final report fel zohaib

8/14/2019 Final Report FEL Zohaib

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Fatima EnterprisesLtd

In the name of Allah most merciful and beneficent I rise in degree of

rank whom so ever I pleased; and my every pressure of knowledge is one,

most knowing.

(Al-Quran)

I am very thankful to ALLAH Almighty who gave me the opportunity, courage

and confidence to explore more knowledge to complete this report and for His

(ALLAH) blessings that have brightened every part of my life, and my parents whose

prayers always supported me in every task of my life. While working on this report, I

was guided by my experience, knowledge and interest in this report. Beyond of all the

material available I am very thankful to my respected and honorable resource person

Mr. Azhar Farooq for giving me such knowledge about the subject that makes thisreport a very motivating. This becomes possible only due to his very unique style of

conveying the knowledge and through his motivational behavior I am able to complete

this complex task.

Besides this I would like to thank other officials who showed their kind

concern toward the completion of this report.

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S/N Description Page No.

1 Acknowledgement 012 Executive Summary 033 Introduction 044 Brief History Of The Company 05

5 Nature Of The Organization 066 Unique Feature Of The Company 077 Business Volume 088 Organizational Structure 099 Departments Student Worked More 1210 Application Of Class Room Learning 2311 Internees Learning In Organization 2412 Financial Analysis 2513 SWOT Analysis 3714 PEST Analysis 4215 Suggestion For Organization 4516 Conclusion 4617 References 47

EXECUTIVE SUMMARY

The Fatima Enterprises Ltd (FEL) is one of the largest and well reputed

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organizations in Textile industry and is working under the supervision of Mian Sheikh

Nishat Ahmad. Fatima Enterprises Ltd was incorporated in 13 Nov, 1976, as a public

limited company nationalized but with the great effort of Sheikh Fazal Rehman it was

repurchased form the Govt. Fatima Enterprises Limited has taken ISO 9001 as a first

step towards total quality management and its implementation has been executed in all

plants. Currently the spinning unit has been installed the capacity of 60,000 spindles.

Fatima Enterprises Ltd is producing three type of yarn; Cotton Yarn, PC

Yarn and Woolen Yarn.

The main departments of Fatima Enterprises Ltd are as follows.

Purchase Department Accounts Department

Finance Department

Marketing Department

Export Department

Fatima Enterprises exports its products in the following countries;

Bahrain, Dubai, Hong Kong, United States of America, Turkey, Spain, Korea,

Italy and Singapore etc. They export the Cotton Yarn, PC Yarn and Woolen Yarn to

the above mentioned countries. There future plan is to maintain a stable level of profit

by increasing value to the customers and modernizing the equipments.

INTRODUCTION

TEXTILE INDUSTRY IN PAKISTAN

Over the years, Pakistan is said to be the single crop economy i.e. cotton andtextile that claims the lions share in terms of the contribution in the national economy

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of Pakistan. Despite efforts to bring in diversification in countrys overall economic

get-up, the textile sector continues to be the most important segment of the national

economy. Its share in the economy, in term of GDP, exports, employment, foreign

exchange earnings, investment and revenue generation altogether placed the textile

industry as the single largest determinant of the economic growth of the country.

Increase in the cotton production and expansion of textile industry has been

impressive in Pakistan since 1947. Cotton bales increase from 1.1 million bales in

1947 to ten million bales by 2000. Number of mills increased from 3 to 600 and

spindles from about 177,000 to 805 million similarly looms and finishing units

increased but not in the same proportion. It employs 50% of industrial labor force and

earns 65% foreign exchange of total exports. Pakistans textile industry experts feel

that Pakistan has fairly large size textile industry and 60-70% of machines need

replacement for the economic and quality production of products for a highly

competitive market. But unfortunately it does not have any facility for manufacturing

of textile machinery of balancing modernization and replacement in the textile mills

which need to think about joint ventures for the production of complete spinning units

with china, Italy and production of shuttle less looms (Projectile) with Korea, Taiwan

and Italy.

The first textile commission, which was constituted by the first material law

government in 1960 had, inter-alia, recommended that an economic size textile unit

should preferably have 25,000 spindles and 500 looms. No new mill with only 12,500

spindles and without looms should be sanctioned. However, no need was paid to the

advice by the sanctioning authorities with the result that an excess capacity had tented

to build up in the spinning sector.

In 1992, a foreign consultant form was hired by the government to look into

the stagnating conditions in the local textile industry. One of the observations of the

foreign consultant was Pakistan has failed to make real progress in the international

market and is being over taken by many of the neighboring competitor countries. The

spinning sector, traditionally the core of the industry, is already in the crisis with many

spindles lying idle and mills being forced to close. Worse still, this sector will be hit by

the projected decline of its major markets in Japan and Hong Kong in the coming

years.

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Cotton textile industry has been premier industry in Pakistan and a major

source of export earning and employment. It also helps in value addition to the

manufacturing sector of the economy. During the six years between 1993 and 1998,

production of yarn (in quantity terms) registered a steady annual growth rate of 302%

in Bangladesh and 405% in India. On the contrary, Pakistan registered a growth rate of

101% per annum in yarn production although it ranked third after China and India in

the global yarn production during the same six years.

The rise in export of value-added products from Pakistan was another point of

encouragement for the textile sector. The export of value-added products rose to

57.4% from 53.9% last year-a clear sign that we are moving in the right direction,

said the Chairman of all Pakistan textile mills association.

Pakistans textile sector is getting rid of old impediments and gearing itself up

for the new opportunities in the new trade regime.

1. BRIEF HISTORY OF THE COMPANY


organizations in Textile industry and is working under the supervision of Mian Sheikh

Nishat Ahmad. Fatima Enterprises Ltd was nationalized in 1972 but with the great

effort of Sheikh Fazal Rehman it was repurchased form the Govt. and incorporated in

13 Nov, 1976, as a public limited company. Fatima Enterprises Ltd has taken ISO 9001

in 1998 as a first step towards total quality management and its implementation has

been executed in all plants. Currently the spinning unit has been installed the capacity

of 60,000 spindles.

At initial stage, when the company was taken over, it was very small company, having

authorized capital of 700000 shares @ Rs. 10 each in 1977 with issued capital of

50000 shares @ Rs 10 each. But now, it has gotten progress and reached at top level.

At present, Fatima Enterprises Ltd. is well known enterprise, having authorized capital

of 25000000 shares @ Rs 10 each and issued and subscribed capital of 14231052

shares @ Rs. 10 each.

Since well before the1950s, Fatima Enterprises has graduated from raw cotton

ginning to spinning and finally into weaving. They now operate 3 ginning factories, 2

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Spinning Units and 1 weaving Unit.

Fatima Enterprises has built a reputation of excellence in quality and

commitment to leadership since its establishment. In just a matter of a few years they

have established their selves as one of the leading manufacturers and exporters of

superior quality cotton yarns in Pakistan. As manufacturers of A grade

knitting/weaving cotton yarn, Fatima weather it is a dream to be the best or

commitment of company with textile sector Fatima did achieve its deserving status

where it stood up as one of the major exporter of Pakistan. It got its place-paved ways

for further developments with ever improving quality and never looked back. YES it

did it!!!!!!!

2. NATURE OF THE ORGANIZATION

There are two types of the business

Manufacturing Business

Merchandising Business

Fatima Enterprises Limited is a manufacturing concern firm which is producing

cotton yarn, woolen yarn and PC yarn which is exported to different countries. Fatima

Enterprises Limited is manufacturing products in Okara, Multan, Muzzafar Ghar and

Rahim Yar Khan. Cotton yarn is producing in Okara and Woolen and PC Yarn is

producing in Muzzafar Ghar.

3. UNIQUE FEATURES OF THE COMPANY: -

One of the leading manufacturers and exporters of superior quality cotton yarns

in Pakistan.

Fatima Enterprises has built a reputation of excellence in quality and commitment

to leadership in the year 1991.

Over the years they have built a reputation of being one of the leading

manufactures and exporters of A grade knitting/weaving cotton yarn while

maintaining USTER top 5% results from Pakistan.

Their present spinning unit, located in the industrial city of Muzaffar Garh,

comprises of 36,000 operational spindles and they hope to expand by progressing

towards spinning in the near future.

Strict Quality Management has helped them in making their final products

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superior and competitive granting them the edge needed to compete in global

markets.

Fatima Enterprises received ISO certification in 1998.

All the units ever growing enterprise are ISO certified.

They also have started workout for ISO 14000 Social Program.

They have Cotton testing equip. HVI Spectrum for fiber length, cotton fineness,

color grading, trash etc.

They have Yarn testing equip. Uster Tester 3 & 4 for checking irregularity,

imperfection & hairiness of yarn etc..

4. BUSINESS VOLUME: -

The Fatima Enterprises Ltd (FEL) is one of the largest organizations in Textile

industry

At initial stage, when the company was taken over, it was very small company. At

present, Fatima Enterprises Ltd. Is well known enterprise subscribed capital of

14231052 shares @ Rs. 10 each. Having authorized capital of 25000000 shares @ Rs

10 each and issued and subscribed capital of 14231052 shares @ Rs. 10 each.

They now operate 3 ginning factories, 2 Spinning Units and 1 weaving Unit.

1) Fatima Textile Unit #2 Okara

2) Solvent Plant Extraction Plant 487-A Vehari Road Multan

3) Fatima Textile Unit #1 MuzaffarGarh,

4) Ginning Section &oil Mill Bahawalpur Road Multan

5) Ghee Unit#1 Nasir Abad Bahawalpur Road Multan

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6) Ginning Section & oil mill Industrial Area Raheem Yar Khan

7) Ginning Section &oil Mill Dera Budoo Bwp road Multan

8) FatimaSugar Mill Muzafar Garh

At present they are one of the leading manufacturers and exporters of superior

quality cotton yarns in Pakistan. Fatima Enterprises exports its products in Bahrain,

Dubai, Hong Kong, United States of America, Turkey, Spain, Korea, Italy, and

Singapore etc. They export the Cotton Yarn, PC Yarn and Woolen Yarn to the above

mentioned countries. There future plan is to maintain a stable level of profit by

increasing value to the customers and modernizing the equipments.

5. ORGANIZATIONAL CHART

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Chairman


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ORGANIZATION UNITS

Directors

Chief Executive

Import/ExportManager

ManagerFinance

SalesManager

PurchaseManager

9

CompanySecretary

FATIMA ENTERPRISES LIMITED

Fatima Textile Unit #2Okara

Solvent Plant Extraction Plant487-A Vehari Road Multan

Fatima Textile Unit #1Muzaffar Garh

Ginning Section &oil MillBWP Road Multan

Ghee Unit#1

Nasir Abad BWP Road Multan

Ginning Section & oil millIndustrial Area Raheem Yar Khan

Ginning Section &oil MillDera Budoo Bwp road Multan

Fatima Sugar MillMuzafar Garh


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DEPARTMENTAL STRUCTURE

INTRODUCTION OF THE DEPARTMENT

Directors

Chief Executive

Finance Dept.Marketing

Dept. Purchase Dept. IT Dept.Accounts

Dept.

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Chairman

Import/ExportDept.


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During my internship mostly I have worked in Finance Department because of my

specialization in finance.

1. Finance Department

This is the major department of the company. This is located in Fatima

Enterprises Ltd head office Multan. It prepares different kinds of financial reports and

gives information to management for decision making purpose.

Finance department prepares the Income Statement, Balance Sheet, Trial

Balance, Cash Flow, Production report for the whole month, stock taking report, yield

comparison report etc. these all reports are useful for the management to make

production plan, financing decision and other important matters. The head of this

department is Finance Manager.

Objectives: -

Following are the main objective of finance department:

To prepare monthly and half yearly reports

To keep the record of inventory and stock

To maintain a liquid position

To maintain adequate cash to run the operations of business

To reconcile the bank statements

To make payments to the suppliers

To deal with sale tax and income tax departments

Preparation of bank payment and bank receipt vouchers

Prepare profit and loss accounts and Balance sheet

Keep record for the payments of salaries

COMPONENTS OF FINANCE DEPARTMENT: -

Finance department are consists on the following sections: Payable, Contraction

Bank negotiation and reconciliation

Store costing

Excise

PAYABLE, CONTRACTION: -

In this section usually payable is paid to the supplier of all goods including

stationary, maintenance goods, cement etc. Payable is made according to the contract

and instruction of the CFO.

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BANK NEGOTIATION AND RECONCILIATION: -

This section starts working when documents reach from bank to head office.

Documents are recorded in documents receipt register and in bank register. A report is

given to the CFO on daily basis about the customer and payment date. He makes

decision either to grant discount to him or not.

STORE COSTING: -

Goods receipt note, the store costing section receives the related bills. They are

checked against purchase order and Performa invoice in terms of quantity,

specification, price etc. After this, a bank payment voucher is prepared and sent to this

section, which issue the checks to the related parties and posts in the ledger.

EXCISE: -

Excise section deals with the outgoing products for issuance of Gate pass. This

working of excise section starts after sale, when loading program is received from

export sale and local sale processing. According to this program Gate pass is prepared

and issued to the go-down keeper. After issuing a Gate pass, its details are recorded in

the register and then sale invoice is prepared in which actual value and sale tax value is

mentioned.

1. Export Department

Export means the exchange of goods or products from inside country to any

foreign country with any currency equal to the value of product or goods. There is the

demand of Fatima Enterprises finished products all over the world. They try to meet

the demands of the world. They also try to compete with Quality and on time delivery

in any environment according to its respondents.

Fatima Enterprises exports its products in the following countries;

Bahrain, Dubai, Hong Kong, United States of America, Turkey, Spain,

Korea, Italy and Singapore etc.

They export the Cotton Yarn, PC Yarn and Woolen Yarn to the above mentioned

countries.

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INTRODUCTION: -

Export section has an important value for any type of business. This section

helps to earn maximum for its owner. The company has the manager of export and

import. The Import/export manager Dr. Nafees Iqbal is an asset of Fatima enterprises

limited. He performs his duty in different manners than others. There is a one assistant

working under the import/export manager. They perform all the activities of import

and export with the help of top management.

Export Functions: -

The following are the main functions, which an export department performs:

To build good relationship with the buyers.

Co-ordination with the buyers and the production department.

Getting orders from the buyers and try to fulfill them in time.

Improve the quality of the product with the interaction of buyer and theproduction department. Prepare and arrange the documents of export.

Prepare the documents for the taxation and excise purpose.

Objectives: -

Following are the objectives of export section:

To survive in the world market.

To earn foreign exchange for the development of the country.

Increase the export to obtaining the optimum profit.

Export for the growth of the company as well as the country.

To avail the opportunities the foreign market.

Export documents contain the following things: -

Exporting of any commodity in the foreign market was very complex and risky

in the past. But now the export documentation provides the security from different

risks. When the goods are exported, a number of documents are to be prepared.

Contract

Bill of Exchange

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Invoice

Packing list

Bill of lading

Copy of Letter of Credit

Transportation documents

Bill of Lading: -

Bill of Lading is also the important document in export. Fatima Enterprises

loads the products from Port of Karachi. This document also includes the

shipper/exporter address, Consignee (to the order of bank), port of loading, also port

of discharge or place of delivery, container #, detail of product, origin of country ,

purpose of export and gross weight etc.

Copy of Letter of Credit: -

Letter of Credit defined as in simple words

THE TRUST OF PERSON ON OTHER

PERSON

The copy of Later of Credit is the most important in the document of Export.

Letter of Credit is the guarantee for Exporter from Importer through bank. Importer

opens the Letter of Credit in the bank and pays negotiable amount for this service

provided by the bank. The Importer pays the negotiable amount to bank between 2%

to 4%. He also gives the sum of money to Broker which is also negotiable. They deal

with any party through band to bank.

The importer opens the L/C by giving the terms and conditions which are

suitable for him/her. Now the Exporter sends some amendments to Importer through

bank. Amendment is the change from Exporter in the terms and conditions showed by

the Importer. Some time the Importer accepts the terms and conditions according to

the Exporter.

In Fatima Enterprises all the work of Import and Export is properly done. They

have well established department separate from other sections.

Types of letter of credit: -

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Confirmed or unconfirmed

Fixed or Unfixed or Revolving

Clean or Documentary

Revocable or Irrevocable

Transportation Documents: -

International trade involves the movement of goods from the warehouse of the

exporter to the warehouse of the importer. There are several modes of transporting

goods and the several types of documentation involved in the transportation process.

These are as follows:

Mode Carrier Transport document

By sea Shipping Co. Bill of lading

by road trucking Co. Road way bill

by rail Railway service Railway receipt/consignment

by air Airline Co. Air way bill

2. PURCHASE DEPARTMENT

When any demand is raised at the mills, it is signed by the purchase committee.

Similarly head office demand is signed by the head of the department and these are sent

to the purchase committee for approval. After approval, these are sent to the purchase

office where these demands are classified in to local and out station demands.

The outstations demands include out of Multan or out of Pakistan. The demands out of

Pakistan are sent to the head office. Big items such as tin plates, chemicals are

purchased by calling tenders and the lower tender is accepted.

Other purchases like oil, cotton seeds and chemicals are purchased by collecting the

rates from different brokers and other related agencies and then concerned item is

purchased.

When selling party is approved purchase order is sent to that party. When

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goods are received at factory, delivery challan book entry is made. Two copies are sent

to the store in charge at mills.

Most of the goods from local markets and out station are purchased on credit basis.

REJECTION OF PURCHASES: -

All the items purchased are sent to the perspective departments and are checked by the

head of the departments e.g. chemicals, Oils being demanded by the production

department. Then chief chemist checks those chemicals.

If the item is up to standard then it is accepted by preparing the quality report and sent

to the commercial department. Similarly all the cash purchases are subject to the

approval of quality.

If goods like chemicals are out of standard then rejection report is made by the

checking department and sent to the purchase department.

Purchase Procedure

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CASH PURCHASES: -

Some goods are purchased on cash basis for the mill needed. In this case bill is

Demand

Quotations &Negotiation

Comparison & Finalization Advance payment

Delivery of Goods

MillBills

Credit

Cash

Negotiation

A/C Section

Cheque Dispatched

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received after making the cash payments and bill is stamped as "CASH PAID".

These purchases include office stationary equipments, and some time repairing items.

BOOKS & REGISTERS WORKING: -

Separate ledgers are maintained for recording all sales and purchases items.

Store spare parts.

Electric goods.

General goods.

Packing materials.

Individual party ledger.

The following information is recorded in above registers:-

The date, name of items and department.

Demand number.

Date of purchase.

Name of party.

Quantity of items.

Rates of purchase items.

3. ACCOUNT DEPARTMENT

Fatima enterprises has separate account department under the control of chief

Accountant who is responsible for the financial affairs of the organization and to keep

control on all inflows and outflows of cash and funds. Similarly he is responsible for

tax affairs of the corporate affairs which are handed by the secretary of the company,

Mr.Iqbal. His main assignment is to handle the shareholder and the Board of Director's

meetings. He also prepares the Agenda and papers of the meeting after this he prepares

the minutes of the meetings of the Board of Directors.

Accounts Department: -

Chief Accountant.

Accountant.

Assistant Accountant. Computer Operator.

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The major vouchers which are prepared in the Fatima Enterprises:-

Adjusted Journal Voucher.

Cash Payment Voucher.

Cash Receipt Voucher.

Bank Payment Voucher.

BOOKS: -

The following are the Books, which are maintained by the Enterprise:

Cash Book.

General Ledger.

General Journal.

Local Customer Ledger.

Bank Book.

CASH BOOK: -

In Cash Book all cash transaction are entered. This book has two sides:-

Payment Side.

Receipt Side.

BANK BOOK: -

Most of the business is carried out through banks. So this book is maintained

to record all the transaction occurred in the bank against the mill. It shows the inflows

and outflows of the cash at the bank, in sub ledgers the posting is made daily. I can see

the bank balance of any bank with which I have an account from the bank book at any

time because separate sheets have been allocated for separate banks.

GENERAL JOURNAL: -

All kind of daily transactions occurred at the mill are recorded in this book and

then transactions are transferred to their concerning ledgers against concerning

accounts.

GENERAL LEDGER: -

Following are to be maintained in the general ledger:-

Allied Bank limited Hussain Agahi.

Muslim Commercial Bank Hussain Agahi.

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National Bank of Pakistan Mumtazabad.

Cash Receipt.

Sonahri Bank Ltd.

Predential Commercial Bank Ltd.

Askari Commercial Bank Ltd.

Platinum Bank Ltd.

Yarn sale

Waste sale

Local sale parties

Sales tax

Export sale

Yarn stock

Cash payments

Profit & Loss Account. From disposal of assets.

Profit & Loss Account. From disposal of stores.

Financial Charges.

APPLICATION OF CLASS ROOM LEARNING: -

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During my 8 weeks internship in Fatima Enterprises Limited I have seen the

application of class room learning in the organization. I have discussed four

management functions Planning, Organizing, Leading and controlling in the class

room. In Fatima Enterprises Limited I have seen how management practically do these

functions in the organization how they plan their activities, established strategies to

achieve those goals how tasks are grouped how they motivate peoples to communicate

them to achieve their goals. How they evaluate the preference of the employees in the

organization. I have discussed First Line Manager, Middle Manager and Top Manager

in the class room. I have seen them in Fatima Enterprises Limited how they work in

the organization.

Organization culture always affect people working in the organization I havepractically how the culture of the organization affect people in the organization.

Environment always affects the performance of the organization I have seen how the

external and internal environment of the organization affect on its performance. It is

always difficult to take decision in uncertain and complex environment. Currently due

to the uncertain environment of the Pakistan Top of Fatima Enterprises Limited are

facing difficulties to take the right decision. I have discusses in the class room how

organization go global and I have seen it in Fatima Enterprises Limited because I have

worked in import and Export Department of Fatima Enterprises Limited. I have

discussed Management by Objectives in Fatima Enterprises Limited decision are made

at Top level. First line Manager, Middle Manager and employees are not invited to

participate in making plans to achieve the goals.

In international Finance I have discusses how trading is done between the

parties at international level and which certain documents are required to do these

trading safely means to hedge the different types of risks which types of contracts and

documents are used. Fatima Enterprises Limited is doing the import and export in

textile sector so I have practically seen how they use certain document like Letter of

Credit, Bill of lading, payment Draft, Acceptance Draft, Bill of Exchange, Air way Bill

etc. in their business to hedge the risk how the organization used open account in

international trading how government institute are providing help to different

organization to increase the export of the country.

In the accounts department I have seen how different types of vouchers,

Ledger, Trail Balance, Income Statement, and Balance Sheets are prepared which Ihave studied in the Financial Accounting. How the calculation of markup on Bank

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loan is done and how the bank reconciliation is prepared in the organization I have

seen all these in Fatima Enterprises Limited during my internship.

INTERNEE LEARNT IN THE ORGANIZATION

During my 8 weeks internship I have worked in different departments of Fatima

Enterprises Limited there I learnt how to work in a team to achieve the goal of the

organization how to behave in different situation how to follow the culture of the

organization. In the Accounts department I have learnt how to prepare Purchase

Vouchers, Sales Vouchers, Journal Vouchers, Bank payment Vouchers, Bank Receipt

Vouchers, Ledgers and Trail Balance in Visual Basic software.

In the Finance Department I have learnt how to prepare Bank Reconciliation of

an organization and calculation of markup on Bank Loan. In the Sales Tax

Department I have learnt how to calculate and claim the refund on the Sales Tax

through the software ofRefund Claim Preparation System on Invoices and how to

submit tax through online by using the web site ofwww.fbr.gov.

In the Export Department I have learnt how to use different types of

documents to hedge the risk in international trading, how to open Letter of Credit,

Open Account to do the trading at international level and how to deal with the

Brokers, Carriers, Middle man and Different parties at international level to do the

trading.

In the Purchase Department I have learnt how to deal with the different types

of sellers to purchase the Raw Material for the production of the product and how to

set the payment conditions to the creditors and how to make the payments available at

time.

FINANCIAL ANALYSIS

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The figures in financial statements, do not tell the whole truth. To obtainmeaningful information relationship between relevant figures must be examined. Forinstance:

Relationships which help to find the liquidity of the business.

Relationship which reflect the effectiveness of the financial policies adopted and

the potential fund raising ability.

Relationships which help to evaluate the effectiveness of operational policies.

To achieve the aim, I undertake Ratio Analysis. Ratios provide the means of

showing the relationship which exists between figures on the Balance Sheets and

Income Statements. The analysis is undertaken to assess important characteristics ofbusiness like liquidity, solvency and profitability. A study on these aspects enables

drawing conclusions as to financial requirements and capabilities of business units.

Ratios may be classified in a number of ways to suit any particular purpose.

Different kinds of ratios are selected for different types of situations.

Liquidity Ratio

Activity Ratio

Solvency Ratio

Profitability Ratio

Liquidity Ratio

Liquidity ratios are used to measure a firms ability & solvency of the firm to

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meet short-term obligations. They compare short-term obligations to short-term

resources available to meet these obligations. It consists of two ratios Current & Quick

ratio.

Years 2004 2005 2006 2007 2008

CR 0.99 0.96 1 0.9 0.89

QR 0.47 0.34 0.54 0.36 0.27

Liqudity Ratio

0

0.2

0.4

0.6

0.8

1

1.2

2004 2005 2006 2007 2008Years

C.R&Q.R

CR

QR

Current ratio signifies the ability of a firm to cover its current liabilities with its

current assets. Only in 2006 current ratio of the firm was 1 otherwise it is less than 1

which shows that Fatima Enterprises Limited does not has sufficient cash to pay its

short term obligations. The Quick ratio signifies the ability of a company to meet its

current liabilities out of its current assets. The quick assets figure includes all currentassets except inventories and prepayments. The purpose of excluding the inventories is

to visualize whether the company is capable of meeting its liabilities quickly because

the inventories take much time to be converted into cash. The quick ratio of Fatima

Enterprises Limited also showing that firm is not able to pay its short term obligations

quickly because only in 2006 it was 0.54otherwiseit is less than 0.54 which shows

Fatima Enterprises Limited un ability pay its short term debts.

Net Working Capital Ratio

Net working Capital measures the financial position of the firm, weather it is

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able to pay back other expenses after paying back its current liabilities. It is measured

as current assets - current liabilities.

Years 2004 2005 2006 2007 2008

NWC -2216 -87987 24482 -382935 -625555

Net Working Capital Ratio

-700000

-600000

-500000

-400000

-300000

-200000

-100000

0100000

2004 2005 2006 2007 2008

years

N.W.C.R

Net Working Capital

It is clear from the table and graph of the net working capital that only in year 2006 the

firm has positive net working capital. In year 2006 the firm paid huge amount of

interest expenses due to which it suffered from loss but its net working capital in year

2006 was positive. In year 2008 Fatima Enterprises Limited has deficit of more than

600000 from net working capital. From net working capital I can conclude that Fatima

Enterprises Limited is not performing well from last five years because although in

year 2006 Fatima Enterprises Limited had positive net working capital but it was not

enough to pay its other expenses as well as long term obligations.

Activity Ratio

Activity ratios are also known as Efficiency Ratios or Turnover Ratios or AssetManagement Ratios. They relate basically to how efficiently a firm is using its assets.

Years 2004 2005 2006 2007 2008

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FAT 4.48 2.18 1.9 2.02 2.27

TAT 1.87 0.96 0.77 0.92 0.9

IT 5.65 2.44 2.6 2.61 1.94

Activity Ratio

0

1

2

3

4

5

6

2004 2005 2006 2007 2008

years

Values

FAT

TAT

IT

The fixed assets turnover ratio measures the efficiency of long term investment.

It is also known as long term (investment) activity ratio. It reflects the level of the

sales generated by investment in productive capacity. The level and trend of this ratio

are affected by characteristics of its components.

From my analysis I have concluded that fixed assets turnover of Fatima

Enterprises Limited is decreasing continuously it means the firm is not using its fixed

assets efficiently to generate profit and unable to pay back its long term obligation at

time. Total assets turnover is used to find the relation ship of net sales to total assets it

is also known as capital turnover ratio. Total assets turnover of Fatima Enterprises

Limited is also decreasing and inventory turnover has decreased from 5.65 to 1.94

which shows the performance of Fatima Enterprises Limited is decreasing from

previous five years.

Solvency Analysis

Leverage ratio signifies how much debt a company has created against its

equity.

In fact the creditors and the lenders are very much concerned about this. Debt ratio is

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very much important for the creditors point of view. Total debt includes both current

liabilities and long term debt.

Years 2004 2005 2006 2007 2008D.R 85 77 85 88 88

D/E 57 63.3 117.2 149.3 170.5

Solvency Analysis

0

20

40

60

80

100

120

140

160

180

2004 2005 2006 2007 2008

years

Values D.R

D/E

Debt ratio measures the percentage of funds provided by the creditors.

Creditors prefer low debt ratios because lower the ratio the greater the chances that

the creditors will not bear the losses in the event of liquidation. Stock holders on the

other hand may want more leverage because it magnifies expected earnings.

Debt ratio of Fatima Enterprises Limited is very high which is not a good sign

for the company because debts ratio is showing that firm is depending upon the debts.

Long term debt paying ability of the company basically gives the indication

that the company in the long run will be able to fulfill the financial as well as other

obligations that are accrued on that. It usually shows the trend and direction of

operations that the companys management is responsible for. Also tells about the

capital structure of the organization. Debt ratio and debts to equity ratio of Fatima

Enterprises Limited is showing that firm is unable to use optimal capital structure

because debt ratio of Fatima Enterprises Limited are very high and also debt to equity

ratio of Fatima Enterprises Limited is increasing continuously which shows that firm is

depending upon debts and also not using these debts efficiently which is increasing the

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burden of Fatima Enterprises Limited.

Interest Coverage Ratio

Interest Coverage Ratio measure the protection available to creditors as theexpend to which earning available for interest cover interest expenses.

Years 2004 2005 2006 2007 2008

TIER 233 183 75 106 109

0

50

100

150

200

250

Days

2004 2005 2006 2007 2008

Years

Interest Coverage Ratio

TIER

Time interest earning ratio of Fatima Enterprises Limited shows that in 2006 itwas able to pay its interest expenses to its creditors on time because its liquidity

position was good to pay its short term obligations but in 2007,2008 the efficiency ofthe firm to pay its interest expenses on its loan to its creditors has decreased again.

Only in year2006 the firm paid its interest expenses in 75 days although theliquidity position of Fatima Enterprises Limited in previous two years was not allowingthe Fatima Enterprises Limited to pay interest expenses in that year but Fatima

Enterprises Limited paid its interest expenses in 2006 on time due to that the firmsuffered from loss in 2006.

From previous two years the performance of the firm was not good due to thatthe firm was not paying its interest expenses to its creditors on time which wasincreasing pressure from the creditors on the firm and the good will of the firm wasalso affected by non payment of interest expenses so Fatima Enterprises Limited wascompelled to pay its interest expenses to the creditors in year 2006 in a difficult period.Due to that Fatima Enterprises Limited suffered from loss in that year.

Profitability Ratio

Profitability ratios show the combined effect of liquidity, asset management &debt on operating results

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Profitability Ratios are used to check the firms efficiency in generating profits.These ratios analyze the profitability from different dimensions and tell that whetherthe firm is meeting its expenses such as interest and other costs and moreover its

generating some profit out of it. How effectively, the firm is utilizing its assets.

Years 2004 2005 2006 2007 2008

GP 6.68 7.54 6.47 7.98 9.65

OP 4.72 6.17 4.81 6.68 8.32

NP 2.82 2.68 -0.89 0.45 1.52

Profitability Ratio

-20

2

4

6

8

10

12

2004 2005 2006 2007 2008

Years

P.R

GP

OP

NP

A companys net profit must be sufficient enough to meet the requirements ofappropriations and the disbursement of a handsome amount as dividend. Net profit ofFatima Enterprises Limited is decreasing continuously in 2006 Fatima EnterprisesLimited has suffered from net loss but in 2008 it has improved its performance.

Operating profit of Fatima Enterprises Limited is fluctuating frequently in

previous five years because in 2006 the firms operating profit was at the lowest levelso the firm suffered from loss in 2006 but it has improve a lot in next two years.

Gross profit of Fatima Enterprises Limited decreased only in year 2006 becausethe over all position of the firm was not good in that year but in later year it hasimprove its performance and growth of the firm.

Return on Assets & Return on Equity Ratio

The return on assets compares income with total assets.

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Years 2004 2005 2006 2007 2008

ROE 23.5 9.8 -19 1.84 14.6

ROA 3.5 1.2 -1.39 0.001 0.008

Profitability Ratio

-30

-20

-10

0

10

20

30

2004 2005 2006 2007 2008

Years

Values

ROE

ROA

Return on assets can be interpreted in two ways. First it measures management

ability and efficiency in using the firm assets to generate profit. Second it reports thetotal return accruing to all providers of capital independent of the source of capital.

Return on equity compares net profit after taxes to the equity that share holders

have invested in the firm. This ratio tells us the earning power on the shareholders

book value investment and it frequently used in comparing two or more firms in the

industry a high return on equity reflects the firm acceptance of strong investment and

effective expenses management. If the firm has chosen to employees a level of debts

that is high by industry standards a high ROE might simply be the result of assuming

excessive financial risk.

Earning Per Share

Earning per Share means how much a firm is earning against each share whichis invested by the shareholders in the firm. Common shareholders are directly consultwith the earning per share of the firm.

Years 2004 2005 2006 2007 2008

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on time. It means its average collection period as well as the average payment period

of the firm are not good. On the basis of my conclusion I can say that the overall

performance of Fatima Enterprises Limited is not good from previous five years.

Conclusion: -

From Ratio Analysis, Horizontal and Vertical Analysis I have concluded that the

overall performance of Fatima Enterprises Limited is not good. Although Fatima

Enterprises Limited after suffering from loss in year 2006 has improved its

performance but it will take time to get back its growth on track.

Cost of sale of a company has increased which has reduced the gross profit of

the firm. Fatima Enterprises Limited is unable to use its fixed assets efficiently due to

that it is unable to generate enough profit from its fixed assets to pay back its long

term liability. Fatima Enterprises Limited is mostly depending upon high debts which

is not a good sign because it has to pay high amount of interest to the creditors on its

loan.

Liquidity and profitability analysis shows that firm is unable to pay back its

current liability from pervious five years. Dividend paid by the firm to its shareholders

is not so much attractive to attract the new investors. In year 2006 the shareholders

have to bear net loss of the firm. Although the firm is improving its performance but it

will take time to get back its lost image.

Recommendations:

Liquidity of the firm is weak due to the availability of cash to the firm to pay

back its short term obligation which should be improved.

Account Receivable are not received on time which mean average collection

period should be improved.

Fatima Enterprises Limited is unable to generate enough profit from its fixed

assets which means either the fixed assets are out dated or the workers are not

skilled to use these assets.

Inventory turnover of the firm is very low which shows its sales is not good

which should be improved

Fatima Enterprises Limited is using high debts on which it has to pay high

amount of interest and it is also discouraging for the new investors.

Fatima Enterprises Limited should use optimal capital structure it means they

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should be balance between debts and equity finances

Gross profit of the firm can be improved by reducing the cost of goods sold

Fatima Enterprises Limited should do its operation efficiently to increase its

operating profit

Net profit of the firm can be increasing by reducing the interest expenses, Cost

of goods sold and Tax

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STRENGTHS

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There are following strengths of Fatima Enterprises

Fatima enterprises limited is the old company and has goodwill in the market.

The installed capacity of the textile units is enough and they also extending its

capacity by installing 40,000 spindles in the Textile Unit II in Okara District.

Approximately all the oil of Fatima Enterprises is sold to army of Pakistan. Due

to one customer they save a lot of expenses in respect of Marketing and

Promotion.

There is qualified and professional staff in all the departments.

Environment is very friendly in the Fatima Enterprises, which creates the sense

of responsibility among the employees.

Employees have the easy access to the Chief Executive in case of any problem.

The weaving unit of the company started its production at the end of August.

FEL has modem machinery to check the quality of yarn.

WEAKNESSES

Machinery is very old in textile as well as in the ghee units. Due to this reason

the efficiency of Fatima Enterprises in the production department is very poor.

Employees of Fatima enterprises limited are not satisfied to their salaries. The

salary package is not competent so, the employees seek towards the good offer

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Raw material is easily available in home country due to the export restrictions

of government and due to good crop of cotton.

They are financially sound companies in Pakistan, So, they can get the differentadvantages from the trust of banks in the matter of Import of the oil, tallow and

chemicals etc.

Due to the trust of banks on the Fatima group they can install the new units

with the help of banks.

The markup on loans of banks is very low, so they can avail this opportunities.

Fatima Enterprises Ltd. is ISO-9001& 9002 certified company so it has a

chance to increase its exports all over the world.

There will be an increase in its market in year 2005 after launch of free trade by

WTO.

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THREATS

High cost of production is also the threat of Fatima enterprises limited.

Foreign investment in textile sector in Sri Lanka, Bangladesh and India is a

danger in future for FEL.

An increase in the Chinas textile products is a danger for FEL.

Trading of quota as a commodity has been a great hurdle for exports.

Due to shut down of electricity the production of Fatima enterprises limited is

much disturbed.

High competition in the international markets is also the threat for the Fatima

enterprises.

PEST ANALYSIS

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2. The micro-environment e.g. my external customers, agents and distributors,

suppliers, my competitors, etc.

3. The macro-environment e.g. Political (and legal) forces, Economic forces,

Sociocultural forces, and Technological forces. These are known as PEST

factors.

Political Factors: -

The political factor has a huge influence upon the regulation of businesses,

and the spending poIr of consumers and other businesses. I must consider issues

such a

1. How stable is the political environment?

2. Will government policy influence laws that regulate or tax ymy business?

3. What is the government's position on marketing ethics?

4. What is the government's policy on the economy?

5. Does the government have a view on culture and religion?

6. Is the government involved in trading agreements such as EU, NAFTA,

ASEAN, or others?

Economic Factors: -

1. Marketers need to consider the state of a trading economy in the short and

long-terms.

2. This is especially true when planning for international marketing. You need

to look at:

3. Interest rates.

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4. The level of inflation Employment level per capita.

5. Long-term prospects for the economy Gross Domestic Product (GDP) per

capita, and so on.

Socio cultural Factors: -

The social and cultural influences on business vary from country to country.

It is very important that such factors are considered. Factors include:

1. What is the dominant religion?

2. What are attitudes to foreign products and services?

3. Does language impact upon the diffusion of products onto markets?

4. How much time do consumers have for leisure?

5. What are the roles of men and women within society?

6. How long are the population living? Are the older generations Ialthy?

7. Do the population have a strong/Iak opinion on green issues?

Technological Factors: -

Technology is vital for competitive advantage, and is a major driver of

globalization. Consider the following points:

1. Does technology allow for products and services to be made more cheaply

and to a better standard of quality?

2. Do the technologies offer consumers and businesses more innovative

products and services such as Internet banking, new generation mobile

telephones, etc?

3. How is distribution changed by new technologies e.g. books via the

Internet, flight tickets, auctions, etc?

4. Does technology offer companies a new way to communicate with

consumers e.g. banners, Customer Relationship Management (CRM), etc?

SUGGESTION FOR THE ORGANIZATION: -

After doing internship in Fatima Enterprises Limited as a manager I will suggest

Decision should not be centralized, to achieve the goals and plans

management should be involved in decision making

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Ditterent types of incentive should be given to the employees to make them

efficient

Promotion of the product should be done at local as well as international

level

Team work should be encmyaged

A proper training programe should be introduced to make the employees

skilled according to the needs

Cost of sale should be reduced to increase the profit

Fatima Enterprises Limited using high amount of debts which should be

reduced to reduce the interest expenses

Fatima Enterprises Limited is using out dated machineries which are notefficient in the production of the product

New technology should be introduced

Due to the current poIr crises Fatima Enterprises Limited is unable to fulfill

the orders of the customers, so it need its own poIr plant

Government has restricted the export of the textile products due to that

Fatima Enterprises Limited is facing problems to maintain its growth at

international level so it should be discussed with the Government

Fatima Enterprises Limited is not focusing at local level, it can generate profit

from local market by promoting their products at local level

Fatima Enterprises Limited mostly do the transcation on credit sale and

unable to collect receivable at time which the cause of shortage of cash. So

the cash transcation should be done

Average collection period should be reduced because Account Receivable are

not collected in time

Dividend should be given in time to attract the new shareholders

CONCLUSION: -


organizations in Textile industry. Fatima Enterprises exports its products in the

following countries; Bahrain, Dubai, Hong Kong, United States of America,

Turkey, Spain, Korea, Italy and Singapore etc. They export the Cotton Yarn, PC

Yarn and Woolen Yarn to the above mentioned countries. One of the leading

manufacturers and exporters of superior quality cotton yarns in Pakistan. Strict Quality

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Management has helped them in making their final products superior and competitive

granting them the edge needed to compete in global markets over the years they have

built a reputation of being one of the leading manufactures and exporters of A grade

knitting/weaving cotton yarn.

The overall performance of Fatima Enterprises Limited is not good from

previous five years.