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Internship Report on Colony Textile Mills Limited - Ning

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Internship Report on Colony Textile Mills Limited




COMSATS
INSTITUTE OF INFORMATION & TECHNOLOGY

             Submitted To:

                                                                         Sir Waqar
                                                                         Ahmed

Submitted By:

Hassan Bakhtiar Roy

FA08-MBA-039/LHR




                                           ACKNOWLEDGEMENT


                    Up and above anything else, all praise to Almighty Allah alone, the
                    Omnipresent and the most Merciful and compassionate. The words
                    are bound, knowledge is limited and time is short to express His
                    dignity. It is one of infinite blessings of Allah that he bestowed me
                    with the potential and ability to contribution towards the deep
                    oceans of knowledge already existing.

                    I pay hum-age to greatest personality of the universe; HOLY
                    PROPHET HAZARAT MUHAMMAD (PBUH) who is forever
                    source and spring of guidance in every sphere of life.




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                At the very outset, I would like to express my hearties and
                sincerest sense of gratitude to all my worthy teachers of CIIT
                Lahore for their inspiring guidance and constructive criticism.

                I am highly thankful for the cooperation of Mr. Bilal Niazi, Mr.
                Wasim Omer, Mr. Rizwan Malik, Mr. Tahir Mehmood, Mr.
                Nouman Chatha and Mr. Kashif Niazi of Colony Industries
                (Pvt.) Ltd. I might not be able to complete my internship without
                their cooperation and kind behavior. I am also gratified to all my
                sincere fellows who I had ever remembered for their continued
                encouragement moral support and invaluable succor as well as
                substantial cooperation during my critical moments.



                Hassan Bakhtiar Roy

                Contents
                Executive Summary 5

                Textile Industry in Pakistan 6

                Introduction & History 8

                Vision Statement 10

                Mission Statement 10

                Group Management Profile 10

   Production Accounting & Management System 12

   Inspection System 13

   Organizational Structure 15

   SWOT Analysis 18

   Detail of SWOT Analysis 20

   PEST Analysis 25

   Marketing Strategy 26

   Competitive Strategy 30


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   Purchase Accounting System 31

   Process of Yarn Production 34

   Work done during Internship 36

   Learning as an Internee 41

   Recommendations 43

   Annexure 44

   Glossary 50

   Bibliography 52




                        Executive Summary



                 This report is based on the activities performed during the
                 internship at COLONY Textile Mills Limited. Internship duration
                 was 6 weeks and it provided practical knowledge of working in
                 professional environment. This learning experience is described in
                 detail n the various sections of this report.

                 In the first section, there is some detail about the company. The
                 history and present status of the company is explained. The
                 organization structure and the details of its management along with
                 its location are also discussed. I have also discussed the yarn
                 manufacturing procedure and the important departments of the
                 company. I have discussed some business operations and some
                 strategies as well.

                 The second section provides information about the activities that I
                 performed during the internship. I worked as an internee mainly in


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           Accounts and Marketing department. However, I also spent some
           time in Purchase Department to gather some information about
           their working.

           The third and last section includes the recommendations.




                                 Textile Industry in Pakistan


           The subcontinent is the inheritor of one of the richest and oldest
           textile traditions in the world. Excavations at Mohenjo Daro and
           Harappa 2500-1500 BC revealed that the inhabitants of the Indus
           Valley cultivated cotton. Sir John Marshall, the archaeologist has
           stated that a few minute scraps of cotton were found adhering to
           the side of a silver vase. Clay and faience spindles whorls indicate
           that cotton and woolen fibers were spun. A well-equipped dyers’
           workshop was excavated at Mohenjo Daro and the fragment of
           cloth indicates that woven cotton cloth was dyed with madder root.

           Independence from the British in 1947 and the division of the
           Indian subcontinent into Pakistan and India started a new era for
           textiles production. Pakistan consisted of two entities, east and
           West Pakistan. The West was the cotton producing area and the
           East was responsible for jute production. At the time of partition,
           Pakistan had no industrial base and inherited only one textile mill,
           the Lyallpur Cotton Mill in Lyallpur [now called Faisalabad]. This
           mill produced yarn and gray cloth and no printed fabrics.

           Under the Open General Licensing [OGL] scheme, the business
           community imported plants and machinery with cash dollars. In
           1950, Adamjee Mills was set up in Karachi, Kohinoor in
           Faisalabad, Colony Textile Mills in Multan, Nishat and Crescent
           Textile in Faisalabad. These were followed by Gul Ahmed Textile
           Mills, Al-Karam, Valika, Star and Rashid textile mills.




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           Within a decade the new country of Pakistan was self-sufficient in
           cotton and began exporting gray cloth and later cotton yarn.
           Pakistan started exporting printed fabrics in the late 1970’s to
           Africa and by mid 80’s was sending printed material to Europe.
           Pakistan’s location was ideal, as it lay halfway between the
           western world and the Far East. Pakistan has a 28 percent share in
           world export of cotton yarn and a 6 percent share in world export
           of cotton cloth.

           It was in the 60s that the power loom took over and by the 70s gray
           cloth was being exported at throwaway prices. There are about
           200,000 power looms operating in Pakistan some of which are
           backyard operations. Handloom, which formed the backbone of
           textile goods in the last century, is now almost non-existent, its
           sales confined to a fast diminishing rural market and a very small
           niche market.

           Although Pakistan is the world’s fourth largest cotton growing
           nation in the world, after the United States, China, and India, its
           total turnover for export is only $ 5 billion. Textile goods form 60
           % of the total exports of the country. The commodities exported
           are yarn, cloth, tents, and canvas, bags, towels, bed linen,
           garments, synthetic textiles and other made ups.

           With a large and expanding textile industry, textile education and
           training became imperative. The Textile University of Pakistan
           was established in Karachi to train technical and management
           professionals. The Textile University awards degrees in Textile
           Sciences and Textile Management. The National College of Arts in
           Lahore and the Indus Valley School of Art and Architecture in
           Karachi are the only two institutions in Pakistan, which award a
           degree in the discipline of Textile Design. Designers are being
           absorbed into the industry, bringing about change and vibrancy,
           with innovations in Print design and weaving.

           Today there are 450 Spinning mills and 35 composite textile mills.
           Textile goods form 60 % of the total exports of Pakistan.




                                                         Introduction
                                                         & History
           Colony group has been the pioneer of textile industry by setting up
           Colony Textile Mills Limited (CTML) after partition of the sub


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                          continent in 1950, thus CTML became one of the first textile mills
                          to be registered as public limited company and quoted in Karachi
                          Stock Exchange (KSE).

                          Foundation of the group was kept over a small flour milling
                          operation, which rapidly grew into cotton ginning that evolved into
                          the core business of the group, constituting 21 cotton ginners
                          spread throughout the cotton grown belt in the province of Punjab -
                          Pakistan. The logical vertical process-integration paved its path for
                          the group to invest in to Textile Spinning. The ground breaking of
                          the Spinning facility was the beginning of huge investments that
                          followed which gave the group a leading position in the Textile
                          Industry of the Country.

                          Colony Textile soon became one of the largest vertically integrated
                          textile facilities in the country. The group further diversified in to
                          Power Generation and Distribution network, Banking, Insurance,
                          and Cement sectors. The success of the group continued until the
                          government regime shift brought about a shift in policy from
                          private sector pushed industrialization to a strong wave of
                          nationalization. The Ginning, Flour Milling, Power, Banking,
                          Insurance and Cement along with various other sectors were
                          completely taken over by the government.

                          Having major assets nationalized, the Group was faced with severe
                          financial difficulties for almost one and a half decades.

                          Presently, the Colony Group consists of several Textile Spinning
                          facilities with an installed capacity in excess of 220,000 spindles
                          out of which more than 200,000 spindles are 4 years old or less.

        Colony group is managing the following companies:


Company Name                           Line of Business                                Status

Colony Textile Mills Limited           Textile (Spinning)                              Public Limited Company

Colony Industries (Pvt.) Limited       Textile (Spinning & Weaving)                    Private Limited Company


                          Colony Textile Mills Limited (CTML)

                          Colony Textile Mills Limited, one of the group companies of the
                          Colony Group, is a Textile Manufacturing unit established as on
                          24th August, 1946 and engaged in manufacturing of yarns of various Ne Counts. The company has
                          authorized capital of Rs. 411,000,000 as on September 30th 2008.




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                            During year 2000 to 2001 the annual production capacity of the
                            company was 34.813 million Kg’s converted into 20 Ne Count
                            based on 111,136 spindles. Currently the number of spindles
                            installed has been increased to over 175,000 spindles.

                            A summary of the company’s production record for spinning
                            section for the past three years is given in Annex 1.5

Year ended 30th September                                                     2006                    2007               2008

No. of spindles installed                                                     59,200                  79,864             177,448

Average no. of spindles worked                                                47,085                  64,195             155,330

Capacity at 20 count(Kg’s.)                                                   17,778,000              22,841,002         48,669,115

No. of shifts worked                                                          1,092                   1,040              1,095

Actual production converted at 20 count                                       14,652,680              18,703,378         47,394,446

Capacity Utilization                                                          82.00%                  82.00%             97.38%




                            The company sales are comprised of local sales which is almost 100% against advance cash
                            payment. The total turnover of the company during last year was Rs. 3.226 Billion which is expected
                            to cross 5.00 Billion mark during the current year.




                                                                             Vision Statement

                            Attain   highest standards of quality in its all business activities.


                            Sustained   growth in real terms.


                            Have   professionally trained high quality motivated workforce, working as a team in all
                            environments.


                            Attain   past glorious position and be recognized locally as well as internationally as a dynamic,
                            quality conscious and progressive company and industry leader.




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                                                           Mission Statement

           To manufacture quality products for customer satisfaction through


           Honoring     the commitment.


           Continuous     endeavor for improvement through adoption of most modern technology in
           production.


           Strict   adherence to quality control.


           Developing     a sense of high reliability through fair dealing.


           Becoming     a part of country’s development and economic prosperity.




           Group Management Profile


           A brief profile of the main directors of the company which hold majority of the shareholding is
           given below:


           MR. MUGHIS A. SHEIKH


           Mr. Mughis A. Sheikh is the Chairman of Colony Textile Mills Limited.




           MR. FAREED M. SHEIKH


           Mr. Fareed M. Sheikh is the Chief Executive of Colony Textile Mills Limited.


           MR. NAVEED M. SHEIKH


           Mr. Naveed M. Sheikh is CEO and director of Colony Weaving Mills (Pvt.) Limited.




           Production Accounting & Management System


           CIL production accounting and management system not only ensures consistency in the operations
           but also helps to manage orders on a micro level. In-house developed software provides great tools




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           to CIL production team for monitoring production processes, production planning, and conducting
           periodic audits to reduce possible delays and coordination snags along with achieving a greater
           degree of reliable inter-departmental information exchange.


           Production Capacity & Capability


           With the installed capacity of 120 looms, the plant can produce more than 1,500,000 Linear Meters
           per month, with a wide variety of fabrics; from percales to satins, from twills to drills, from rip stops
           to high thread count fabrics, stretch fabric and much more.


           All looms have a high speed connectivity facility through Local Area Network along with being
           Web-enabled. CIL customers will be able to monitor looms allocated to their contracts, and also
           view what articles are being run on what looms and at what efficiency, whereby correlating the
           delivery snags, if any, on one hand and quality related issues on the other. For this organization
           customer confidence is the key to success, and providing this transparency to their customers can
           facilitate the business on the commercial side as well as providing CIL production team to strive for
           either improving their performance or marinating the quality which is for the satisfaction of the
           clients.


           Inspection System


           Colony Industries (Pvt.) Limited is the pioneer in the entire Indo-Pak region in deploying the Uster
           FabriScan in its facility. The FabriScan replaces the traditional manual inspection by a far more
           consistent and objective data collection. This system is capable of inspecting Fabric production of a
           240 loom facility. Deploying this machine in this facility was a well thought-out decision as this
           system is not subject to fatigue, downtimes, or outside influences. It provides consistent checking the
           entire quantity of fabric fed through it. There is no negligence factor, no favors to be made, no rules
           to be compromised besides providing a big pool of information that is humanly not possible. All
           faults are “UV” tagged so that mending operation can be performed (if necessary) at the exact
           location of the fault.


           The machine can be programmed to inspect as per the requirements of the customer and those
           criterion saved for future reference and use. The inspection reports can be made available to client
           on the web so that pre-screening of their consignment can be done timely, effectively and in-
           synchronization with their production plan. In order to cater for our direct Dye-House customers, we
           have the “CUT OPTIMIZATION” option available. As soon as the inspection is complete, the
           system performs the optimization process and suggests the best possible way to cut the fabric to get
           the highest number of pieces of the Optimal Quality.




           Power Generation & Heat Recovery System


           Colony Weaving Mills is fully-contained and self-sufficient facility with its in-house continuous and
           reliable power generation facility with 100% backup power arrangement. The Power Generation
           department with its Heat Recover System is designed to generate enough hot water to fire the




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              chilling system for the entire facility, along with producing more than 50% of the steam required for
              the sizing operation.


              Memberships


              Lahore   Chamber of Commerce Industries


              APTMA     (All PAKISTAN TEXTILE MILLS ASSOCIATION).


   Products


              Yarn


              The company is producing 100% cotton yarn, 100% Polyester yarn, 100% Viscose yarn and mixed
              yarn of various counts ranging from coarser Number English 20 count to finer Number English 80
              count.


              Fabric


              CIL is producing Grey Fabric with following fiber types, for abbreviation’s detail see Glossary:




                         Organizational Structure

              The concept of an organization chart shows what positions exist, how they are grouped and who
              reports to whom.


              The organizational structure should be designed to provide both vertical and horizontal information
              flow as necessary to accomplish the organizational overall goals. If the structure doesn’t fit the
              information requirements of the organization, people will have either too little information or will
              spent time on processing information that is not vital to their tasks, thus reducing effectiveness.


              Colony Group’s structure is a hybrid of divisional and functional structures; divisions are based on
              two products Yarn (Spinning Facility) and Grey Fabric (Weaving Facility).


              Top positions are as follows:


              See Annexure 1.1




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                                                        Group Profile




                       Board of Directors


                       Mr. Mughis A. Sheikh (Chairman)


                       Mr. Fareed M. Sheikh (Chief Executive Officer)


                       Mr. Zarrar Ibn-e-Zahoor


                       Mr. M. Akram Qureshi


                       Mr. Najeeb Ahmed


                       Mr. Muhammad Shakeel


                       Mr. Tahir Mahmood


                       Registered Office


                       M. Ismail Aiwan-e-Science


                       Shahrah-i-Jalaluddin Roomi,


                       Ferozepur Road Lahore – 54600


                       Phone: (042) 5758970 – 2


                       Fax: (042) 5763247




   Colony Industries (Pvt.) Limited


                       CIL consists of two divisions Weaving & Spinning; following is the top positions in CIL.


                       See Annexure 1.2


                       Accounts Department




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           Accounts Department keeps track of all transactions. Each and every sales confirmation note and
           purchase confirmation notes come to Accounts Department for making timely payments and
           recovery of money from buyers.


           Internal auditing is also another responsibility of Accounts Department for smooth and clear
           handling of operations.


           See Annex 1.3




                                                       SWOT Analysis




           Strengths:


           ISO 9001-2000:


           Strong Security System


           High quality product
                                                                                 Weaknesses:
           Latest mechanized
           machinery.                                                            High cost of production



           Tremendous market                                                   Centralized decision making
           positioning
                                                                                 Less promotional activities
           Highly qualified and skilled
           management


           Highly Motivated
           Workforce


           Adequate financial




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           resources


           Competitive advantage


           Own power generation plant




           Opportunity:


           Organization Can expand
                                            Threats:
           product lines

                                            New Entry of competitors
           Organization Can capture
           new market segments around the
                                            Buyer needs demands
           world
                                            changes

           Organization Can reduce the
                                            Political instability
           cost by proper utilization of
           resources
                                            Change of government
                                            policies
           Organization Can hire more
           well-educated and experienced
                                            Globally Economic
           person
                                            instability




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           Detail of SWOT Analysis


           Strengths:


           ISO 9001-2000:


           CTML 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


           CTML has a greater security system. There are different hidden security cameras which capture all
           the moments.


           High quality product


           CTML is 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, Germany and France. And by
           using that latest machinery the productivity of the employees are very high.


           Tremendous market positioning




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           CTML is one of the Pioneer Textile Group in the Pakistan so it has got the position in the mind of its
           customer. And being an old textile company people are loyal with it. CTML has a better position in
           the mind of its customers.


           Highly qualified and skilled management


           The management of CTML 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. Apart from that they are giving their employees
           facilities of Convenience like personal car along with fuel provided by the company too, which is a
           big deal for motivating the employees.


           Adequate financial resources


           The owners of CTML are one of the richest persons of the Pakistan and they have more plant and
           investment in other industries like Sugar Mills, and Share Market. They have adequate financial
           resources to meet their requirements.


           Competitive advantage


           Because it is an old textile originating from 1950’s and it has still kept its position in the textile
           market on all competitors nationwide, which is its competitive advantage.


           Own Power Generation Plant


           They have own power generation plant and CTML is the pioneer in the private organization who
           start the power generation.




           Weaknesses:


           High cost of production


           The production cost is high because of un-proper utilization of resources.


           Centralized decision making


           The decisions are made by the upper management which is weakness of the CTML because they
           have not any proper idea about the prevailing situation and their decision can be un-fruitful for the
           company.




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           Less promotional activities


           The advertising and promotional cost of the CTML is very low it can take advantage for more turn
           outs.




           Opportunity:


           Organization can expand Product Lines


           Currently the CTML is 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 CTML. They also
           have better market repute.


           Organization can reduce the cost by proper utilization of resources


           If the cost of different matters which are not been utilized properly, is controlled by the CTML
           management they can produce more at less 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. Because being human, you always have the room for betterment
           in any aspect.


                                                                    Threats:


           Buyer needs demands changes


           Because of the research & development the design and the product of CTML is just satisfactory as
           compared to competitors in the global environment and they are not fulfilling the demand of
           customers.


           Political instability


           Political instability effects the CTML because of the quota system, Government can restrict the
           Company to export.


           Changed of government policies


           Government policies are changing day by day so it is always a threat for not only CTML but for any
           company to survive in such a environment.


           Globally Economic instability




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           Because of the economic instability the CTML and the “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 also affect its overall exports.


                                              PEST Analysis

           Political Instability


           The political situation of Pakistan is not satisfactory. Due to the rapid change in the Government
           every government sets its own new trade policies.


           Govt. should apply sustainable policies for the beneficial of the exporters as well as the investors.


           Economic situation:


           The economic condition of Pakistan can also affect the foreign investors increasing inflation rate
           make the cost of production high and thus reduce the profit margin of the investor.


           Social situation:


           The change in the lifestyle of the people affects the growing demand of the CTML products. The
           change in the lifestyle and needs in different demographics also affect the demand of the customers.


           Technological factor:


           Technological advancement in all the sectors of the country has changed the entire socio-economic
           environment. Especially in the textile sector there is a lot of technological development.


           CTML’s excellent computerized machines and devices have made extension in its present setup of
           well advanced technology imported from Japan, Germany and France.




                      MARKETING STRATEGY

           CTML is a group starting from 1950’s which means that it is an old and pioneers of Textile industry
           in Pakistan. On its purchase side as I have worked for a whole week in Yarn Procurement
           department of the Group, which is a small branch of Marketing department. I found their business to
           be such a vast that they ordered their raw material on telephones, they made contracts with the new
           companies and those companies having already contracts had no need to made. The main which
           were daily paid were mainly to the ICI for polyester and then to companies like Nishat, Sitara
           Textiles and many more companies and groups like that. Their fiber is very famous not only
           nationally but internationally as well.




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           Secondly on Europe sector this group is very well known as they purchase machinery from them and
           then they supply Methane to them, which is used in mixing with petrol. Though it is a by-product of
           sugar sector yet it is branch of the same company. This is helpful for the Textile division too.


           The past year has been tough for the textile industry as competition is increasing steadily and margin
           of profit is becoming smaller day-by-day. Our competitors from Asia have come up in a big way
           with lower prices resulting from lower overhead, cheaper and better raw materials and machinery.


           Countries like China, Indonesia, India and Bangladesh played an active role in the fabric market.
           Improvement in quality and production capability was the main area of concentration.


           Market for Yarns and Grey fabrics was diversified to increase the customer base and reduce
           dependency on the Far East. In this effort business with Malaysia, Korea, Taiwan, UK and South
           America was initiated in case of Yarns.




           In case of Grey Fabric market business was initiated in South Africa, North America, Japan, Italy,
           France, and Sri Lanka etc. Product range was also increased to cater to the differing needs of the
           buyers. Fancy and special items like Dobby Designs, Bedford Cords, and Caviar Twills and stretch
           fabrics were developed which are being sold at premium prices.


           CTML has constantly updated our machinery, replacing old machines with new ones upgrading the
           existing set-up, leading to better efficiencies and quality products.


           Leaving behind the traditional way of doing business and in our journey towards excellent it has
           consistently expanded its buyer base and explored the different markets around the world.


           Keeping in view demand of the World market, CTML pursued its strategy of value addition and
           reducing the dependency on Grey Fabrics and Grey Yarn.


           Having the foresight to assess that in coming year’s value addition will be the thing of the future,
           CTML worked towards the achievement of its goal of future increasing its capability in value
           addition.


           The export of processed fabric and made-Ups has shown market improvement as compared to last
           year.


           It has placed us successfully in the middle to upper end of the market. Our strength in Europe is the
           curtain division.


           This included yarn dyed dobbies, engineered confections, different finishes and embellished
           products. The plan is to continue with this winning strategy and at the same time we are trying to
           find new clients in the high end.




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           We are also exploring business opportunities in countries like Spain and France where CTML has
           very little business at the moment.


           North America is the star market for CTML; it’s a new market for it after breaking up the exclusive
           arrangement with our previous sale set-up. The quota is coming down in 2005 and we have started to
           prepare for it internally as well as for the external environment. Bedding is the bulk of the home
           textile business.


           CTML is in the process of updating its machinery to cater the needs of the wider width fabric
           requirement for USA bedding business. CTML is also taking up the social accountability issues very
           seriously, which are so dear to the American consumers. A lot of big brand US companies have
           visited us and are discussing the possibilities of a joint venture.


           The opportunities are limitless, we have to review and analyze them very thoroughly to associate
           with the right people in the long run. In shorter term we are building a small amount of quota, which
           will give us recognition as a bedding supplier.


           CTML is very strong in non-quota categories like curtain and table linen. These categories are best
           served with new product development (NPD). CTML will coordinate the effort for NPD by all
           markets to optimize results. CTML has achieved the highest sales in 1999-2002 for North America
           market.


           On top CTML has developed more direct and closer relationship with its end customers. Oceanic has
           been our most lucrative and mature marker. In business terms it is our “cash cow” market.


           Primarily due to being a non-quota market it had no real limitations in this market. Despite economic
           problems in that region, it has maintained our sales figures in the year under review. This market is a
           good design source for other markets, which is helping us to maintain our print volumes.


           Middle East market is composed of South Africa and the new emerging markets like the UAE,
           Egypt, Saudi Arabia, and Jordan etc. CTML has dedicated new staff with fresh energy for the
           emerging market.


           They have successfully broken the ground and we have very strong faith that these markets will give
           us good volumes in the near future. We are also targeting printed apparel business for the first time.
           The latest addition is the most ambitious Apparel Dyeing plant setup in Raiwind Mill, which has
           started its production.


           The effectiveness and productivity of this plant will be further enhanced, as CTML moves towards
           becoming a more vertically integrated organization.


           CTML has increasing its profitability by working efficiently, procuring better raw material and most
           importantly kept a very close association with its customers.




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           It visits its business partners frequently and provides them with the best service possible. All of the
           above mentioned points led to strengthened relationship with its business partners making it very
           difficult for its competition to penetrate into its market share.


           CTML has provided its staff with better working environment and facilities, which enhances its
           efficiency and output.


           At CTML, it is prospering due to its professional commitment towards excellence and giving the
           best results at all times and against all odds. Its marketing and production team co-ordinates all the
           time and its focus remains on maintaining its position as the market leader in the textile sector of
           Pakistan.




                                              Competitive Strategy




           As for as COLONY Group is concerned its own name is its competitive advantage. Being an old
           group it has its own name in the field of Textile as well as sugar. As I have told in the above segment
           that it has business of Methane gas in Europe it is its competitive advantage. As dealing in one
           different side gives you edge over competitors in other field.


           Furthermore, its financial assets are also an edge for the group. As being late in paying any party
           makes future problems which result in delivery of any product to be late and resulting in bad image
           of the company.


           COLONY group buys raw material from all the groups like Nishat, Sitara Textiles, Kohinoor
           Textiles and many more companies like that I cannot name all of them as it is a huge number. Which
           automatically makes links better and which tells its mostly products are exported. And for sure they
           are of finest quality.


           It’s one competitor is the Rupali group.




       PURCHASE ACCOUNTING SYSTEM



           For abbreviations see Glossary:

           Purchase Procedure for Mill


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           When a Floor Shop in-charge (Foreman on the maintenance and
           Head Jobber on the Production side) needs to purchase one or
           more items to facilitate his sphere of work, he will fill out a PDN.
           A copy of PDN used in our company appears in Appendix 999.
           The PDN has three leafs. First copy is for the Purchase
           Department, second for the Store at Mill, and third for the
           Department originating the demand. A good quality Carbon Paper
           should be used so that even the last copy is legible.

           At the initial stage there are six columns that are filled by the
           authorized staff of the concerned Department/Section. Those six
           columns being Department, Sr. #, Item Code, Description, UOM,
           and Quantity Demanded.

           The company is divided in to five Consumption Departments. This
           division is done in order to simplify identification of consumption
           patterns, allocation and analysis of wages & salaries, and
           convenience in Budgeting. The Departments namely are:

           Sr. # Departments Code

           1) Head Office 01-00

           2) Administration 02-00

           3) Spinning 03-00

           4) Services 04-00

           5) Residential Colony 05-00

           The Department/Section code format adopted by our company is
           99-99.

           99-99

           Department Section

           Main Departments always have “00” in place of section designator.
           For example, 02-02 signifies that the Department is
           Administration and the Section is Time Office. However, when we
           want to refer to the Administration Department the code used will
           be “02-00”, meaning that the code relates to a Main Department.

           A Store Item Code List (SICL) sorted on Item Code as well as
           Description also containing the Unit of Measure (UOM) of each


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           item in front of the Description is supplied to the Store In-charge,
           Manager (P&A), Electric Engineer, Mills Manager at the Mill, and
           Purchase Officer at the HOL. New Items added to Store Inventory
           (SI) from time to time will be added manually to the list by those
           who have been issued the SICL. At the beginning of every Quarter
           a new SICL be issued to all concerned.

           PDN No.: This is a sequentially controlled five digit distinct
           number allocated to each PDN document.

           Starting with 00001 to the first PDN of the financial year up to
           99999 during that financial year.PDN numbers is controlled by the
           Store In charge in the PDN Number Control Register. If HOL
           issues a PDN, the Purchase Officer will ask the Store In charge to
           allocate his demand a PDN Number. Next number in sequence will
           be allocated which will be written on the PDN by the Purchase
           Officer. The Store In charge will make a note of this that the PDN
           was made by the HOL staff.

           Department: The Section that makes the PDN fills-in its complete
           code. If Ring Maintenance is filling the form, it will enter the
           code 03-10 signifying that Sub-Section “Ring Maintenance” of
           Spinning Department is demanding what is endorsed in the PDN.
           The Sub-Section’s description will be written in front of the blank
           space provided for description. The Main Department’s name will
           not be mentioned in this space.

           Sr. No.: The first column to be filled in a PDN will be Serial
           Number that appears in an abbreviated form (Sr. No.). Under this
           head, a whole-number in a sequential order will be filled-in for
           keeping a count of item demanded in a particular PDN. It will
           always start from 1 and go up to a maximum of 9, as there is a
           provision of only 9 rows in a PDN for entry of items.

           Item Code: For various reasons including statistical analysis and
           MIS the Item Code has been broken into three numeric parts, each
           part separated by a dash “-”.

           The Item Code adopted in our organization is in the format 99-99-
           999. Store Code combines with the Item Code to form the ITEM
           CODE.

           99-99-999

           Store Section Item Number



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           Store Sub-Section




                          PROCESS OF YARN
                          PRODUCTON
           See figure in Annexure 1.3

           Production manager services the daily production schedules and
           try to work according to the demand to schedule. There are many
           steps involved in production of the yarn.

           BLOW ROOM

           The first step is that the raw cotton is sent to Blow room for the
           quality of the cotton. Then it is sent to the Lab for quality check.
           Here basic quality and other contents are checked in proper form.
           If one kg cotton is put into this room only 600 grams cotton goes
           into further production process and rest goes in wastes. Here
           following are wastes excluded,

           B/R Gutter

           Dropping

           CARDING

           In this step the cotton is carded. The production manager checks
           the cotton and it comes in the drums type containers. These drums
           rotate and cotton comes out in specific form called as “pones”.
           Here about 5% cotton goes in the shape of waste. Waste extracts
           from this process are called by;

           Card fly

           COMBING

           In this step the cotton goes for combing. Combing is a process to
           comb and wax the cotton for softness purpose. Following wastes
           are excluded from cotton in this process;

           Short Fiber


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           Comber Noel

           SIMPLEX

           After the attaining of Cotton from Card and Comb processes,
           which is also weak this is further passed back to blow room
           process called Roving and then cotton is sent to Ring process.

           RING

           In this step small pones are developed for further process and
           wastes are made out named;

           Phnemaphil

           AUTOCONING

           In this step the manager in specific intervals checks the quality of
           carded pones from which yarn is produced in shape of cones by
           passing through machines for this purpose. Here also some wastes
           are extract called;

           Oily hard waste

           Hard waste

           PACKING

           Cones manufactured in proceeding step are now kept in moisturize
           room for absorbing required moisture. Cones are packed into bags
           or cartoon according to customer requirements.

           PURCHASE DEPARTMENT

           The purchase department makes all purchases. Every demand from
           different departments for different items is forwarded to store and
           from here it is forwarded to purchase department if needed to
           purchase. It has a main store in factory.




           WORK DONE DURING INTERNSHIP
           During my internship, I worked in the following departments.


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           Accounts

           Marketing

           Account department

           In account department, I managed to understand the flow of
           transaction, preparation of vouchers and ledger posting.

           Preparation of vouchers

           In account department under the supervision of concerned officers,
           I came to know different type of vouchers being prepared and their
           process of preparation. Vouchers are written evidence of any
           business transaction. The different type of vouchers being prepared
           by the account department of CTML is as under,

           Cash payment vouchers

           Cash receipts vouchers

           Journal voucher or adjustment vouchers

           Now I will discuss these vouchers one by one:



           Cash Payment Vouchers

           Being a public limited company cash payment vouchers are used
           for recording the expense of less than five thousand. These types of
           vouchers are prepared when cash payments are made against small
           expenses i.e. repair, entertainment etc. in order to record the
           expenses following entry is passed:

           Account code name of expense (debit) Amount

           Cash account (credit) Amount

           Evidence of expense is attached with the cash payment vouchers.

           Cash Receipt Vouchers

           These types of vouchers are prepared when the cashier on behalf of
           the CTML is receiving cash. However, these types of vouchers are
           small in quantity because majority of transactions are done by


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           bank. On receipt of cash, cashier prepared the cash received slip.
           Account officer prepares voucher on the basis of cash receipt
           prepared by the cashier. In order to book the transaction the
           following entry is passed in the books.



           Account code cash account (debit) Amount

           Income A/C or receivable A/C (credit) Amount



           Account code Bank A/C (debit) Amount

           Cheques clearing A/C (credit) Amount

           ADJUSTMENT VOUCHER OR JOURNAL VOUCHERS

           These types of vouchers are generally prepared in the following
           circumstances;

           Purchase   on credit

           Writing   off assets i.e. depreciation store consumption etc.

           Rectification   of mistakes or omissions

           Now I discuss them one by one

           Purchase on credit

           Generally raw material, stores and spares are purchased on credit.
           In order to account them for the journal voucher are prepared by
           the concerned account officer

           Account code Purchase A/C (debit) Amount

           Account payable A/C (credit) Amount

           Copy of the invoices is attached with vouchers;




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           Writing off Assets

           These journal vouchers are prepared in order to change the assets
           to expense for the preparation of monthly accounts.

           To account for depreciation of fixed assets:

           Account code Depreciation A/C (debit) Amount

           Accumulated depreciation A/C (credit) Amount

           To account for the raw material consumption:

           Account code raw material concerned A/C (debit) amount

           Raw material store A/C (credit) amount

           To account for store consumption:



           Account code store concerned A/C (debit) amount

           Store and spares A/C (credit) amount

           To account for store consumption:

           Account code store concerned A/C (debit) amount

           Store and spares A/C (cedit) amount

           To account for accrued expenses:

           Account code expense A/C (debit) amount

           Account payable A/C (credit) amount

           In additional to above referred kinds journal voucher is also passed
           to rectify the mistakes made in voucher preparation or posting.



           Marketing department



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           The main purpose of this department is to locate buyers through
           agents. So marketing starts from locating the buyers, making
           contract, opening of LC, shipment and in last payment is received.




                                         Learning as an
                                         Internee




           Duties

           As I have told above that I had prepared vouchers of different
           types. Then I used to take vouchers of Mr. Tahir, Miss Shazia and
           Mr. Ramzan to audit and brought back audited vouchers from the
           Audit. Copied cheques whose payments were to be made on that
           day. Then I brought a few times Invoices for sales tax from
           marketing department. Maintained record of filing with Mr.
           Farooqui. Then in Yarn Procurement I made worksheets for the
           parties who do not have tax exemption certificate and their tax has
           to be deducted. Next in purchase department, I had only worked
           for filing their GRN’s and maintaining them in a serial manner. I
           have attended calls for a person not seat or else.

           Accomplishments

           As an Internee I have done all the works diligently which I have
           mentioned above. Instead I had done other works as well which a
           person on the job never performs, like someone asks me to take
           vouchers from Audit like I am his/her Assistant I had done that and
           never said no. As I have seen those employees which went to
           Audit and the other asked to bring my vouchers as well and the



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           person says no I have my own work you should better go yourself.
           That is the thing which I wanted to share in this regard.




           New Knowledge Acquired

           One thing regarding new knowledge is what I have shared in
           Accomplishments. Next one important thing regarding knowledge
           acquired is that what you are studying is not related to the job
           duties you are doing are in future you have to do honestly. You
           have to understand that work from start, in case of an employee
           leaving a company and joining other he also will have to
           understand the work in new company. I have got a lot of sense
           regarding working in an organization where everyone is working
           out for cutting your roots. How to work in a conservative
           environment! How to behave in any situation! How to negotiate
           with any person on job!




           Problems Encountered

           Well I don’t have to face as many problems as I will have to face
           when I will go on job. First few days were hard but I cannot say
           there was any problem. Employees there were very cooperative
           and they asked me to ask as many times about a thing till you are
           not cleared about that. They guided me on every issue and asked
           me as/like a big brother to learn as much as you can. I am really
           thankful to all of them.



           Impact of Experience on my Career

           This experience definitely effects my career positively. As I would
           not have been come to know about the atmosphere of any
           organization, this experience has told me a lot about environment


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           of organization and behavior of different type of people. All of this
           edge goes to my Institute’s good understanding about students
           future.




                                         RECOMMENDATIO
                                         NS


           Colony Textile Mills Limited:

           The first and most recommendation is to eliminate one man
           show prevailing in the company

           There must be a proper system for training of employees and
           supervisors.

           Importance should be given to employees’ turnover.

           Different training courses should be arranged for the up lifting
           and improving the quality of work for employees.

           There is also a problem of work overload for the employees
           and it should be control properly so that the employees are
           motivated. As I have seen employees working till 8 PM. And I
           have come to know that sometimes they work till 1 AM late night
           without any incentive.

           Employees should be paid extra for the work which they do
           after working hours.




                                                 Annexure


           COLONY CEO’s


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           Figure 1.1




           COLONY Division wise

           Figure 1.2



                              CEO

                              (CIL)

                        Technical Director

                           (Weaving)

                    Chief Technical Officer

                           (Spinning)

                        Marketing Manager



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                        Production Manager

                         Accounts Manager

                          Sales Manager

                        Production Manager

                         Accounts Manager

                         Finance Manager

                        Commercial Director

                           MIS Manager

              Manager Personnel & Administration




           Accounts Department



           Figure 1.3




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   Procedure of Yarn manufacturing

               Figure 1.4




                                     Annex 1.5



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Year ended 30th September                              2006          2007         2008

No. of spindles installed                              59,200        79,864       177,448

Average no. of spindles worked                         47,085        64,195       155,330

Capacity at 20 count(Kg’s.)                            17,778,000    22,841,002   48,669,115

No. of shifts worked                                   1,092         1,040        1,095

Actual production converted at 20 count                14,652,680    18,703,378   47,394,446

Capacity Utilization                                   82.00%        82.00%       97.38%




                                                                Glossary




                            COT 100% Cotton


                            PP 100% Polyester


                            PC Blend of Polyester & Cotton


                            CVC Chief value cotton



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           PV Polyester – Viscose


           Mixed Different materials in Warp & Weft




           Purchase Accounting System




           PDN Purchase Demand Note


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           GRN Goods Receipt Note


           SIN Store Issue Note


           SRN Store Return Note


           UOM Unit Of Measure


           HOD Head Of Department


           HOL Head Office Lahore


           G/L General Ledger


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                          C
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                          I
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           Section Code Distinct Code Allocated to Section of a Department



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           Store Item Code List SICL


           MIS Management Information Systems




                                Bibliography




           Sources from where I have collected data:




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           Miss Parveen Abida, 2004, Production Accounting &
           Management System, Inspection System, Introduction, Internship
           Report on Colony Textile Mills Ltd. Lahore


           Miss Javed Iffat, 2006, SWOT Analysis, PEST Analysis,
           Internship Report on Masood Textile Mills Ltd. Faisalabad.
           Faisalabad


           Mr. Bhatti Jamil Muhammad, 2006, Marketing Strategies,
           Internship Report on Nishat Textile Mills Ltd. Lahore




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