total Assets Turnover Ratio.
The total assets turnover ratio measures the use of all assets in terms of sales, by comparing sales with net total assets. This interactive tutorial walks you through the calculations as well as where on the financial statements to find the numbers.
Formula Sales/ Total Assets
year2008 2009
Nishat 0.51 0.23
Azgard 9 0.37 0.18
Sapphire 0.79 0.66
Comments:
According to 2008 and 2009 comparison the utilization of total assets by nishat is in decreasing trend but better than Azgard nine. On the other hand Sapphire has also decreasing trend but it is better than naishat and Azgard nine.But Azgard Nine overall situation regarding to total asset turnover ratio is bad than other two competitor.
Profitability Ratios:
Profitability ratios (also referred to as profit margin ratios) compare components of income with sales. They give us an idea of what makes up a company's income and are usually expressed as a portion of each dollar of sales. The profit margin ratios we discuss here differ only by the numerator. It's in the numerator that we reflect and thus evaluate performance for different aspects of the business: The gross profit margin is the ratio of gross income or profit to sales. This ratio indicates how much of every dollar of sales is left after costs of goods sold.
Gross Profit (GP) Ratio:
Gross profit ratio (GP ratio) is the ratio of gross profit to net sales expressed as a percentage. It expresses the relationship between gross profit and sales.
Formula Gross profit/Sales*100
year2008 2009
Nishat 15.41 17.59
Azgard 9 34.15 35.28
Sapphire 11.57 13.02
Comments:
Gross profit of nishat company increasing in 2008 – 2009. And the competitors of Nishat company has also increasing trend in 2008 – 2009.
Operating Profit Ratio:
Operating ratio is the ratio of cost of goods sold plus operating expenses to net sales. It is generally expressed in percentage. It measures the cost of operations per dollar of sales. This is closely related to the ratio of operating profit to net sales.
Formula Operating Profit Margin = Operating profit /Sale*100
year
2008 2009
Nishat 37.91 10.20
Azgard 9 28.18 17.72
Sapphire 14.42 11.60
Comments:
Nishat company operating profit decreased in 2008 – 2009.Operating profit of all three organization show decreasing trend due to increase in operating expenses.
Net Profit/ (Loss) after Tax:
Net profit ratio is the ratio of net profit (after taxes) to net sales. It is expressed as percentage
Formula Net profit before tax/Sales*100
year2008 2009
Nishat 33.20 9.89
Azgard 9 9.88 7.37
Sapphire 6.88 4.49
Comments:
The Net Profit margin tells us the ability of a company to generate the earning after meeting all costs of business.. In year 2009 company suffered a minimum net profit. The ratio has decreased as compare to previous year due to increase in cost and expansion of project. Sapphire shows the decreasing trend in 2009 Nishat top net profit is in year 2008 and 2009.
DEBT TO EQUITY RATIO:
Debt-to-Equity ratio indicates the relationship between the external equities or outsiders funds and the internal equities or shareholders funds. It is also known as external internal equity ratio. It is determined to ascertain soundness of the long term financial policies of the company.
Formula Total Long Term Debts / Shareholders Funds
year2008 2009
Nishat 0.04 0.54
Azgard 9 0.91 0.94
Sapphire 0.09 0.21
Comments:
Nishat shows increasing trend from 2008 - 2009 which shows that they decreasing there debts for expansion of project and their short and long term debts decreased. Sapphire debt to equity ratio is lowest point in 2009 and after that it has decrease its situation in next coming years and increases the ratio.
It shows that Azgard nine position in debt to equity is better then its competitors.
EARNINGS PER SHARE (EPS) RATIO:
Earnings per share ratio (EPS Ratio) are a small variation of return on equity capital ratio and are calculated by dividing the net profit after taxes less preference dividend by the total number of equity shares.
Formula Profit after tax/No. of shares
year2008 2009
Nishat 38.42 5.36
Azgard 9 2.65 1.2
Sapphire 30.76 4.8
Comments:
The earning per share of three companies, earning per share of Nishat company decrease in 2009 as compare it to 2008 and it is at highest point in 2008 and than it decrease in 2009, which mean there is no earning and it going down. Sapphire and Nishat has also same trends but Nishat has better earning per share ratio as compare it to Sapphire and Azgard Nine. It is at highest point in 2008. The earning per share has decreasd as compared to the previous year. These companies should better mange its financial position and improve its performance to get out this fall in earning per share
NISHAT COMPANY LIMITED
BALANCE SHEET
2008 2009
EQUITY AND LIABILITIES
2009
CAPITAL AND RESERVES
Share Capital 1,597,857,000 2,424,827,000 34%
Reserves 23,549,323,000 25118271000 6%
Accumulated profit - -
Total Equity 25,147,180,000 27,543,309,8000 0.87%
SHAREHOLDERS EQUITY
NON CURRENT LIABILITIES
Loan term finances 1,047,794,000 15785094000 93%
liabilities against assets subject to finance lease - - 0%
1,047,794,000 15785094000 93%
CURRENT LIABILITIES
Trade and other payables 1,141,227,000 1790890000 36%
Interest/ mark up on loans 201,847,000 751195000 73%
short term borrowings 9,175,518,000 11407809000 20%
Current portion of long term liabilities 926,025,000 1543888000 40%
Provision for income tax 276,988,000 187019000 -48%
11,721,605,000 15680801000 25%
CONTIGENCY AND COMMETMENTS - -
TOTAL EQUITY AND LIABILITIES 37,916,579,000 60880191000 38%
ASSETS 2008 2009
NON-CURRENT ASSETS
Property, Plant and Equipment
10,647,310,000
27609911000 61%
Investment propertiesLong term investment
118906000 13900567000 135700000
1753090100012%21%
Loan term loans-secured and deposits 8,122,000 16006000 49%
Loan term loans-secured and deposits 10,541,000 15753000 33%
10665973000 45308271000 76%
CURRENT ASSETS
stores, spares parts and loose tools 490,229,000 846126000 42%
stock in trade 4,103,648,000 8333721000 51%
Trade Debts 1,329,027,000 2139304000 38%
Short term investments 7,129,154,000 1764610000 -75%
loans and advances 403,295,000 355608000 -12%
Short term deposit and prepayments 30,400,000 91194000 67%
others receivables 370,013,000 636499000 42%
Cash and bank balances 73,752,000 1404858000 95%
13,929,518,000 15571920000 11%
TOTAL ASSETS 37,916,579,000 60880191000 38%
NISHAT COMPANY LIMITED
PROFIT AND LOSS
2008 2009 2009
SALES 12484139000 14152293000 12%
COST OF SALES (9696803000) (11662819000) 17%
GROSS PROFIT 2787336000 2489474000 -11%
DISTRIBUTION COST (680479000) (743763000) 9%
ADMINISTRATIVE EXPENSES (221675000) (272488000) 19%
OTHER OPERATING (181664000) (127685000) -24%
(1083818000) (1143936000) 5%
OPERATING PROFIT 2021579000 1441951000 -40%
FINANCE COST (760583000) (550790000) -38%
share of profit in associated companies (47675000) - ( 539876000) 91%
(907,432,000) (819,267,000) -11%
PROFIT BEFORE TAXATION 1213321000 1431037000 15%
TAXATION (147432000) (137457000) 7%
PROFIT AFTER TAXATION 1065889000 1293580000 18%
Laps of Nishat Textile
Transport facility is only provided to the female workers Medical facilities are only provided to the worker in the factory not to
the management. Bonuses are provided to the workers working in the factory not to the
management. NML don’t have proper chain of stores for their product. Fair price
shops are available but outdated stocks are sold there. Employees are not paid for the over time. Training courses are held for the upper management not for the factory
employees. All the decisions are taken by higher management.
Recommendations
At present facility of bonus is given only to production staff but such incentives should also be given to Head office Staff.
Special incentives should also be given to Head on Eid and on other special days should be given to the workers.
Medical facilities are given in mill but such facilities should also be given to management.
Different training courses should be arranged for the up lifting and improvement the quality of work for employees
They provide transportation facility to only female employees I think male should also be provided with conveyance convenience. This will create the easiness for workers and reduce the wastage of time.
There is also a problem of work overload for the employees and it should be control properly so that the employees are motivated.
Employees should be paid extra for the work which they done after working hours.
NML should spent for the R&D so they can produce better demanded product.
All decision should not be taken by higher management. All of the management should be given a chance so that employees are motivated and innovative environment is created.
GROUP MEMBERS
Yasir Nadeem MBA-01091-074
Amanullah MBA-01091-063
Khubaib Ayub MBA-01091-071
Mahmood Hussain Cheema MBA-01091-070
Salman Tarrar MBA-01091050
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TOPIC:
NISHAT TEXITLE
PRESENTED TO:
Sir.Usman MBA 3th SEMESTER
Lahore Business School
