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Kohinoor Textile Mills Internship Report
EXECUTIVE SUMMARY
K.M.L has grown from a cotton export house into the premier business group
of Pakistan with 5 listed companies, concentrating on 3 core businesses; Textiles,
Cement and Power Generation. Today, K.M.L is considered to be at par with
multinationals operating locally in terms of its quality products and management
skills.
I recently have done my internship in Kohinoor Mills Limited, in which I got
training from its H.R Department. The internship basically revolved around the
employee relation with the organization. The system, the style of working & the
commitment of the employees in KML is really an example. The difference between
the success & failure is doing things right and doing things nearly right, & KML has
always tried for success & that is why it is known to be one of the leading
organizations in Pakistan. Irrespective of all these positive points of Kohinoor Mills
Limited, I have noticed a few areas where the improvement can really increase the
efficiency of KML. I also mentioned about the Textile industry in Pakistan and vision
of its industry. Then I have done a detailed PEST analysis as well as SWOT Analysis.
Then I have discussed about my learning in the whole internship that is all about the
Textile Terminologies and process of the human behavior. I have made it possible to
write each and every thing that I have learnt there. I have all my practical efforts in
the form of this manuscript thats the asset for my future career. I have also given the
scenario of the whole divisions and also gave the detailed processes that are been
running in my internship division (Hosiery including all the departments that are
working under Hosiery). I have also mentioned the exporting countrys names to
which K.M.L is exporting their products. I have also mentioned the procedures to
make salary slips, how to maintain transportation data, colony data etc. I have also
given the analysis of the organization according to the ratio, horizontal and vertical
analysis and findings on the basis of this analysis. Finally I have also made my
findings and suggestions and if I were the manager of the organization then what
would be my decision.
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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 2007-08. 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
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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.
Pakistans 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 countrys 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.
FINISHING LOOK AND CONTROL COMPONENTS
The products manufactured locally, when displayed against foreign goods -
offer a poor look primarily because of the unsightly finishing of welding seams,
electroplating, painting and other surface treatments. In addition, the adoption of
wrong design parameters, or the attempt to reduce the cost of production, lead to the
incorporation of under-sized electrical motors and electric / electronic control panels.
NEED FOR TRAINING INSTITUTIONS
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Diploma Level Courses on the pattern of Pak-Swiss Training Centre in
Karachi should also be opened in the Textile Institutions in Faisalabad and Karachi
and more such courses should be introduced in the Polytechnics in areas like Multan,
Hyderabad, Lahore and Gujranwala.
EXHIBITIONS
Most of these small workshops are shy or afraid of getting registered or
displaying their products, mainly from the fear of the revenue collection, labor
controlling and other government regulating agencies. This fear keeps them away
from the mainstream Industry. This also leads to the lack of interaction among the
small scale, medium scale and higher level industry for a purposeful vendor
development.
National Exhibitions held annually can be very helpful in bringing out the
skills, the range of products and opportunities of group collaboration. It will help the
planners and large scale engineering industry in defining the way for developing skillsin order to make this sector strong and viable.
The interaction between the foreign textile manufacturing industries could also
be enhanced by facilitating the indigenous Textile Engineering Industry to participate
in the specialized Exhibitions and fairs being held in those countries.
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INTRODUCTION OF ORGANIZATION
The Kohinoor Maple Leaf Group was born from the trifurcation of the Saigol
group of companies and is a reputable and leading manufacturer of textiles and
cement. KTMG comprises of Kohinoor Textile Mills limited (KTML) and Maple
Leaf Cement factory limited (MLCF). Both companies are incorporated in Pakistan
and are listed on three stock exchanges of the country.
CEMENT
Maple Leaf Cement is the third largest cement factory in Pakistan. It was set
up in 1956 as a joint collaboration between the West Pakistan Industrial Development
Corporation and the government of Canada. It is strategically located at Daudkhel
(District Mianwali) in Northern Pakistan, which is an area rich in raw materials
required for the production of cement. Kohinoor acquired the ownership and
management of Maple Leaf Cement under the privatization policy of the government
of Pakistan in 1992. Presently Kohinoor Mills Ltd is the holding company for Maple
Leaf cement...
TEXTILES
KML was incorporated in 1987 at Mangamandi and is one of the oldest
companies of Pakistan with over 50 years experience in textile manufacturing. It was
initially set up as a weaving project with 256 looms. However, after decades of
aggressive expansion and modernization KML has emerged into a fully vertically
integrated home textiles company with state of the art capabilities for Weaving,
Dyeing, Hosiery, Genertek, and Hometex. The company has a diverse customer base
with sales in both the local and export markets. The main international markets
include Asia, Europe, USA and Australia.
Kohinoor Mills Limited was incorporated as a Public limited Company on December
21st, 1987 and is located at 8th K.M., Manga Raiwind Road, and District Kasur. The
Company produces greige cloth from cotton, blended and synthetic yarns.
The project was initially established with 48 Sulzer Ruti shuttles-less looms of 153"
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width from Switzerland with modern ancillary machinery to produce high quality
fabric for export markets. Further expansions saw the installation of an additional 96
Tsudakoma air jet looms from Japan in 1990 and a third shed comprising 60 state of
the art Picanol Omni 340 cm wide looms was installed in July 1998, twelve with
batching motions. Another twelve Picanol Omni 340 cm wide looms were installed in
1999.
In 2000-2001 old 48 Sulzer Ruti looms were replaced by 48 lated Picanol
Omni Plus 380cm looms. In addition to that latest Picanol Omni plus Jacquard Looms
were also added as well as a yarn conditioning machine from Zorella was alsoinstalled.
The entire manufacturing process from warping to fabric inspection is
monitored through an on-line process control system from Barco. The marketing
strategy is to explore new markets both in quota and non-quota countries.
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COMPANY INFORMATION
BOARD OF DIRECROTS
Mr. Aamir Fayyaz Sheikh Chief Executive/ Chairman
Mr. Asad Fayyaz Sheikh
Mr. Ali Fayyaz Sheikh
Mr. Rashid Ahmad
Mr. Aamir Ameen NIT Nominee
Mr. Salman Akram Raja
Mr. Syed Mohsin Raza Naqvi
AUDIT COMMITTEE
Mr. Rashid Ahmad Chairman
Mr. Aamir Fayyaz Sheikh Member
Mr. Ali Fayyaz Sheikh Member
CHIEF FINANCIAL OFFICERS:-
Mr. Syed Mohsin Raza Naqvi
HEAD OF INTERNAL AUDIT
Mr. Zeeshan Khurram
COMPANY SECRETARY
Mr. Muhammad Rizwan Khan
AUDITORS
M/S Riaz Ahmad & Company
Chartered Accountant
BANKERS
AL BARAKA ISLAMIC BANK B.S.C (E.C)
ALLIED BANK LIMITED
ASKARI BANK LIMITED
BANK AL-FALAH LIMITED
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HIERARCHY OF HOSIERY DIVISION
Kohinoor Hosiery Page 8
M.D
G.M
Operations
G.M
Marketing
H.R/Admin Finance Engineering Q. AI.T D.G.M
Production
MarketingCommercial
PPC WIPC Packing/
Ins ection
Boarding Dying Linking Rewinding KNITTING
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Vision
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 sustain able 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
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.
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DIVISIONS OF K.M.L
Kohinoor mills has five divisions
KOHINOOR WEAVING DIVISION
KOHINOOR HOSIERY DIVISION
KOHINOOR DYING DIVISION
KOHINOOR GENERTEK DIVISION
KOHINOOR APPAREL DIVISIO
EXPORTING COUNTRIES
U.S.A
Banana Republic GAP
LEVIS Target
Tommy VF
Liz Claiborne Hagger Arrow Wal-Mart
K-Mart White Stag
Europe
Next Mango
Zara Brushka
C&A British Home Store
Hema Carrefour
Rose By French Connection
Farah UK Tema
Amadues Jeans
Australia
Yakka King Gee
Charles Parsons Farah
South Africa:
Wools Worth
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VARIOUS DEPARTMENTS
Marketing Department
Finance Department
H. R Department
Production
Quality Assurance
P.P.C Department
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MAJOR FUNCTIONAL AREAS WHERE INTERNSHIP
CARRIED OUT
HUMAN RESOURCE DEPARTMENT
The H.R Department is the key strength of any organization in motivating
employees, managing HRMIS system, dealing external affairs, handling with each
departments performance, making promotions etc..so my major area was Human
Resource Department.
1st THREE DAYS
MANUAL WORK
My start was from manual work as I have been given the task to sort out resigned
employees files which were almost 8,000 and to rearrange the present employees list in
the drawers. I completed my work with in 3 days and got appreciation from my boss. I
got my internship letter from the first day of my joining.
4th DAY
VEHICLE DOCUMENTATION
After my manual completion I have been given the chance to use their system and
they assigned me a task to enter the record of employees who are using vehicles of
K.M.L.
And it was oracle based program in which the software was already installed of
H.R related activities. This was H.R.I.S, it included
Appraisals
Transportation
Wages
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Bonuses
Etc..And I enter the data of transportation of almost 400 employees in a day. This data
included
Employee I.D
Route
Stop
Vehicle Number
5
th
DAYOn 10th of June I did some more data entry of transportation along with some
handling of documents in files and arrange the files in drawer. This work is all about the
activities which we have read in our semester but there is a difference in the practical
work and bookish knowledge.
SUMMARY OF TRANSPORTATION
After entering data related to transportation, I had to sort out the members of other
functions like weaving, dyeing, apparel(Home Tax), Genertek, Q- Mart, Pool, because
we are dealing with hosiery function so we got to make data related to the concerned
function.
6TH DAY
REIGNED EMPLOYEES FINAL SETTLEMENT
That day was the big day for me because I was given the chance to do the main
work of Hosierys H.R. There were 59 people who resigned from their job and they had
their final settlements. There were following major things that we had to look.
REARRANGE
First I had to rearrange the files according to their department in Hosiery like
linking, boarding, boarding hall#1, 2, 3, engineering, knitting team A, B, Quality
Assurance, W.I.P.C.
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EMPLOYEES DETAILThe employees details was based on
Employee I.D
Employee Name
Father Name
Date of Joining
Date of Leaving
PresentsPRESENTS
Then I had to enter the presents in the month of April, May and June in the system
and calculate in the system.
BREAK UP OF SALARIES
The break up of salaries was based on the basic and the allowances, there were
categories of 6,000, 8000, 8100, 21000, 28000 and the basic was 55% of the gross pay
and I had to calculate the settlement according to the days presents of the employees in
the month.
G.P.FUND
The G.P.Fund also had to pay back to the resigned employees and thats been
added by 10% of the basic in the sum of G.P.Fund and it added doubled each month. For
example if the amount of G.P.Fund is 500 for the month, then it will be added 500+500.
And 500 once deducted from the basic salary.
DEDUCTIONS
The deductions included
Advance salary
Zakat (applied on 16,228 or above of G.P.Fund)
Advance G.P.Fund
Interest on G.P.Fund
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Canteen Expense
MANUAL CALCULATIONIf the data is not available in the system then we had to calculate the settlement by
manually.
SYSTEM CALCULATION
If the data is available in the system according to the employee I.D. Then we
simply had to give the print option and got the settlement slips.
8th DAY
ACCOMMODATION FACILITY FOR EMPLOYEES
Employees are also facilitated with accommodation facility
EXECUTIVE ACCOMMODATION
Executives are been given hostel facility with respect to the flats which included.
Luxurious Bed Rooms
Attached Bath
T.V
A.C
Canteen
Mosque
Guest Room
FAMILY ACCOMMODATION
Families of employees are also been facilitated in hostel.
WORKERS ACCOMMODATION FACILITY
Workers in the mill are also facilitated with residence facility with some
necessary needs of lower level employees.
Entry of Employees in Colony.
There are following three Blocks in the colony and each has held a lot space. And I
have entered their data according to their Block and Room Number in the oracle
Block -A (90 Rooms)
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Block B (53 Rooms)
Supervisory-Block (49 Rooms)
HEALTH & SAFETY MEASURES
Each company has its own health and safety measures according to the
compliances regulated by the regulatory bodies. So, K.M.L also has the safety measures
so they have to inspect their safety measures morning and evening and it inspects in
different areas like
Boarding
Yarn Godown
Linking
Dyeing
Knitting
Etc..
And the things to inspect are
1. PASSAGE 2. FIRE EXITS
3. HOUSE KEEPING 4. SMOKE DETECTORS
5. FIRST AID BOX 6. FIRE HYDRANTS
7. CONTROL PANEL 8. FIRE EXTINGUISHER
9th DAY
AUDIT
The external audit team came today in the Hosiery function and they checked the
whole scenario regarding to the activities been doing in K.M.L documentation in other
departments as well as our department H.R. they have asked for the following matters to
be disclose for their report, these are
Health & Safety
List of All Employees
Salary Slips (Randomly selected I.Ds from a list of employees)
Employees Personal Files (Randomly Selected from a List of Employees)
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10
th
DAYOVER TIME DATA
The time that the employees have worked extra hours in the mill.
This need to be entered in the system for the month of May & June regarding to
their
I.Ds Shift (A,B,C,G)
Over Time Hours Double Shift
Date
11th DAY
STAFF PAY ROLL SLIPS
The salary slips of staff of different departments had to be executed in hard copy
and that was almost of every concerned department.
12th DAY
NEW EMPLOYEES DATA
K.M.L hires new employees from time to time and these employees have to make
their personal files it includes..
Appointment Letter
I.D Card
Academic Documents
Domicile
K.M.L Form
So all the detail related to the employee need to be entered in the oracle system it
includes
Division Code (Hosiery 5) Department Code (Including sub departments)
Shift (A,B,C,G) Designated Code
Employee I. D Joining Date
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Name of employee Father Name
Card Number Salary Break UpDate of Birth Status
Religion Sex
Address I.D Number
Over Time G.P.Fund
Qualification Detail
LEAVE POLICY
To grant different kinds of leave to its employees in order to facilitate them to
attend, to their domestic and social responsibilities.
TYPES OF LEAVE
The types of leave available to employees are
1) Causal leave
2) Sick leave
3) Earned leave
4) Leave without pay
5) Maternity leave
1. CAUSAL LEAVE
Every employee will be eligible for ten days causal leave in each calendar year.
1) Causal leave can be granted on pro-rata basis, proportionate to the length of
service.
2) Un-availed causal leaves shall lapse automatically at the end of every calendar
year.
3) Causal leave cannot be combined with any other type of leaves except sick leave.
4) Causal leave can be availed for a maximum period of 3 days at one time.
2. SICK LEAVE
Every employee will be eligible for eight days sick leave in each calendar year.
1. Sick leave will be granted on pro-rata basis, proportionate to the length of service.
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2. Sick leave exceeding 2 days must be supported by a medical certificate from a
registered medical practitioner.3. Sick leave may be Accumulated up to a maximum of 16 days
3. EARNED LEAVES
Every employee will be eligible for earned leave as follows
Workers-14 days
Staff-15 days
1. Earned leave will be due only after completion of one years continuous service
with the company from the date of joining.
2. Earned leave shell be credited to the employee account at the end of each year of
service
3. It is incumbent for management staff in grade M-12 and above to avail a
minimum of 15 days earned leave in a calendar year.
4. Earned leave lying to the credit of an employee will be encashed at the time of
separation for the company for employee up to Grade-12.
4. LEAVE WITHOUT PAY
There is no provision of leave without pay in Law. How ever extra-ordinary leave
without pay may be granted at the discretion of the competent authority in special
circumstances involving absence from duty.
5. MATERNITY LEAVE
1) Female married employees who have been employed for more than one year will
be granted maternity leave.
2) Maternity leave of 12 weeks, 6 weeks each before and after the delivery will be
granted on production of medical certificate from a registered medical
practitioner.
TRANSPORT POLICY
Company Maintained Car will be provided to the following categories of
employees, as indicated against each.
Grade Designation Type of Vehicle
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M-19 Director 1600 C.C (Honda VTI) or equivalent
M-18 General Manager 1500 C.C (Honda Civic EXI) or equivalent
M-17 Sr. Manager 1300 C.C (Corolla XE-Honda City EX) or
Equivalent
M-16 &
M-15
Manager & Deputy
Manager
1000 C.C
ALLOTMENT
The Human Resource Department will issue allotment letter to the eligible official
at the time of handing over the car.
INSURANCE/TAXES
The cost of token, comprehensive insurance policy, registration charges, radio
charges, radio license fee etc, will be borne by the company.
PETROL/DIESEL
The limit of petrol/Diesel is as follows:-
Grade Monthly Yearly
M-19 300 Litres 3600 Litres
M-18 250 Litres 3000 Litres
M-17 175 Litres 2100 LitresM-16 150 Litres 1800 Litters
M-15 125 Litres 1500 Litres
1) The bills with detail of the expenditure incurred on the repairs of the car will be
submitted to HR department.
2) Vehicle maintenance card shall be maintained for each vehicle by H.R
department.
3) The bill will be forward to finance department for re-reimbursement after making
necessary entry in the maintenance card.
4) In case of any damage/accident the allottee will forward Vehicle Accident
Report to finance department who will arrange repairs/maintenance through
comprehensive insurance policy.
5) For other employees company provide the facility of air conditioner buses and
vans.
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6) The vehicle may be sold to the allottee, after the expiry of the stipulated
replacement period on market rates.TIME OFFICE
Time office does the following activities
Keep the daily attendance of employees.
Make the settlement of the resigned employees to be further proceeded to the H.R
Department.
Gives the half leaves or temporary leave for about 1 to 2 hours.
TRAINING ROOM
Training room does the following activities..
It makes the training arrangements of the newly employed persons and the related
department supervisor delivers the training.
It also prepares employees personal file and allot the employee number.
It makes the employee card with scanned picture.
It also finds the people who are involved in unhealthy activities in the
organization.
ATTENDANCE ALLOWANCE
Completion of monthly standard working hours is a must to become eligible for
full monthly salary, and attendance allowance. Only piece rate employee get attendance
allowance.
Kohinoor mills limited set criteria for attendance allowance.
3000 rupees company pay as attendance allowance.
One absence =3000-500=2500
Two absence=3000-1000=2000
Three absence=3000-2000=1000
Four absence=3000-3000=0
EO.B.I CONTRIBUTION
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Employee old age benefit institution is as follows for employees who will be
given this amount when they will reach to age of 60 for male and 55 for females. Paid by company = 5% of minimum Wage i.e. Rs. 300
Paid by Employee = 1% of minimum wage i.e. Rs. 60
Total Contribution = 6% of minimum wage i.e. Rs. 360
SOCIAL SECURITY
Employees who have salary limit up to Rs. 10,000 are covered under Punjab
Employees Social Security Institution.
Rs 360 i.e. 6% of minimum wage paid by company every month. Employees and their dependants are covered under this institution.
Employees are eligible for benefits (medical facility) under this fund.
HR department generate reports every month and after verification send to
finance department.
Finance department prepare Cheques for social security.
Prepare this report under the HR Officer.
HEALTH INSURANCEEmployees having salary more than Rs: 10000 are covered under Adam jee
Health Insurance.
Same as social security employees who have salary limit up to Rs. 10,000 are covered
under Punjab Employees Social Security Institution.
ADAM JEE POLICY
Insured persons stay in hospital for a minimum period of 24 hours for either
necessary medical treatment of any disease, sickness or accidental bodily injury or
treatment admissible in terms of this policy.
Following benefits are covered under Adam jee...
Daily room and board charges
Intensive care unit (ICU) charges
Physicians visit charges
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Surgical charges
Miscellaneous hospital expenses
Day care surgery charges
Local ambulance cover
Emergency accidental outpatient cover
Emergency accidental dental treatment
EFU LIFE INSURANCE
All employees are covered under EFU life insurance. Under this policy all
employees are eligible for benefit of life insurance. Sum assured under this policy is
equal to minimum Rs.500, 000 and 36 gross salaries of employee.
RESIGNATIONS
The resignation is the major problem of most of the organizations, this turnover
increases day by day as the policies and conditions been changed with time. So, the
employees who have left the organization due to their own problems, terminations, S.O.S
need to settle their final dues that company has to pay. There are following rules that
need to be followed by the company in order to settle the accounts of resigned
employees.
NOTICE PERIOD
It is the period to which the employees have to inform the organization about his
resignation. There are two ways to intimate the organization.
One Month Notice Period
24-Hour Notice Period
Termination
P-Fund
1-ONE MONTH NOTICE PERIOD
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In one month notice period the employee must inform the company one month
before his resignation, for this he has to give the notice to the company that he will leavethe organization one month after the intimation is given.
The basic pay which is almost 56% of the net pay will not be deducted from
employees account.
2-24-HOUR NOTICE PERIOD
In 24-hour intimation from employee, will loose the basic pay of 56% of the net
pay. And this could happen in an emergency decision from employee, when he has an
emergency or he has settled the things with another organization.
3-TERMINATION
In the termination process the employee has been terminated due to his unhealthy
activities in the organization or lack of interest in working. In termination the employee
has been given the basic pay and its not been deducted in notice period deduction.
4-P-FUND
Provident fund also been given in the final settlement of employee and it was
been deducted each month by 10% of the basic pay. Zakat is been deducted 2.5% of the
net P-fund and its been applied on Rs: 16,228.
SALARY BREAK-UPS
Employees salary break-ups has the following steps
BASIC PAY
The basic pay is the 55% of the grand/net pay.
ALLOWANCES
Following are the allowances that are been added in the basic.
Utility
House Rent
Medical
Other Benefits
COLAS
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Following deductions are been made
Income Tax (Not Refundable) E.O.B.I-% of Gross (Employee Old Age Benefit Institution)
Its been given at the age of 60. Its % depends upon the gross variation.
P-Fund-(Provident Fund)
P-Fund is deducted each month by 10% of the basic pay and refundable.
Advance Salary
Interest on Advance Salary- 60%
Advance P-Fund Interest on Advance P-Fund- 5%
TRANSFER OF EMPLOYEES
As K.M.L has five Divisions, so in accordance to the employees is concerned,
transfers been done if require between these divisions, so it is also the responsibility of
H.R to update the transfer record in the oracle system. They also got to change their
employee I.Ds, because the I.D in which they were working will be changed in
accordance to the other divisions requirement.
For example, an employee who had employee I.D in weaving was 149 and he is
been transferred in hosiery division in the same designation but with different I.D like
9464.
PIECE RATE SYSTEM
As we know very well that the organizations uses different modes of employment,
one of them is the piece rate system, so K.M.L has changed its two of the departments
mode of employment to the piece rate. The Following departments are.
Linking
Boarding
Linking
Linking is the department in which the socks need to be linked from the palms.
Total 50 employees have been converted to piece rate. So, they got to give the resignation
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to start their piece rate job for this they got to give their final settlements and make their
new files, because the piece rate registration form is different from their permanentemployment.
RATE
The rate for per dozen pieces is Rs: 1.75/- for linking employees.
BOARDING
In the boarding the socks need to be flexible with the help of the sizes been
attached on machines. And 128 employees have been converted to the piece rate system.
So their process of mode is same as linking.
RATE
The rate for per dozen pieces is Rs: 2.50/- for boarding employees. Their pay will
not be as fixed as of the permanent employees and the new employees dont have the
facility of social security for the 1st 3 months but the employees who has been transferred
from permanent to piece rate has the facility of social security. There is no system of
provident fund in piece rate.
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OTHER DEPARTMENTS
MARKETING
In every organization marketing department plays a vital role for prevailing the
organization in the marketing. In Kohinoor the marketing department is also performing
his responsibility for the best of the organization. It is engaged in getting orders from
customer and fulfills the order according to the requirements of the customer by the
follow up of the entire departments.
ACTIVITIES PERFORMED BY THE MARKETING DEPARTMEN
Following procedure is been used
SEND SAMPLES
Marketing department send the samples to the customer after getting his
requirements by three ways.
Specification
Actual sample
And by weight
Then the customer sends back the sample by some changing required in that
sample, the marketing department again generates the sample and send to the customer.
GETTING THE ORDER
If the customer accepts the second sample then he sends the order for production.
The order includes, rate per dozen and the number of dozen to be purchased by him, with
the final specification, which includes the following things:
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1. Sock Size 2. Shoe Size
3. Welt Length 4. Welt width
5. Top length 6. Top Width
7. Boot Length 8. Foot Length
9. Foot Width 10. Weight
11. Drawing of Sock
SETTING OF PRICE
When the sample is accepted by the customer then marketing department set the
price with customer after discussing with general manager. The profit in price is
generally set in the range of 30-40k.
MANUFACTURING OF ORDER
Then the order is send to the planning department for running in the production
department and the packing requirement is also send by marketing department which is
followed by the packing department.
SHIPMENT OF GOODS
When the production is ready for the shipment, the marketing sends the request to
the shipping department which makes the shipment of that order.
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SAMPLING DEPARTMENT
It works under marketing department and engages in the production of the
sampling of marketing department.
WORKING PROCEDURE OF SAMPLING
It gets the requirements from the marketing department and makes the production
according to the specification of the customer and sends it to the Q.A department after
passing from the related manager of sampling.
QUALITY ASSURANCE
WORKING OF Q.A
Q.A precedes the samples by knitting, linking, dyeing and boards it according to
the requirement given to them and checks it step by step at each place and at the end it
reached to the marketing department which sends it to the customer.
PRODUCTION PLANNING & CONTROL (P.P.C)
P.P.C is the main and the most involving department because it manages the other
departments activities, as the order been placed and been approved by the customer
through the marketing department so, it has to mange the order with in the time as it
manages the Knitting, Linking, Bleaching (Dyeing), Drying, Boarding, Packing to the
end customer.
They have to plan all these activities about how much yarn is required, packing
accessories management, and the planning about the fulfillment of the customer
requirement.
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COMMERCIAL DEPARTMENT
The commercial department is the bone of every manufacturing concern. It playsa vital role in the manufacturing of the products such as purchase of the raw material and
sold of the scrap in the market at the best prices.
MAIN ACTIVITIES DONE BY THE COMMERCIAL DEPARTMENT
The following activities performed by the commercial department. These are
SENDING THE PURCHASE ORDER
The commercial department sends the order for purchasing the yarn from the
market. At the best price and the quantity required for the production as well as the
quality of the yarn required. The yarn is purchase on the request of the planning
department for the specific job and style.
RECEIVING OF THE YARN
Then the godown office receives the yarn as per the quantity ordered and stores it
in the yarn store. According to the IGP number and the supplier. Only that yarn is
received whose IGP is generated at the gate and which is order by the commercial
department.
ISSUING OF THE YARN
Then the yarn is issued as per the demand of the production department. The yarn
issued is recorded in the computer. As the record purpose and to find out the balance of
the yarn.
RETURNING OF YARN
The excess or the rejected yarn is received back by the commercial department.And recorded it in the record to increase the stock.
SENDING OF THE REJECTED YARN
The rejected yarn is send to the supplier to get the new yarn. And the record is
made for the yarn return to the supplier.
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MAKING OF THE INDENT
The indent is created from the demand of the yarn on the daily basis and is used tocreate the oracle record. It shows the issuance and the ending balance of the yarn.
RECEIVING OF THE SCRAPE
The scrape is received from the WIPC department after the weight of every thing
and make it inventory in the store. The scrape is arranged according to the quality and the
identification.
SALE OF SCRAPE
The scrape is sold to the customer after the bidding of each product the customer
who give the higher bid get the contract and lode the scrape in the conveyance, then
weight it and made the payment in the form of pay order.
PAYMENT TO THE TRANSPORTER
It is the duty of the godown office people to pay the rent of the transporter after
receiving it from the finance department. The payment is made to those who bring the
yarn for the factory from the supplier.
GENERATION OF THE REPORT
The godown office generate the different reports required for the different
purpose
These reports are.
Daily issuing report of yarn
Scrape received report from the WIPC department.
Report of the sold of scrape
Report of the balances of the yarn and the scrape
IGP report
Yarn indent report
Bleach report
Report of the received of the yarn
Lab test report
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And the at the end of month the all related reports
GENERATION OF THE OUT WARD GATE PASSThe generation of the out ward gate pass is also responsibility of the commercial
department; it is generated when the scrape is sold or the rejected yarn send back to the
supplier.
PUBLIC DEALING
The commercial department is also engage in the public dealing in the market for
the purpose of making the different contract about the purchase of yarn and sold of the
scrape.
SENDING REPORTS TO THE FINANCE DEPARTMENT
It is also responsibility of the commercial department to send the report of the
daily consumption and the wastage of the production to the finance department for the
purpose of generates different reports for the finance department.
SENDING DETAIL OF THE PAYMENT TO THE SUPPLIER OF YARN
It is the responsibility of the commercial department to send the detail of the
payments made to the supplier of the yarn to the factory and then the finance department
made the payment on the specify date.
LOCATION OF THE STORE
The material is located in the store IGP vise and then issued it according to the
requirement of the job, from the WIPC department.
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FINANCE DEPARTMENT
The finance department is the main department which deal all the transaction
related to the finance such as the current transaction of cash, future forecasting of cash,
and preparing of the books of account for the daily purpose as well as for the audit
purpose. So we can say that for audit purpose it is the main department.
FINANCIAL STATEMENTS INCLUDES
Balance sheet Profit & loss account
Cash flow Statement of equityNotes to the financial statement
TYPES OF ASSETS
Non Current Assets Current Assets
NONCURRENT ASSETS
Comprise those assets which have the future benefit more than one year. Thereare two types of Non Current Assets:-
Tangible Assets E.g. equipment, building.
Non Tangible Assets E.g. good will, patient, trade mark etc..
CURRENT ASSETS
comprise those assets which have the future benefit of one year. E.g. prepaid
expense, account receivable, etc
TYPES OF LIABILITIES
Current Liabilities Non Current Liabilities
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CURRENT LIABILITIES
Which have to pay within one year. It includes trade creditors, interest notespayable accounts payable current portion of long term liabilities.
NONCURRENT LIABILITIES
Which have to pay more than one year .it includes long term financing long term
deposits security deferred taxation.
PROCESS OF PURCHASES STOCK
Indent Store
Purchaser Purchase order
Supplier Inward Gate passes
Store User
EXPLORING THE STORE ADMINISTRATION WORK
STORE ADMINISTRATION
GENERAL STORES
RAW MATERIALS STORES
FINDINGS
In Kohinoor Mills Limited store operations controlled by Store Manager. The
function of store is to issue and receive items needed by different departments. So we can
subdivided these functions into following categories.
1. GENERAL STORE
PROCEDURE OF RECEIVING GENERAL STORE GOODS
In this regard, production department sends demands of various items to General
Manager and he checks the demands that whether it is required by the production
department or not. After this he signs on these demands. Then these demands are written
on a duplicate book. One copy of these demands is being kept in his record and one copy
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is being sent to the store in charge. If demanded items are present in the store, then the
store keeper issues the same.If the demanded items are not held in the store, then the store in charge writes
required items on a slip called "Indent Slip" and then this slip is presented to the General
Manager, who signs the slip and send to the head office. Then head office purchases
samples of demanded items and sends to the mills. At the mills, store in charge informs
the production department that the required or samples of demanded items have come
from head office. The section that requires these items checks these samples as to
whether these are according to their requirements or not. Then, the order is given by the
General Manager.
The head office sends these demanded items along with their bills and then these
items are recorded by store in charge on Store Receipts Note. It is also recorded on store
received ledger. From store received ledger these items are also recorded on the Bin-
Card, while these Bin-Cards are attached with every type of item. Due to this Bin-Card it
is very easy to check each item.
The demanded items which are available in the local market are purchased by the
Assistant Manager. While Store In charge checks all these items and then records on
Store Receipt Register.
PROCEDURE FOR ISSUE OF GOODS
There is a book of requisition slip in every section of the production department
which contains requisition slip in triplicate. If any section of production department
requires anything, they have to fill requisition slip on which the signature of the head of
the department is essential. Then the store keeper issues the items required after recording
it in Daily Issue Register.
REPORTS OF GENERAL STORES
The following two reports are prepared by the Store In charge.
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DAILY STORE ISSUE REPORT
This report is maintained daily and kept in a file. In this report issuance ofdemanded items to every department and balance of items are given. This report is
presented daily to Assistant Manager and General Manager.
Purchase Report
This report is prepared monthly. In this report the value of all items in the store is
recorded at the end of every month. After preparation, report is presented to Assistant
Manager who checks it and then sends to the head office.
PRODUCTION DEPARTMENT
Production department is concern with the production of the products. Here in the
Kohinoor the product is only socks, so it is engaged in the production of the socks of all
the styles.
There are two types of machines in Kohinoor with 84, 108,132 needless and with
three types sinker on the machines. These are small tyre medium tyre and large tyre.
There are four feeders on every machine which supply the yarn according to the
requirement.
It includes the following different department, such as
1. Knitting department
2. Linking department
3. Bleaching department
4. Boarding department
5. Packing department
KNITTING DEPARTMENT
The knitting department is the main department of the production which is usedto knit the socks according to the requirement and send to the WIPC department.
ACTIVITIES OF THE KNITTING DEPARTMENT
The knitting department is engaged in the following activities
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MAKE THE STYLE WISE PROGRAM
It is the first activity performed by the knitting department to make the programfor the production according to the specification of the marketing department which is
actually given by the customer.
LOUD THE PROGRAM
When the style is conformed, then the knitting master loud the program with
the help of floppy drive on each machine engaged in that style.
SPECIFICATION OF YARN
The yarn running on the machines for every style is specific, so the people in
the knitting department check the specification of the yarn.
MAKING PRODUCTION
The production department gets the yarn and makes the production according to
the requirement and specification given by the planning department.
CHECKING OF THE QUALITY
The production operator checks the quality of the socks one by one and makes
the difference in the form of A and B pairs according to the quality.
MAINTENANCE OF THE MACHINES
If a machine is stopped or giving the bad quality production then the operator
check the machine and set them accordingly.
USAGE OF PARTS OF MACHINES
If an operator under the foremen is using more quantity of spare parts as
compared to the standard, then he is answerable for that material.
CHECKING THE EFFICIENCY
The efficiency of each foreman is checked by the knitting manager from the
Performa giving by each foreman at the end of the day.
SENDING THE PRODUCTION TO WIPC
The production of the knitting department is send to the WIPC which deal all
the procedure of the production.
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LINKING DEPARTMENT
After the production is send to the WIPC it received by the linking departmentand start its working according to the specification of the planning department.
ACTIVITIES OF THE LINKING DEPARTMENT
The linking department performs the following activities. These are
RECEIVED THE PRODUCTION
It received the production of the knitting department every day and links it in
three shifts.
LINKING OF SOCKS
The socks are linked on 39 automatic machines. One operator links the 280 dozen
in a day, which is the standard for every operator but more dozen are given to every
operator.
TURNING PROCEDURE
The socks are turned by two ways. First one is by machines and second one by the
manually, those which can not be turned by machines are due quality to quality problems.
TRANSFER PRODUCTION TO WIPC
After the socks are linked those are send to WIPC for further processing.
REPORTS OF LINKING DEPARTMENT
Following reports are generating by the linking department. These are
Daily linking department
Turning report
Efficiency report
Needles report Monthly reports
Yarn consumption report
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BLEACHING AND DYINGBleaching and dying department gets the production from WIPC department,
bleach and dye it according to the requirement of the customer. The tunnel is used for the
purpose of bleaching of socks. Which bleach a lot after 6 minutes with computerized
system.
REPORTS OF BLEACHING DEPARTMENT
This department generates different report. Such as
Daily production report
Comical consumption report
Efficiency report of machine
BLEACHING PROCEDURE
The procedure of bleaching includes the following steps. The worker lode the
socks on the conveyer of specific quantity which is 45kg and machine automatically get
the socks; bleach it according to the specification given to it by the operator of the
machine.
BOARDING DEPARTMENT
The boarding department is engaged in the activities of pressing the socks after
bleaching and online packing of socks in the department.
ACTIVITIES PERFORMED IN THE BOARDING DEPARTMENT
The boarding department is engaged in the following activities.
RECEIVING OF SOCKS FROM THE BLEACHING DEPARTMENT
The boarding department received a quality socks from WIPC.
SETTING OF THE MACHINESThe machines are set according to the requirement of the customer and the type of
the socks. Some socks needs a steam and some with out of it. Specific temperature is set
according to the requirement.
CHECKING OF THE QUALITY
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The quality of the socks is check after the press if there is any quality problem
then the socks are rejected by the quality people.The problem includes.
The length of sock
Any whole in sock
Pressing problem
Any knitting problem not explore first.
Packing problem(related packing material)
Setting of pairs.GENERATION OF REPORTS
The boarding department generates different reports. These are
QUANTITY PACKED
The reports related to the packing and the units board is generated for record
purpose and for the daily efficiency of the worker.
COMPENSATION REPORT
The compensation report is also generating by the boarding department. It is
needed if the worker made work more then the standard. Then the fixed amount of
compensation related to per dozen, is given to the related worker. It is good way to
motivate the employee.
GETTING THE PACKING MATERIAL
The boarding department gets the packing material from the sub-store called
Packing store, when the socks are in the process of boarding. Only that person gets the
material which is specified by the in charge.
RETURNING OF REJECTED PRODUCTION
The socks which are rejected by the quality people are sending to WIPC
department.
SOLVE THE QUALITY PROBLEMS
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The quality problems which can be set by the setting of the machines are set by
the shift in charge of the boarding department.
PACKING DEPARTMENT
There are two method of packing, first one is on line packing and second one is
off line packing. The off line packing is made by the girls hire by the company and on
line packing is made in the boarding department when the socks are pressed.
SHIPPING DEPARTMENT
This department is basically deals with the shipment of goods to the customers.
DOCUMENTS USED BY SHIPPING DEPARTMENT FOR EXPORTS
PACKING LIST
Packing list is detail of goods packed according to complete specification of
product.
COMMERCIAL INVOICE
Issued by the exporter for the full realizable amount of goods as per trade term.
CERTIFICATE OF ORIGIN
It is required to certify on the invoice that the goods are of a particular origin or
manufactured/ packed at a particular place and in accordance with specific contract.
PACKING LIST
It shows the details of goods contained in each parcel / shipment.
CERTIFICATE OF INSPECTION
This document describes the condition of goods and confirming that their quality
& quantity is according to order.
BILL OF LADING
Bill of Lading is of different types but Kohinoor mills mainly using two types of
transportation sources i-e Sea and air cargo.
SHIPPING DOCUMENTS
When company sends through sea then use shipping documents.
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AIRWAY BILL
When company use air cargo then airway bill of consignment.
E-FORM
E-form issued by bank. It is the requirement of state bank of Pakistan to fill E-
form and submit to state bank for record and any subsidy.
BILL OF EXCHANGE
An unconditional order issued by Kohinoor Mills which directs the recipient to
pay a fixed sum ofmoney of their consignment to their bank at future date. The future
date may be either fixed ornegotiable.
CERTIFICATE OF SHIPMENT
It signifies that a certain lot of goods have been shipped.
SHIPPING ORDER
Issued by the Shipping (Conference) Line which intimates the exporterabout the
reservation of space of shipment of cargo through the specific vessel from a specified
port and on a specified date.
CART/ LORRY TICKET
It is prepared for admittance of the cargo through the port gate and includes the
shipper's name, cart/ lorry No., marks on packages, quantity, etc.
SHUT OUT ADVICE
It is a statement of packages which are shut out by a ship and is prepared by the
concerned shed and is sent to the exporter.
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FINANCIAL ANALYSIS
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FINANCIAL ANALYSIS
The accounts of any company either a manufacturing concern, trading concern or
a banking company are amongst the most easily accessible collections data concerning
their performance. However, if they are to be thought of as data they should convey some
genuine information about how the firm is doing. That is to say, there must be some
useful meanings that can be extracted from the figures in the accounts.
Well-known technique for extracting such information from accounts is known as
financial statement analysis. Financial Statements of any concern which are frequently
used for financial analysis purpose are:
BALANCE SHEETA summary of financial position on a given date is called Balance Sheet.
INCOME STATEMENT
A summary of firms revenues and expenses over a specified period is called
income statement.
TYPES OF FINANCIAL ANALYSIS
Most practiced types of financial analysis include the following
COMMON SIZE ANALYSIS (VERTICAL ANALYSIS)INDEX ANALYSIS (HORIZONTAL ANALYSIS)
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VERTICAL ANALYSIS
INCOME STATEMENT
2006 2007 2008
sales 100 100 100
Cost of sales 87.56 85.22 86.92Gross profit 12.44 14.77 13.07
Distribution cost 4.63 4.38 5.65
Administrative expenses .18 1.92 3.27
Other operating expenses .15 .42 1.67
Other operating income .63 .61 1.27
Profit from operation 6.49 8.66 3.75
Finance cost 6.39 6.39 8.15
Profit(loss)before taxation .09 2.27 (4.40)
Provision for taxation .93 .77 .79
Profit(loss)after taxation (.83) 1.50 (5.18)
BALANCE SHEET
2006 2007 2008
Assets
Non current assets
Fixed assts 52.46 47.15 44.73
Long terminvestment
.15 .02 2.72
Long term security .039 .04 .02
Current assetsStores, spares andtools
3.33 3.56 .42
Stock in trade 17.30 13.76 17.60
Trade debts 13.28 11.57 8.53
Loans and advances 2.94 3.10 6.21
Trade deposits .03 .08 .02
Other receivable 2.47 2.78 2.12
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Sales tax recoverable 2.30 1.55 1.26
Short term
investment 3.37 14.14 11.95Cash and bankbalance
2.32 1.54 .59
Equity and liability
2006 2007 2008
Share capital andreserves
Authorized sharecapital
14.06 12.88 12.11
Issued, subscribed
and paid up sharecapital
4.225 4.26 5061
Reserves 17.56 24.99 19.04
Non currentliabilities
Redeemable capital 1.53 .46 -
Long term financing 16.85 10.31 9.94
Deferred tax 18.39 2.97 2.76
Current liabilities
Trade and otherpayables
10.54 7.20 9.66
Accrued mark up 1.34 1.27 1.25
Short term borrowing 39.55 40.01 45.44
Current portion oflong term liabilities
7.03 7.66 5.83
Provision for taxation 1.37 .85 .45
Total equity andliabilities
100 100 100
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HORIZONTAL ANALYSIS
INCOME STATEMENT
2006 2007 2008
Sales 100 119.09 94.99
Cost of good sold 100 115.91 94.31
Gross profit 100 141.43 99.80
Distribution cost 100 112.57 115.79
Administrativeexpenses
100 127.55 173.31
Other operating
expenses
100 289.34 1045.57
Other operatingincome
100 116.31 192.39
Profit fromoperations
100 159.98 54.92
Finance cost 100 120.00 121.09
Profit before taxation 100 2860.66 (4415.37)
Provision for taxation 100 98.97 80.54
Profit after taxation 100 (215.24) 592.07
Balance sheet
2006 2007 2008
Assets
Fixed assets 100 98.09 98.97
Long terminvestment
100 12 2070.59
Long term security 100 100.99 58.34
Store, spare and tools 100 116.81 147.25
Stock in trade 100 86.78 118.07
Trade debts 100 95.12 74.60
Loans and advances 100 114.90 245.35
Trade deposits 100 264.15 95.82Other receivables 100 122.64 99.70
Sales tax recoverable 100 73.73 63.94
Shore terminvestment
100 458.02 411.68
Cash and bankbalance
100 72.67 29.53
Total assets 100 109.16 116.09
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Equities and
liabilitiesAuthorized sharecapital
100 100 100
Issued, subscribedand paid up sharecapital
100 109.99 153.99
Reserves 100 155.32 125.88
Non currentliabilities
100
Redeemable capital 100 33.33 -
Long term financing 100 66.76 68.45
Trade and otherpayables
100 74.62 106.42
Accrued mark up 100 105.88 111.06
Short term borrowing 100 110.41 133.36
Current portion oflong term liability
100 118.77 96.16
Provision for taxation 100 68.14 56.41
Total equities andliabilities
100 109.16 116.09
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RATIO ANALYSIS
Ratio analysis involves methods of calculating and interpreting financial ratios to
analyze and monitor the firms performance.
CATEGORIES OF FINANCIAL RATIOS
Financial ratios can be divided for convenience into five basic categories
Liquidity
Activity
Debt
Profitability
Market
LIQUIDITY RATIOS
A firms ability to satisfy its short-term obligations as they come due is called
liquidity. Liquidity refers to the solvency of the firms overall financial position the ease
with which it can pay its bill. These ratios are viewed as a good indicator of cash flow
problems. The two basic measures of liquidity are:
CURRENT RATIOA measure of liquidity calculated by dividing the firms current assets by its
current liabilities. It measures the firms ability to meet its short term obligations. It is
expressed as follow:
` Current assets
Current ratio =
Current liabilities
INTERPRETATION
As our current ratio is less than 1 so it is not the favorable situation for the
company.
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Years 2006 2007 2008Current ratio .79 .93 .84
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QUICK (ACID TEST) RATIO
The quick ratio measures the liquidity and is calculated by dividing the firmscurrent assets minus inventory by its current liabilities. It is calculating as follow:
Current assets Inventory
Quick ratio =
Current liabilities
years 2006 2007 2008
Quick ratio .45 .61 .49
INTERPRETATIONAs quick ratio of 1.0 or greater is occasionally recommended but in 3 years data
quick ratio is less than 1 its mean firm is not in better measure of overall liquidity.
ACTIVITY RATIO
It measures the speed with which various accounts are converted into sales or
cash inflows or outflows.
A number of ratios are available for measuring the activity of the most important
current accounts which includes inventory, account receivable, and account payable.
It includes following ratios:
Inventory Turnover
Average Collection period
Average Payment period
INVENTORY TURNOVER
It commonly measures the activity, or liquidity, of a firms inventory. It is
calculated as follows.
Cost of goods sold
Inventory turnover =
Inventory
Years 2006 2007 2008
Inventory turnover 4.86 5.14 3.80
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INTERPRETATION
Inventory turnover is meaning full when it is compared with other firm in thesame industry.
TOTAL ASSETS TURNOVER
It indicates the efficiency with which the firm uses its assets to generate sales. It
is calculated as follows:
Sales
Total assets turnover =
Total assets
Years 2006 2007 2008
Assets turnover .82 .89 .67
INTERPRETATION
Higher a firms total assets turnover more efficiently its assets has been used.
Company uses its assets more efficiently in year 2006 and 2007 rather than 2008.
DEBT RATIO
The debt position of a firm indicates the amount of others peoples money being
used to generate profits. The more debts a firm use in relation to its total assets, the
greater its financial leverage.
FINANCIAL LEVERAGE
The magnification of risk and return introduced through the use of fixed cost
financing, such as that debt and preferred stock.
There are two types of measuring debt ratio of a firm.
Degree of indebtedness (debt ratio)
Ability to service debts (time interest earned ratio)
DEBT RATIO
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It measures the proportion of total assets financed by the firms creditors. The
higher this ratio, the greater the amount of other peoples money being used to generateprofits. It is calculated as follows:
Total liabilities
Debt ratio = Total assets
TIME INTEREST EARNED RATIO
It is also called interest coverage ratio, measures the firms ability to make
contractual interest payments it is calculated as follows.
Earning before interest and taxes
Time interest earned ratio =
Interest
PROFITABILITY RATIO
There are many measures of profitability. As a group, these measures enable the
analyst to evaluate the firms profit s with respect to a given level of sales, a certain level
of assets, or the owners investment.
It includes the following ratios
Gross profit margin
Operating profit margin
Net profit margin
Earning per share
Return on total assets (ROA)
Return on equity (ROE)
GROSS PROFIT MARGIN
It measures the percentage of sales dollar remaining after the firm has paid for its
goods. It is calculating as follow:
Sale CGS
Gross profit margin =
Sale
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Gross profit
C.G.S =Sales
Years 2006 2007 2008
Gross profit margin 12.44 14.78 13.07
INTERPRETATION
The higher the gross profit margin the lower the cost of merchandize sold. Its
mean in 2007 gross profit margin is greater in 2007 rather than in 2006 and 2008.
OPERATING PROFIT MARGIN
It measures the percentage of each sales dollar remaining after all costs andexpenses other than interest, taxes, and preferred stock dividend is deducted.
It is also called pure profit earned on each sales dollar. It is calculating as follow:
Operating profits
Operating profit margin =
Sales
Years 2006 2007 2008
Operating profitmargin
0.09 2.27 (4.40)
INTERPRETATION
Operating profit margin represents pure profits earned on each rupee. Higher
operating profit margin is preferred in 2007 it is higher so company earned more profits
in 2007.
NET PROFIT MARGIN
It measures the percentage of each sales dollar remaining after all costs, expenses,
including interest and taxes have been deducted.
It is calculating as follow
Net profit
Net profit margin =
Sales
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Years 2006 2007 2008
Net profit margin (.83) 1.50 (5.19)
INTERPRETATION
Higher net profit margin is preferred which is greater in 2007.
EARNINGS PER SHARE
EPS represents the number of dollars earned during the period on behalf of each
outstanding share of common stock. It is calculating as follow:
Earning available for common stockholders
EPS =
No. of shares common stock outstandingYears 2006 2007 2008
Earning per share (1.29) 2.78 (6.34)
INTERPRETATION
It represents the rupees amount earned on behalf of each share. Company earned
much more rupees in 2007 rather than 2006 and 2008.
RETURN ON TOTAL ASSETS
It is also called the return on investment measures the overall effectiveness of
management in generating profit with its available assets. The higher the firms return ontotal assets the better the firm is.
Earning available for common stockholders
ROA =
Total assets
Years 2006 2007 2008
Return on assets (1.29) 2.84 (7.30)
INTERPRETATIONReturn on assets indicates that how much firm earned on each rupee of asset
investment.
RETURN ON EQUITY (ROE)
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The return on common equity measures the return earned on common
stockholders investment in the firm. It is calculating as follow.Earning available for common stockholders
ROE =
Common stock equity
years 2006 2007 2008
Return on equity (3.12) 4.58 (14.06)
INTERPRETATION
It represents that how much company earned on each rupee of common stock
equity.PRICE/EARNING RATIO
It measures the amount that investors are willing to pay for each dollar of the
firms earning. The higher the price earning ratio the greater is investors confidence.
Market price per share of common stock
P/E ratio =
EPS
Years 2006 2007 2008
Price/earning ratio (16.48) 9.37 (3.43)INTERPRETATION
It indicates that investors were paying 9.37 in 2007 for each rupee.
MARKET/BOOK RATIO
It provides an assessment of how investor views the firms performance. Firm
expected to earn high return relative to their risk typically sells at higher market/book
multiples.
Common stock equity
Book value per share of common stock =
Number of shares of common stock outstanding
years 2006 2007 2008
Market/book ratio .51 .43 .50
INTERPRETATION
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It indicates that investors are currently paying for each rupee.
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Industrial Analysis
SWOT ANALYSIS
STRENGTHS
HAVING OWN ELECTRICITY PLANT
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KML having own electricity power plant which is producing not only for the
KWML but also providing electricity to other companies and to govt. at subsidy rate.
ERP SOFTWARE
ERP (Enterprise Resource Planning) has been installed in KML thats why
company is saving all records in systems and having huge database.
POWER LOOMS
KML has purchased latest power looms Toyota Air Jet Power Looms. Thats why
they have reduced the production cost and have increased the quality and efficiency of
their textile products.
CROSS CULTURAL COMMUNICATION
In KML there are near about 4500 employees who are from different
environments and having different cultures but fortunately there is no cross cultural
communication.
MARKET REPUTATION
KML is one of the major Mills in Pakistan thats why they have little bit
reputation in local market and having trust from investors.
WEAKNESSES
EMPLOYEES MOTIVATIONAL LEVEL
The one weakness of KML is that their employees are not motivated thats why
they are getting off and putting their resigns in front of managers and executives. This is
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the responsibility of HR department to find out at to see at the time of hiring them that
what the thing is that their employees can be motivated.
EVERY BOOKED ORDER IS DELIVERED LATELY
The delivery of each contract is always not done on time. The customer has to
wait for 4 to 5 weeks to get his/her desired product. The main reason is that late
purchasing of raw material. Raw material just like Yarn and Sizing material is not
available on time and some time it happens that there is shortage of raw material during
the running contract thats why production department has to wait for the raw material.
ADMINISTRATIVE EXPENSES
There are high overhead charges through out the year particularly administrative
expenditures. Management whether it is lower management or upper management, the
expenditures are same but company is getting equally profit from them thats why
expenditures are increasing.
RELIABILITYON FOREIGN CUSTOMERS
Always organization has to rely on foreign customers and it would become risk
especially in financial matters and possibility of fraud would be there. KWML is too
much depending upon their foreign customers. They have limited number of foreign
customers but these are also losing by lacking of quality and little bit high cost.
COMMERCIAL DEPARTMENT
Commercial department of KML is showing its little bit bad performance. Means
always the yarn is purchased late and on credit and payments are done by the department
always very late. There is no proper or pre-plan for the month or for couple of weeks so
that amount should be received to pay the suppliers. Each time purchasing of yarn is done
belatedly so that looms not run and hence per day cost increased and depreciation also.
GODOWN POSITION
There is no proper placing for final products to place them safely and at the time
of their dispatch there is possibility of mistake.
ERP SOFTWARE
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Its good that KML has ERP software in their systems. But there are number of
errors that are occurred much time. For example, during the dispatch of product, youhave to click all the rolls manually. There is no option to select them all and other
problem is to calculate the weight of packed rolls. You have to do all these things
manually.
COMMUNICATION GAP
There are a little bit gaps in communication between the departments. May be
these confirm each and every thing from each other but still they make mistakes and
blame each others to safe them.
TEAM BUILDING
A major problem is team building. There is almost no concept of team. Each
person is doing individually and performing his/her activities.
CASUAL ATTITUDE
The attitude among the employees is very casual. No one following the rules and
regulations of the company. Some implementation is done among the executives but not
at managerial level.
HR DEPARTMENT
HR Department is almost useless and only performing two activities. These
activities are making salaries and attendance of the employees and workers. They are not
working to train the employees and making appraisals to evaluate them.
MARKETING OF TEXTILE PRODUCTS
KML has no proper planning for the Marketing. They advertise about their selves
only from newspapers. Thats why limited number of people knows about them.
THREATS
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POLITICAL INSTABILITY
As we all know that the political situations of Pakistan are one of the worstsituations of the whole world. Each new government establishes its new rules and
regulations which impact the industries badly. Now a day there are many major issues
which are affecting the textile industry as well as other countries just like Musharafs
impeachment, PM Shaukat Aziz Fraud, New elections for Provisional and national
assemblies and the major issue was the murder of BB Benazir Bhutto. Now the new
government of Pakistan has implemented some new rules for the textile industry which
are almost of them are not in fever of the industrialists. These are
31% increment in the prices of Gas
Near about 10 rupees per liter increment in price of petroleum
Bann to export the raw cotton
No subsidy for the research and developments in the textile industry
Against these rules and implications, All Faisalabad Textile Mills boycott in July
2008 by shutting down their Mills and factories. Now the government has provided them
some subsidy in gas field.
HIGH CONSUMPTION OF PETROLEUM
The high consumption of the petroleum is also the major issues because in
international market, their prices are going up and touching sky, due to which the freight
costs are increasing day by day and hence the cost of production, is also increasing
rapidly which is becoming the reason of losing foreign customers of Pakistan.
SHORTAGE OF ELECTRICITY
The government of Pakistan still unable to provide the required quantity of
electricity, the usage of electricity has been increased. The companies who have their
own electricity plants are save but those who dont have are facing a major problem of
shortage of electricity.
EMPLOYEES
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Kohinoor Mills limited is facing a major problem of their employees because they
getting off from KML. They think that they are not getting reasonable and valuablesalaries and incentives from the company. The major reason is also that company is
losing its value and reputation in the local market as well as in international market, thats
why they are getting off from the company to secure their future and present as well.
POOR RESEARCH & DEVELOPMENTS
KML has not been working for better Research and Development Department for
some years. They are not focusing to improve their technology and expand their market
share. They just keep focus on their current systems which are producing not too much
good quality products thats why some of foreign customers are dissatisfied from them
and shifted towards other suppliers.
INCREMENT IN FREIGHT CHARGES
The prices of petroleum have been increased and still increasing rapidly. Thats
why the freight charges have been increased and the cost of productions has also been
increased by the huge amount. Due to these increments, the sale price has also been
increased but customers are not ready to pay more for a good quality instead of better
quality. And transport companies are demanding more increments to use their
transportation services.
INTERNATIONAL AND LOCAL COMPETITORS
One of the major threats at international level which KML and textile industry of
Pakistan has to face, is international competition which is growing up and competitors are
capturing the market share rapidly thats why Pakistans market share in foreign market
is cutting down gradually due to high cost but poor quality of their textile products.
In local market, there are many companies in Pakistan who are improving their
quality of textile products by acquiring new technologies. The big giants of Pakistan
textile industry are
NISHAT TEXTILE SAPHIRE TEXTILE
KTM TEXTILE COLONY TEXTILE
YUNIS TEXTILE AMTEX
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CHENAB TEXTILE AL-KARAM TEXTILE
GULISTAN TEXTILE FAZAL TEXTILELOWEST PRICE OF FABRIC IN WORLD FOR USA & UK COUNTRIES
This would surprise for all of us that Pakistan is offering lowest prices the UK and
USA market. But sorry to say that these prices are coming down gradually due to losing
the quality in their products and services as well. In USA the price per meter is $0.91
which is the lowest price in compare with other international and especially Asian
Suppliers.
OPPORTUNITIES
NEW TECHNOLOGY
The technology has been improved for the textile industry and these technologies
are being acquired by the international competitors as well as by local competitors so
they are producing good quality textile products and increasing the efficiency as well as
decreasing the cost of production. KWML has the opportunity to invest for the new
technology. By acquiring the latest technology, they can increase the production quality,
efficiency and can decrease the cost of production.
MOTIVATING THE EMPLOYEES
HR department can prove and show them they are here for employees by
motivating the employees performing their best. They can find the motivation level of
their employees and give them incentives to motivate them.
PROJECTS FOR THE LOCAL MARKETKWML has the opportunity to capture the market share locally by launching new
projects just like they have launched Dhanak in August 2008. They can start new
projects in garments, Apparel or Home Tax, Dyeing, Hosiery.
ADVERTISING
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KML has the opportunity to advertise about their selves to promote their textile
products.
They can advertise in international magazines about themselves
KML can publish its own local business magazine to promote themselves
Can also be advertised over the internet (electronic Marketing)
KMLS OWN SHOPS
KML can open its own shops in local market where they can display their
garments products (socks, Trousers) and Apparels as well as curtains.
ONLINE SHOPPING STORE
KML can open its online store where they can show their garments variety and
apparels. The advantage of this step would be
Online Marketing
Capturing the market over internet internationally
Capturing the market over internet locally
The material which you put on your fair price shop can be sold out at online shop
PEST ANALYSIS
POLITICAL FACTOR
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Uneven political conditions, deteriorating law and order situation and instability
in gas and electricity prices are adversely affecting the textile sector, while governmenthas hardly taken any step to give some relief or incentives to the mill owners. Textile mill
owners and exporter have strongly denounced the recent 31 percent increase in the
gasoline prices and demanded from the government to withdraw the recent increase and
take serious steps to help textile industry survive through difficult times According to the
sources, if prices continue to increase at current rate, the textile industry would find it
difficult to survive as the recent increase has already proven deadly and many mills have
started to shutdown in the wake huge price increase. It was also witnessed that due to
prices increase in gas has not only adversely affected the productivity of the textile
industry but has also caused s