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EXECUTIVE SUMMARY
K.M.L has grown from a cotton export house into the premier business groupof 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.
INTRODUCTION OF TEXTILE SECTOR
THE PAKISTAN TEXTILE INDUSTRY
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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
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.
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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
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
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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 skills
in 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.
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 materialsrequired for the production of cement. Kohinoor acquired the ownership and
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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"
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
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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.
DIVISIONS OF K.M.L
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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
VARIOUS DEPARTMENTS
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Marketing Department
Finance Department
H. R Department
Production
Quality Assurance
P.P.C Department
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 HumanResource 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
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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 vehiclesof 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
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
5th DAY
On 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.
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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, QualityAssurance, W.I.P.C.
EMPLOYEES DETAIL
The employees details was based on
Employee I.D
Employee Name
Father Name
Date of Joining
Date of Leaving
Presents
PRESENTS
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 CALCULATION
If the data is not available in the system then we had to calculate thesettlement 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)
Block B (53 Rooms)
Supervisory-Block (49 Rooms)
HEALTH & SAFETY MEASURES
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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 itinspects 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)
10th DAY
OVER 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)
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Over Time Hours Double Shift
Date
11th
DAYSTAFF 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
Name of employee Father Name
Card Number Salary Break Up
Date 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
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2) Sick leave
3) Earned leave
4) Leave without pay5) 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.
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.
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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 PAYThere 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
M-19 Director 1600 C.C (Honda VTI) or equivalentM-18 General Manager 1500 C.C (Honda Civic EXI) or equivalentM-17 Sr. Manager 1300 C.C (Corolla XE-Honda City EX) or
EquivalentM-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 LitresM-18 250 Litres 3000 Litres
M-17 175 Litres 2100 LitresM-16 150 Litres 1800 Litters
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M-15 125 Litres 1500 Litres1) 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.
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 theH.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.
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One absence =3000-500=2500
Two absence=3000-1000=2000
Three absence=3000-2000=1000
Four absence=3000-3000=0
EO.B.I CONTRIBUTION
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 INSURANCE
Employees 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
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
leave the 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.
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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 hehas 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
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
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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 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 permanent employment.
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
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transferred from permanent to piece rate has the facility of social security. There is no
system of provident fund in piece rate.
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 hisrequirements 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.
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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:
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.
SAMPLING DEPARTMENT
It works under marketing department and engages in the production of the
sampling of marketing department.
WORKING PROCEDURE OF SAMPLING
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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 thecustomer requirement.
COMMERCIAL DEPARTMENT
The commercial department is the bone of every manufacturing concern. It
plays a 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
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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 thecommercial 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.
MAKING OF THE INDENT
The indent is created from the demand of the yarn on the daily basis and is
used to create 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
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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
And the at the end of month the all related reports
GENERATION OF THE OUT WARD GATE PASS
The 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 equity
Notes 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. There
are 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 notes
payable 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
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his record and one copy 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 writesrequired 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.
DAILY STORE ISSUE REPORT
This report is maintained daily and kept in a file. In this report issuance of
demanded items to every department and balance of items are given. This report is
presented daily to Assistant Manager and General Manager.
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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 toAssistant 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
used to 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
MAKE THE STYLE WISE PROGRAM
It is the first activity performed by the knitting department to make the
program for 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
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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 PRODUCTIONThe 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.
LINKING DEPARTMENT
After the production is send to the WIPC it received by the linking department
and 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.
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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 qualityproblems.
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
BLEACHING AND DYING
Bleaching 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
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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 DEPARTMENTThe 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 MACHINES
The 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
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.
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RETURNING OF REJECTED PRODUCTION
The socks which are rejected by the quality people are sending to WIPC
department.
SOLVE THE QUALITY PROBLEMS
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
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Bill of Lading is of different types but Kohinoor mills mainly using two types
of transportation sources i-e Sea and air cargo.
SHIPPING DOCUMENTSWhen company sends through sea then use shipping documents.
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 unconditionalorder issued by Kohinoor Mills which directs the recipient
topay 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.This content canbe found on the following page:
HTTP://WWW.INVESTORWORDS.COM/477/BILL_OF_EXCHANGE.HTML
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 SHEET
A 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)
VERTICAL ANALYSIS
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INCOME STATEMENT
2006 2007 2008
sales 100 100 100Cost of sales 87.56 85.22 86.92Gross profit 12.44 14.77 13.07Distribution cost 4.63 4.38 5.65Administrative expenses .18 1.92 3.27Other operating expenses .15 .42 1.67Other operating income .63 .61 1.27
Profit from operation 6.49 8.66 3.75
Finance cost 6.39 6.39 8.15Profit(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
AssetsNon current assetsFixed assts 52.46 47.15 44.73Long 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 17.60Trade debts 13.28 11.57 8.53Loans and advances 2.94 3.10 6.21Trade deposits .03 .08 .02Other receivable 2.47 2.78 2.12Sales tax recoverable 2.30 1.55 1.26Short terminvestment
3.37 14.14 11.95
Cash and bankbalance
2.32 1.54 .59
Equity and liability
2006 2007 2008
Share capital andreservesAuthorized sharecapital
14.06 12.88 12.11
Issued, subscribedand paid up share
capital
4.225 4.26 5061
Reserves 17.56 24.99 19.04
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Non currentliabilitiesRedeemable capital 1.53 .46 -
Long term financing 16.85 10.31 9.94Deferred tax 18.39 2.97 2.76Current liabilitiesTrade and other
payables10.54 7.20 9.66
Accrued mark up 1.34 1.27 1.25Short term borrowing 39.55 40.01 45.44Current portion oflong term liabilities
7.03 7.66 5.83
Provision for taxation 1.37 .85 .45Total equity and
liabilities
100 100 100
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HORIZONTAL ANALYSIS
INCOME STATEMENT
2006 2007 2008
Sales 100 119.09 94.99Cost of good sold 100 115.91 94.31Gross profit 100 141.43 99.80Distribution cost 100 112.57 115.79Administrativeexpenses
100 127.55 173.31
Other operatingexpenses
100 289.34 1045.57
Other operatingincome
100 116.31 192.39
Profit fromoperations
100 159.98 54.92
Finance cost 100 120.00 121.09Profit before taxation 100 2860.66 (4415.37)Provision for taxation 100 98.97 80.54Profit after taxation 100 (215.24) 592.07
Balance sheet
2006 2007 2008
AssetsFixed assets 100 98.09 98.97Long terminvestment
100 12 2070.59
Long term security 100 100.99 58.34Store, spare and tools 100 116.81 147.25Stock in trade 100 86.78 118.07Trade debts 100 95.12 74.60Loans and advances 100 114.90 245.35Trade deposits 100 264.15 95.82
Other receivables 100 122.64 99.70Sales tax recoverable 100 73.73 63.94Shore terminvestment
100 458.02 411.68
Cash and bankbalance
100 72.67 29.53
Total assets 100 109.16 116.09
Equities andliabilitiesAuthorized share
capital
100 100 100
Issued, subscribed 100 109.99 153.99
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and paid up sharecapitalReserves 100 155.32 125.88
Non currentliabilities
100
Redeemable capital 100 33.33 -Long term financing 100 66.76 68.45Trade and other
payables100 74.62 106.42
Accrued mark up 100 105.88 111.06Short term borrowing 100 110.41 133.36Current 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
MarketLIQUIDITY 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 RATIO
A 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.
QUICK (ACID TEST) RATIO
The quick ratio measures the liquidity and is calculated by dividing the firms
current assets minus inventory by its current liabilities. It is calculating as follow:
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Years 2006 2007 2008Current ratio .79 .93 .84
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Current assets Inventory
Quick ratio =
Current liabilitiesyears 2006 2007 2008Quick ratio .45 .61 .49
INTERPRETATION
As 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 orcash 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 2008Inventory turnover 4.86 5.14 3.80
INTERPRETATION
Inventory turnover is meaning full when it is compared with other firm in the
same industry.
TOTAL ASSETS TURNOVER
It indicates the efficiency with which the firm uses its assets to generate sales.
It is calculated as follows:Sales
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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
Gross profit
C.G.S =
Sales
Years 2006 2007 2008Gross 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 profit 0.09 2.27 (4.40)
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marginINTERPRETATION
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
Years 2006 2007 2008Net 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 outstanding
Years 2006 2007 2008Earning 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
on total assets the better the firm is.
Earning available for common stockholders
ROA =
Total assets
Years 2006 2007 2008
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Return on assets (1.29) 2.84 (7.30)
INTERPRETATION
Return on assets indicates that how much firm earned on each rupee of asset
investment.
RETURN ON EQUITY (ROE)
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 2008Return 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 2008Price/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
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Industrial Analysis
SWOT ANALYSIS
STRENGTHS
HAVING OWN ELECTRICITY PLANT
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
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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 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
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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
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,
you have 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.
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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
POLITICAL INSTABILITY
As we all know that the political situations of Pakistan are one of the worst
situations 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
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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
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
valuable salaries 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
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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
CHENAB TEXTILE AL-KARAM TEXTILE
GULISTAN TEXTILE FAZAL TEXTILE
LOWEST 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.
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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 oftheir employees and give them incentives to motivate them.
PROJECTS FOR THE LOCAL MARKET
KWML 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
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
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PEST ANALYSIS
POLITICAL FACTOR
Uneven political conditions, deteriorating law and order situation and
instability in gas and electricity prices are adversely affecting the textile sector, while
government has 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 sudden
increase in the production cost and has badly affected the economy of the country. On
the other hand, textile and the other exporters also facing a lot of challenges due to
increase in the production cost of the specific export goods, while such hurdles badly
affected the Pakistani exporters to meet the challenges and compete in the local and
international markets. Exporters are demanding that government should give them
facilities to cope with the existing challenges and not get involved in favoritism.
The main political factors which are attracting the industries and as well as for
the whole world are
Musharafs Seat
Arrested Judiciary
Benazir Bhutto murdered
The murder of Benazir Bhutto was infuriated matter. Number of people came out
with a great anger and numbers of textile companies were burnt by them, just like in
Karachi happened. The other issue was neat & clean elections of 2008. No doubt
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those elections were being held neat and clean but the opposition did not accept the
results and new government is still try to control the factors which are creating
disturbance. As it is mentioned above that the govt. of Pakistan increased the prices ofGasoline and petroleum, which are the basic needs for the textile industries. In July
2008, the textile companies in Faisalabad shutdown their companies against the 31%
increments in prices of Gasoline, also increased the prices petroleum by 10 rupees.
Still no satisfied procedure has not been implemented by the Govt. of Pakistan.
Tight monetary policy also creates a lot of hurdles for textile sector and
exporters, and rapidly growing interest rates of the banks is causing the shut down the
power looms, and it also crushing down the textile industry and exporters, addedsources. The industrialists rejected the imposition of 10 percent withholding tax on
electricity bills, small and medium industries, and power looms, while they demanded
withdrawals of 10 percent withholding tax immediately for the survival of the
industrial sector of Pakistan. Then again, the government is failed to decrease the
every day increasing trade deficit. Textile sector of Pakistan contributes huge amount
in the economy of the country serious measures are needed for its revival.
ECONOMICAL FACTOR
Economical factors are also disturbing the all industries of Pakistan as well as
the textile industry. From 1999 to 2008 the inflation rate has been increased by 100%.
The last and current Government has been failed to control the economy. As the
prices have been increased, the suppliers try to get and save more profit from their
investments. Thats why prices are decided and put with a high return in terms of
profit.
Before 2008, textile industry was getting number of incentives from the
government just like R&D (Research & Developments) and subsidies on the utilities.
But some companies misused these opportunities and unfortunately Govt. pulled back
these types of incentives.
The main problem with the textile industry is shortage of electricity, gasoline
and petroleum, due to which Textile industry is bearing too much cost that why they
have to increase their prices to earn profit or for break-even. There are some
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companies which have their own electricity plants but they have to spend a lot of
money to run them.
Other problems which are facing by the textile industry of Pakistan are
Not availability of skilled labors.
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