COLONY TEXTILE

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Up and above anything else, all praise to Almighty Allah alone, the Omnipresent and the most Merciful and compassionate. The words are bound, knowledge is limited and time is short to express His dignity. It is one of infinite blessings of Allah that he bestowed me with the potential and ability to contribution towards the deep oceans of knowledge already existing. I pay hum-age to greatest personality of the universe; HOLY PROPHET HAZARAT MUHAMMAD (PBUH) who is forever source and spring of guidance in every sphere of life. At the very outset, I would like to express my hearties and sincerest sense of gratitude to all my worthy teachers of CIIT Lahore for their inspiring guidance and constructive criticism. I am highly thankful for the cooperation of Mr. Bilal Niazi, Mr. Wasim Omer, Mr. Rizwan Malik, Mr. Tahir Mehmood, Mr. Nouman Chatha and Mr. Kashif Niazi of Colony Industries (Pvt.) Ltd. I might not be able to complete my internship without their cooperation and kind behavior. I am also gratified to all my sincere fellows who I had ever remembered for their continued encouragement moral support and invaluable succor as well as substantial cooperation during my critical moments.

Hassan Bakhtiar Roy

Contents
Executive Summary 5 Textile Industry in Pakistan 6 Introduction & History 8 Vision Statement 10 Mission Statement 10 Group Management Profile 10 Production Accounting & Management System 12 Inspection System 13

Organizational Structure 15 SWOT Analysis 18 Detail of SWOT Analysis 20 PEST Analysis 25 Marketing Strategy 26 Competitive Strategy 30 Purchase Accounting System 31 Process of Yarn Production 34 Work done during Internship 36 Learning as an Internee 41 Recommendations 43 Annexure 44 Glossary 50 Bibliography 52

Executive Summary

This report is based on the activities performed during the internship at COLONY Textile Mills Limited. Internship duration was 6 weeks and it provided practical knowledge of working in professional environment.

This learning experience is described in detail n the various sections of this report. In the first section, there is some detail about the company. The history and present status of the company is explained. The organization structure and the details of its management along with its location are also discussed. I have also discussed the yarn manufacturing procedure and the important departments of the company. I have discussed some business operations and some strategies as well. The second section provides information about the activities that I performed during the internship. I worked as an internee mainly in Accounts and Marketing department. However, I also spent some time in Purchase Department to gather some information about their working. The third and last section includes the recommendations.

Textile Industry in Pakistan
The subcontinent is the inheritor of one of the richest and oldest textile traditions in the world. Excavations at Mohenjo Daro and Harappa 25001500 BC revealed that the inhabitants of the Indus Valley cultivated cotton. Sir John Marshall, the archaeologist has stated that a few minute scraps of cotton were found adhering to the side of a silver vase. Clay and faience spindles whorls indicate that cotton and woolen fibers were spun. A well-equipped dyers’ workshop was excavated at Mohenjo Daro and the fragment of cloth indicates that woven cotton cloth was dyed with madder root. Independence from the British in 1947 and the division of the Indian subcontinent into Pakistan and India started a new era for textiles production. Pakistan consisted of two entities, east and West Pakistan. The West was the cotton producing area and the East was responsible for jute production. At the time of partition, Pakistan had no industrial base and inherited only one textile mill, the Lyallpur Cotton Mill in Lyallpur [now

called Faisalabad]. This mill produced yarn and gray cloth and no printed fabrics. Under the Open General Licensing [OGL] scheme, the business community imported plants and machinery with cash dollars. In 1950, Adamjee Mills was set up in Karachi, Kohinoor in Faisalabad, Colony Textile Mills in Multan, Nishat and Crescent Textile in Faisalabad. These were followed by Gul Ahmed Textile Mills, Al-Karam, Valika, Star and Rashid textile mills. Within a decade the new country of Pakistan was self-sufficient in cotton and began exporting gray cloth and later cotton yarn. Pakistan started exporting printed fabrics in the late 1970’s to Africa and by mid 80’s was sending printed material to Europe. Pakistan’s location was ideal, as it lay halfway between the western world and the Far East. Pakistan has a 28 percent share in world export of cotton yarn and a 6 percent share in world export of cotton cloth. It was in the 60s that the power loom took over and by the 70s gray cloth was being exported at throwaway prices. There are about 200,000 power looms operating in Pakistan some of which are backyard operations. Handloom, which formed the backbone of textile goods in the last century, is now almost non-existent, its sales confined to a fast diminishing rural market and a very small niche market. Although Pakistan is the world’s fourth largest cotton growing nation in the world, after the United States, China, and India, its total turnover for export is only $ 5 billion. Textile goods form 60 % of the total exports of the country. The commodities exported are yarn, cloth, tents, and canvas, bags, towels, bed linen, garments, synthetic textiles and other made ups. With a large and expanding textile industry, textile education and training became imperative. The Textile University of Pakistan was established in Karachi to train technical and management professionals. The Textile University awards degrees in Textile Sciences and Textile Management. The National College of Arts in Lahore and the Indus Valley School of Art and Architecture in Karachi are the only two institutions in Pakistan, which award a degree in the discipline of Textile Design. Designers are being absorbed into the industry, bringing about change and vibrancy, with innovations in Print design and weaving. Today there are 450 Spinning mills and 35 composite textile mills. Textile goods form 60 % of the total exports of Pakistan.

Introduction & History
Colony group has been the pioneer of textile industry by setting up Colony Textile Mills Limited (CTML) after partition of the sub continent in 1950, thus CTML became one of the first textile mills to be registered as public limited company and quoted in Karachi Stock Exchange (KSE). Foundation of the group was kept over a small flour milling operation, which rapidly grew into cotton ginning that evolved into the core business of the group, constituting 21 cotton ginners spread throughout the cotton grown belt in the province of Punjab - Pakistan. The logical vertical process-integration paved its path for the group to invest in to Textile Spinning. The ground breaking of the Spinning facility was the beginning of huge investments that followed which gave the group a leading position in the Textile Industry of the Country. Colony Textile soon became one of the largest vertically integrated textile facilities in the country. The group further diversified in to Power Generation and Distribution network, Banking, Insurance, and Cement sectors. The success of the group continued until the government regime shift brought about a shift in policy from private sector pushed industrialization to a strong wave of nationalization. The Ginning, Flour Milling, Power, Banking, Insurance and Cement along with various other sectors were completely taken over by the government. Having major assets nationalized, the Group was faced with severe financial difficulties for almost one and a half decades. Presently, the Colony Group consists of several Textile Spinning facilities with an installed capacity in excess of 220,000 spindles out of which more than 200,000 spindles are 4 years old or less. Colony group is managing the following companies: Company Name
Colony Textile Mills Limited Colony Industries (Pvt.) Limited

Line of Business
Textile (Spinning) Textile (Spinning & Weaving)

Status
Public Limited Company Private Limited Company

Colony Textile Mills Limited (CTML)

Colony Textile Mills Limited, one of the group companies of the Colony Group, is a Textile Manufacturing unit established as on 24th August, 1946 and
engaged in manufacturing of yarns of various Ne Counts. The company has authorized capital of Rs. 411,000,000 as on September 30th 2008. During year 2000 to 2001 the annual production capacity of the company was 34.813 million Kg’s converted into 20 Ne Count based on 111,136 spindles. Currently the number of spindles installed has been increased to over 175,000 spindles. A summary of the company’s production record for spinning section for the past three years is given in Annex 1.5

Year ended 30th September

2006

2007

2008

No. of spindles installed

59,200

79,864

177,448

Average no. of spindles worked

47,085

64,195

155,330

Capacity at 20 count(Kg’s.)

17,778,000

22,841,002

48,669,115

No. of shifts worked

1,092

1,040

1,095

Actual production converted at 20 count

14,652,680

18,703,378

47,394,446

Capacity Utilization

82.00%

82.00%

97.38%

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

Vision Statement
Attain

highest standards of quality in its all business activities.

Sustained

growth in real terms.

Have

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

Attain

past glorious position and be recognized locally as well as internationally as a dynamic, quality

conscious and progressive company and industry leader.

Mission Statement
To manufacture quality products for customer satisfaction through

Honoring

the commitment.

Continuous

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

Strict

adherence to quality control.

Developing

a sense of high reliability through fair dealing.

Becoming

a part of country’s development and economic prosperity.

Group Management Profile

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

MR. MUGHIS A. SHEIKH

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

MR. FAREED M. SHEIKH

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

MR. NAVEED M. SHEIKH

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

Production Accounting & Management System

CIL production accounting and management system not only ensures consistency in the operations but also helps to manage orders on a micro level. In-house developed software provides great tools to CIL production team for monitoring production processes, production planning, and conducting periodic audits to reduce possible delays and coordination snags along with achieving a greater degree of reliable inter-departmental information exchange.

Production Capacity & Capability

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

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

Inspection System

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

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

Power Generation & Heat Recovery System

Colony Weaving Mills is fully-contained and self-sufficient facility with its in-house continuous and reliable power generation facility with 100% backup power arrangement. The Power Generation department with its Heat Recover System is designed to generate enough hot water to fire the chilling system for the entire facility, along with producing more than 50% of the steam required for the sizing operation.

Memberships

Lahore

Chamber of Commerce Industries

APTMA

(All PAKISTAN TEXTILE MILLS ASSOCIATION).

Products

Yarn

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

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

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

The organizational structure should be designed to provide both vertical and horizontal information flow as necessary to accomplish the organizational overall goals. If the structure doesn’t fit the information requirements of the organization, people will have either too little information or will spent time on processing information that is not vital to their tasks, thus reducing effectiveness. Colony Group’s structure is a hybrid of divisional and functional structures; divisions are based on two products Yarn (Spinning Facility) and Grey Fabric (Weaving Facility).

Top positions are as follows:

See Annexure 1.1

Group Profile

Board of Directors

Mr. Mughis A. Sheikh (Chairman)

Mr. Fareed M. Sheikh (Chief Executive Officer)

Mr. Zarrar Ibn-e-Zahoor

Mr. M. Akram Qureshi

Mr. Najeeb Ahmed

Mr. Muhammad Shakeel

Mr. Tahir Mahmood

Registered Office

M. Ismail Aiwan-e-Science

Shahrah-i-Jalaluddin Roomi, Ferozepur Road Lahore – 54600 Phone: (042) 5758970 – 2

Fax: (042) 5763247

Colony Industries (Pvt.) Limited

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

See Annexure 1.2

Accounts Department

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

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

See Annex 1.3

SWOT Analysis

Strengths:

ISO 9001-2000:

Strong Security System

High quality product

Latest mechanized

machinery.

Weaknesses:

Tremendous market

High cost of production

positioning
Centralized decision making Highly qualified and skilled

management

Less promotional activities

Highly Motivated

Workforce

Adequate financial

resources

Competitive advantage

Own power generation plant

Opportunity:

Organization Can expand

product lines

Threats:

Organization Can capture

New Entry of competitors

new market segments around the world
Buyer needs demands

changes
Organization Can reduce the

cost by proper utilization of resources

Political instability

Change of government Organization Can hire more

policies

well-educated and experienced person
Globally Economic

instability

Detail of SWOT Analysis

Strengths:

ISO 9001-2000:

CTML is certified under ISO 9001-2000 and so it meets the requirement of international standard and has a value in the mind of concern people.

Strong Security System

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

High quality product

CTML is using advance technology like they have modern machinery by which the quality of product produced is very high.

Latest mechanized machinery.

They are using modern looms which they have purchased from Japan, Germany and France. And by using that latest machinery the productivity of the employees are very high.

Tremendous market positioning

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

Highly qualified and skilled management

The management of CTML is skilled they have hired the foreign graduate people in their management and also experienced people from all over the country.

Highly Motivated Workforce

They are providing better pay to their employees and also bonus to them which motivate the workforce and they are doing well at work setting. Apart from that they are giving their employees facilities of Convenience like personal car along with fuel provided by the company too, which is a big deal for motivating the employees.

Adequate financial resources

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

Competitive advantage

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

Own Power Generation Plant

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

Weaknesses:

High cost of production

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

Centralized decision making

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

Less promotional activities

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

Opportunity:

Organization can expand Product Lines

Currently the CTML is not dealing in knitwear they can expand their product line by producing knitwear. They have plants and the extra cost for the production will be low for CTML. They also have better market repute.

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

If the cost of different matters which are not been utilized properly, is controlled by the CTML management they can produce more at less costs. It has to develop a further systematic process for controlling and managing resources.

Organization can hire more well-educated and experienced person

They can take advantages by hiring more skilled people and they should hire young, fresh and energetic staff for their betterment. Because being human, you always have the room for betterment in any aspect.

Threats:

Buyer needs demands changes

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

Political instability

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

Changed of government policies

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

Globally Economic instability

Because of the economic instability the CTML and the “Dumping system” which is rising on daily basis in the world can create many problems for the company and any uncertainty in the world like 9/11 may also affect its overall exports.

PEST Analysis

Political Instability

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

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

Economic situation:

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

Social situation:

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

Technological factor:

Technological advancement in all the sectors of the country has changed the entire socio-economic environment. Especially in the textile sector there is a lot of technological development. CTML’s excellent computerized machines and devices have made extension in its present setup of well advanced technology imported from Japan, Germany and France.

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

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

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

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

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

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

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

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

Keeping in view demand of the World market, CTML pursued its strategy of value addition and reducing the dependency on Grey Fabrics and Grey Yarn. Having the foresight to assess that in coming year’s value addition will be the thing of the future, CTML worked towards the achievement of its goal of future increasing its capability in value addition.

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

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

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

We are also exploring business opportunities in countries like Spain and France where CTML has very little business at the moment. North America is the star market for CTML; it’s a new market for it after breaking up the exclusive arrangement with our previous sale set-up. The quota is coming down in 2005 and we have started to prepare for it internally as well as for the external environment. Bedding is the bulk of the home textile business.

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

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

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

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

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

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

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

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

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

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

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

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

Competitive Strategy

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

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

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

PURCHASE ACCOUNTING SYSTEM

For abbreviations see Glossary:

Purchase Procedure for Mill

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

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

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

Sr. # Departments Code

1) Head Office 01-00

2) Administration 02-00

3) Spinning 03-00

4) Services 04-00

5) Residential Colony 05-00

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

99-99

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

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

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

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

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

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

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

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

99-99-999

Store Section Item Number

Store Sub-Section

PROCESS OF YARN PRODUCTON
See figure in Annexure 1.3

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

BLOW ROOM

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

B/R Gutter

Dropping

CARDING

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

Card fly

COMBING

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

Short Fiber

Comber Noel

SIMPLEX

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

RING

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

Phnemaphil

AUTOCONING

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

Oily hard waste

Hard waste

PACKING

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

PURCHASE DEPARTMENT

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

WORK DONE DURING INTERNSHIP
During my internship, I worked in the following departments. Accounts Marketing

Account department

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

Preparation of vouchers

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

Now I will discuss these vouchers one by one:

Cash Payment Vouchers

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

Account code name of expense (debit) Amount

Cash account (credit) Amount

Evidence of expense is attached with the cash payment vouchers.

Cash Receipt Vouchers

These types of vouchers are prepared when the cashier on behalf of the CTML is receiving cash. However, these types of vouchers are small in quantity because majority of transactions are done by bank. On receipt of cash, cashier prepared the cash received slip. Account officer prepares voucher on the basis of cash receipt prepared by the cashier. In order to book the transaction the following entry is passed in the books.

Account code cash account (debit) Amount

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

Account code Bank A/C (debit) Amount

Cheques clearing A/C (credit) Amount

ADJUSTMENT VOUCHER OR JOURNAL VOUCHERS

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



Purchase on credit



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



Rectification of mistakes or omissions

Now I discuss them one by one

Purchase on credit

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

Account code Purchase A/C (debit) Amount

Account payable A/C (credit) Amount

Copy of the invoices is attached with vouchers;

Writing off Assets

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

To account for depreciation of fixed assets:

Account code Depreciation A/C (debit) Amount

Accumulated depreciation A/C (credit) Amount

To account for the raw material consumption:

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

Raw material store A/C (credit) amount

To account for store consumption:

Account code store concerned A/C (debit) amount

Store and spares A/C (credit) amount

To account for store consumption:

Account code store concerned A/C (debit) amount

Store and spares A/C (cedit) amount

To account for accrued expenses:

Account code expense A/C (debit) amount

Account payable A/C (credit) amount

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

Marketing department

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

Learning as an Internee

Duties

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

Accomplishments

As an Internee I have done all the works diligently which I have mentioned above. Instead I had done other works as well which a person on the job never performs, like someone asks me to take vouchers from Audit like I am his/her Assistant I had done that and never said no. As I have seen those employees which went to Audit and the other asked to bring my vouchers as well and the person says no I have my own work you should better go yourself. That is the thing which I wanted to share in this regard.

New Knowledge Acquired

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

Problems Encountered Well I don’t have to face as many problems as I will have to face when I will go on job. First few days were hard but I cannot say there was any problem. Employees there were very cooperative and they asked me to ask

as many times about a thing till you are not cleared about that. They guided me on every issue and asked me as/like a big brother to learn as much as you can. I am really thankful to all of them.

Impact of Experience on my Career

This experience definitely effects my career positively. As I would not have been come to know about the atmosphere of any organization, this experience has told me a lot about environment of organization and behavior of different type of people. All of this edge goes to my Institute’s good understanding about students future.

RECOMMENDATIONS

Colony Textile Mills Limited:

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

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

Importance should be given to employees’ turnover.

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

employees.

There is also a problem of work overload for the employees and it should be control properly so that the

employees are motivated. As I have seen employees working till 8 PM. And I have come to know that sometimes they work till 1 AM late night without any incentive.

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

Annexure

COLONY CEO’s

Figure 1.1

COLONY Division wise

Figure 1.2

CEO

(CIL)

Technical Director

(Weaving)

Chief Technical Officer

(Spinning)

Marketing Manager

Production Manager

Accounts Manager

Sales Manager

Production Manager

Accounts Manager

Finance Manager

Commercial Director

MIS Manager

Manager Personnel & Administration

Accounts Department

Figure 1.3

Procedure of Yarn manufacturing

Figure 1.4

Annex 1.5

Year ended 30th September

2006

2007

2008

No. of spindles installed

59,200

79,864

177,448

Average no. of spindles worked

47,085

64,195

155,330

Capacity at 20 count(Kg’s.)

17,778,000

22,841,002

48,669,115

No. of shifts worked

1,092

1,040

1,095

Actual production converted at 20 count

14,652,680

18,703,378

47,394,446

Capacity Utilization

82.00%

82.00%

97.38%

Glossary

COT 100% Cotton PP 100% Polyester PC Blend of Polyester & Cotton CVC Chief value cotton

PV Polyester – Viscose Mixed Different materials in Warp & Weft

Purchase Accounting System

PDN Purchase Demand Note

GRN Goods Receipt Note

SIN Store Issue Note

SRN Store Return Note

UOM Unit Of Measure

HOD Head Of Department

HOL Head Office Lahore

G/L General Ledger

Item Code Distinct Code Allocated to an Inventory Item

Departmen t Code Distinct Code Allocated to a Departmen t

Section Code Distinct Code Allocated to Section of a Department

Store Item Code List SICL

MIS Management Information Systems

Bibliography

Sources from where I have collected data:

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

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

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

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