Internship Report

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Internship Report On Kohinoor Weaving Mills Limited Marketing Division Submitted to: Mr. Sohail Chaudary (Deputy Marketing Manager of KWML Weaving Division)

Submitted by: Shahzad Mukhtar Date: 12-08-08

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List of Contents No.

Contents

Page No

1

Acknowledgment

3

2

Preface

4

3

Textile Industry History

5

4

Textile Value Chain

9

4

KWML

11

5

Mission Statement

12

6

Kohinoor Weaving Mills Divisions

13

7

Kohinoor Weaving Division

15

8

Kohinoor Waving Marketing Dept:

15

9

Industrial Analysis

21

10

Company Analysis

29

11

Major Threats for the Textile Industry

38

12

A Snapshot of Textile Industry

41

13

Recommendations

44

14

Conclusion

45

15

References

47

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Acknowledgement I bow my head before almighty Allah with gratatitude. My indebt ness and salute to many individuals who have helped shape this report cannot adequately be conveyed in a few sentences. However, I must once again recall my indebt ness to lot of former fellows and contemporary colleagues who took the time and trouble during the last few days to speak to me about the ways this text could be further improved. It is most appropriate to mention the ingenuity of respected teacher Sir, who provide me an opportunity to enhance the management skills from a well established organization It is my privilege and honors to my express my deep gratitude and in calculating thanks to the DGM of Kohinoor Weaving Mills Limited Raiwind especially to Muhammad Abdul Ghafoor and Atif Saga who provided me an opportunity to work in the environment where quality is every thing. I bow my special thanks t o Mr. Sohail Chaudary (Deputy Marketing Manager of KWML Weaving Division) who was very kind to me during my internship period.

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Preface: Bachelor degree is more practical one compared to other Bachelor degree. Majority of the studies includes practical work and experience to give students a closer look of the business work and its requirements. That is the degree holder can adjust themselves easily in al kinds of businesses and industrial environments. Final project of planning is a part of that series. It is an integral part of degree at UMT (UNIVERSITY of MANAGEMENT & TECHNOLGOY). It helps students to understand the practical work and know about working of an organization. To meet this purpose, I was assigned the below project at Kohinoor Weaving Mills Limited Raiwind. In this short period I have learned a lot about an organization. The first part is the introduction of the Textile Industry. The second part is the Organization’s view. The third is the Analysis of Industry and the company while the forth is about Recommendations and conclusion. I hope this report will provide a clear inside picture of Kohinoor Weaving Mills Limited to its readers and they will know much more the planning.

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History of Pakistan Textile Industry: 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 labour force and earns 65% foreign exchange of total exports. Pakistan’s 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 (BMR) 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. 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. In exports, while Taiwan, India and the republic of Korea registered an annual increase of 18.1%, 27.7% and 5.4% respectively during 19931998, Pakistan registered a negative growth of 4.8% one important development was that till 1997, Pakistan was the world’s largest exporter yarn followed by India. However, in 1998, India gained the NO 1 position, leaving Pakistan at NO 2 In the case of cotton cloth production, a number of Asian countries have been emerging in the international market to compete with Pakistan. These countries are Bangladesh, India, Taiwan, Indonesia, Thailand, Turkey, Sri Lanka and Iran. The latest available date on overall export performance of Pakistan comported with some regional countries is given in table 1: The above-mentioned presentation in the context of international scenario highlights the adverse position of Pakistan’s textile industry when is likely to continue further following the full implementation of WTO agreement from 2005 onwards when an era of free trade will start globally. Notwithstanding the above fact, current stagnation in the local textile industry can be overcome

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through efforts, consistent with charges occurring in the international market. It must be appreciated that all successive governments since the birth of cotton textile industry in Pakistan have been encouraging the textile exporters to penetrate into new market and also to broaden the base of exportable commodities by including value added textile goods so that reliance on exports of cotton, cotton yarn and coarse fabrics gradually become minimal. Reflecting on the state of affairs, Abid Chinoy, Pakistan cloth merchants Association (PCMA) Chairman, Appreciated government’s efforts to encourage new exports and finding new markets, which need aggressive export marketing. The steps taken on the monetary front, such as the frequent devaluation of Pak rupee in terms of dollar could not improve the cost competitiveness of exportable products due to increase in prices of the local and imported inputs of the local textile industry, and also due to inelastic demand for the Pakistan’s exports. It has been rightly mentioned in the latest stage bank of Pakistan’s annual report (FY01) that, “Over the years Pakistan’s exports receipts have been vulnerable on account of the narrow base of exportable items, concentrated markets and low value addition ‘this indicated that the growth in the country’s overall exports, including textile products which contributed more then 60% of total export receipts each year, could to be related some cosmetic and ad hoc measure like devaluation of Pak rupee and concession export credits. 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. During the period 1973 to December 1992, some 71 spinning units with 1,136, 835 spindles, 6,600 rotors ands 7,329 looms were closed down. 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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Another important strategic recommendation given by the foreign consultant very much relevant to the current Conditions: “It is vital that companies play very positive role in the markets, which each one having its own marketing activity, whose job is to understand the need of the customers and the ever changing competitive dynamics of the markets. In order to improve exports, Pakistan’s Readymade Garments Manufacturers and Exporters Association (PRGMEA) has urged the commerce minister Abdul Razzak Dawood to set up an Apparel Board for the promotion of export of woven and kit garments which fetch US$ 2.5 billion foreign exchange for the country. The industry experts are of the opinion that in the order to have a strong industrial base, Pakistan economy need investment upswing. Pakistan’s economic growth performance during recent years has been dismal: as against the average growth rate of 6.1% in the 1980s, the half and 4.0% in the 2nd half of the 1990s. The major micro-economic instability factors like high inflation rate, budgetary deficit, continuous depreciation of rupee, economic sanctions, etc. could not help the investment process. Such an environment cannot be conducive to investment and growth. Exporters of textile products have found the target of US$ 10.4 billion set by the government for the year 2002-2003, as achievable and termed it a realistic approach. The textile sector which constituted 69% of total export during 20012002, believes that enhanced quota by the European Union and Turkey would make this possible to fetch another US$1 billion this year. 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. The trade policy is considered an acceptable paper, but in the industry does not fine anything that could lead to a high level exports achievement and remove trade imbalance. Pakistan’s textile sector earned US$5.77 billion during the outgoing year, compared with US$5.577 BILLION OF 2000-2001 indicating a growth of 0.69%. “Textile vision 2005” has identified the present status and opportunities to make in roads in conventional and hew markets and has

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developed sectoral recommendations, hence the sectoral committees set up by the Federal Textile Board (FTB) would play an important role be ensuring the availability of quality raw materials on competitive prices and improvement in designing, and would adopt quality standards and increase productivity levels. It would attract foreign brands and promote Pakistani brands with world-class standers. With such a positive trend, Pakistan’s textile sector is getting rid of old impediments and gearing itself up for the new opportunities in the new trade regime. Textile Uses: Textiles have an assortment of uses, the most common of which are for clothing and containers such as bags and baskets. In the household, they are used in carpeting, upholstered furnishings, window shades, towels, covering for tables, beds, and other flat surfaces, and in art. In the workplace, they are used in industrial and scientific processes such as filtering. Miscellaneous uses include flags, backpacks, tents, nets, cleaning devices, such as handkerchiefs; transportation devices such as balloons, kites, sails, and parachutes; strengthening in composite materials such as fibre glass and industrial geotextiles, and smaller cloths are used in washing by "soaping up" the cloth and washing with it rather than using just soap. Textiles used for industrial purposes, and chosen for characteristics other than their appearance, are commonly referred to as technical textiles. Technical textiles include textile structures for automotive

applications,

medical

textiles

(e.g. implants),

geotextiles

(reinforcement

of

embankments), agrotextiles (textiles for crop protection), protective clothing (e.g. against heat and radiation for fire fighter clothing, against molten metals for welders, stab protection, and bullet proof vests. In all these applications stringent performance requirements must be met. Woven of threads coated with zinc oxide nanowires, laboratory fabric has been shown capable of "selfpowering nanosystems" using vibrations created by everyday actions like wind or body movements.

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Kohinoor Weaving Mills Limited

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Kohinoor Weaving Mills History: The Kohinoor Maple Leaf Group was born from the trifurcation of the Saigol group of companies and is a reputable and leading manufacturer of textiles and cement. KMLG comprises of Kohinoor Textile Mills limited (KTML) and Maple Leaf Cement factory limited (MLCF). Both companies are incorporated in Pakistan and are listed on three stock exchanges of the country. Textiles KTML was established in 1953 at Rawalpindi and is one of the oldest companies of Pakistan with over 50 years experience in textile manufacturing. It was initially set up as a spinning and weaving project with 25,000 spindles and 600 looms. However, after decades of aggressive expansion and modernization KTML has emerged into a fully vertically integrated home textiles company with state of the art capabilities for spinning, weaving, dyeing, printing and stitching. The company has a diverse customer base with sales in both the local and export markets. The main international markets include Asia, Europe, USA and Australia. Cement Maple Leaf Cement is the third largest cement factory in Pakistan. It was set up in 1956 as a joint collaboration between the West Pakistan Industrial Development Corporation and the government of Canada. It is strategically located at Daudkhel (District Mianwali) in Northern Pakistan, which is an area rich in raw materials required for the production of cement. Kohinoor acquired the ownership and management of Maple Leaf Cement under the privatization policy of the government of Pakistan in 1992. Presently Kohinoor Textile Mills is the holding company for Maple Leaf cement.

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Mission Statement: At Kohinoor we aim to serve the needs of our customers and build value for our stakeholders by continuing to remain an efficient and profitable company. At the same time we hope we are creating an environment where talented and exceptional people want to work. We are committed to providing our employees with opportunities for personal and professional growth that they can find nowhere else. We are dedicated to operating our facilities with the utmost respect for the communities and environment in which we live and work. Corporate mission: •

Put the customer first always.

•

Be flexible to the customer’s needs.

•

Adhere to the highest quality standards.

•

Think innovatively but make informed business decisions.

•

Deliver results

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Kohinoor Weaving Mills Divisions: Kohinoor weaving mills has divided into different divisions which are given below. 1.

Kohinoor Weaving Division:

Kohinoor weaving mills was incorporated as a public limited company on December 21st, 1987 and is located at 8th K.M Managa Raiwind Road, District Kasur. The company produces griege cloth from cotton, blended and synthetic yarns. The project was initially established with 48 Sulzer Ruti Shuttle-less looms of 153” width from Switzerland with modern ancillary machinery to produce high quality fabric for export markets. Further expansions saw the installation of an additional 96 Tsudakoma air jet looms from Japan in 1990 and a third shed compromising 60 state of the art Picanol Omni 340 cm wide looms was installed in July 1998, 12 with bleaching motions. Another 12 Picanol Omni 340cm wide looms were installed in 1999. in 2000 old 48 Sulzer Ruti looms were replaced by 48 latest Picanol Omni plus 380 cm looms. In addition to that latest 16 Picanol Omni plus Jacquard looms were also added as well as a yarn conditioning machine from Xorell Was also installed. The entire manufacturing process from warping to fabric inspection is monitored through an online process control system from Barco. The marketing strategy is to explore new markets both in quota and non-quota countries. The company is able to export finished fabric both dyed and printed processed at its sister company Kohinoor textile mills, Rawalpindi using the latest technology. Kohinoor weaving mills limited was certified to ISO 9001 by the Lioyds Register Quality Assurance, UK on December 19, 1991. 2.

Kohinoor Hosiery mills:

Kohinoor Hosiery Mills started production in January 2003. its new automated knitting plant makes it the largest most advanced knitting plant it the largest most advanced unit of its kind in Pakistan.

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3.

Kohinoor Dying Mills:

Kohinoor Dying Mills stated production in June 2002. the unit comprises of the most modern automated plant in Pakistan. 4.

Kohinoor Genertek Mills:

Kohinoor Genertek was established as an electric power generation company to ensure uninterrupted supply to Kohinoor weaving mills and Kohinoor Raiwind Mills. The project is situated at the Manga Road, District Kasur. The project is based on three Niigata Diesel generating sets operating on heavy fuel oil with a total operating capacity of 17.88 MW. The plant began supply in 1996. The company also supplies excess capacity power on a commercial basis to other industries in the vicinity of the project Kohinoor Genertek was certified to ISO 9002 by Lioyds Register Quality Assurance, UK on June 17, 1998.

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Kohinoor Weaving Division: Kohinoor weaving mills was incorporated as a public limited company on December 21st, 1987 and is located at 8th K.M Managa Raiwind Road, District Kasur. The company produces griege cloth from cotton, blended and synthetic yarns. The project was initially established with 48 Sulzer Ruti Shuttle-less looms of 153” width from Switzerland with modern ancillary machinery to produce high quality fabric for export markets. Further expansions saw the installation of an additional 96 Tsudakoma air jet looms from Japan in 1990 and a third shed compromising 60 state of the art Picanol Omni 340 cm wide looms was installed in July 1998, 12 with bleaching motions. Another 12 Picanol Omni 340cm wide looms were installed in 1999. in 2000 old 48 Sulzer Ruti looms were replaced by 48 latest Picanol Omni plus 380 cm looms. In addition to that latest 16 Picanol Omni plus Jacquard looms were also added as well as a yarn conditioning machine from Xorell Was also installed. The entire manufacturing process from warping to fabric inspection is monitored through an online process control system from Barco. The marketing strategy is to explore new markets both in quota and non-quota countries. The company is able to export finished fabric both dyed and printed processed at its sister company Kohinoor textile mills, Rawalpindi using the latest technology. Kohinoor weaving mills limited was certified to ISO 9001 by the Lioyds Register Quality Assurance, UK on December 19, 1991. Kohinoor weaving division has been divided into 3 major departments. ¾ Shipping Department ¾ Marketing Department ¾ Commercial Department Kohinoor Weaving Marketing Department: Marketing Department of Weaving Division has also been divided into 3 major zones which are given below.

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¾ International or Export Zone ¾ Local Zone ¾ Internal Zone: International or Export Zone: In international zone sales personnel attract and contact the foreign customers to sell their textile products. Two personnel focus on European countries & African countries. While on other hand, two personnel focus on USA and Asian Countries. Payment methods: In export zone, different payment methods are used which are given below 9 L/C (30 days, 60 days, 90 days, 120 days, 150 days) 9 CNF 9 C&F 9 CIF 9 B/L 9 Trust system Local Zone: In local zone, sales personnel attract with the local buyers and offer their textile products. Payment terms: Textile products are delivered on credit basis and in terms of new customers, advance payment is collected. Internal Zone: In internal zone, the fabric is provided to the dyeing division of KWML to dye and then further sending it to the local or international customers. This dyed fabric is also provided to the hosiery division.

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Competition: At international level there are number of suppliers from around the globe who are exporting the fabrics to other countries with a high quality and at low price. If we look at Asian countries then there names are mentioned below. Bangladesh China Vietnam Pakistan India Iran These countries are providing the fabric to European countries as well as USA and African countries. Bangladesh is the only country who is providing best quality of the fabric and selling it highest sale price which is $3.15 per meter. On other hand, Pakistan is producing poor quality and selling their fabrics $0.92 in USA which is the lowest price. The main reason of the poor quality is the lack of investment whether they are foreigners or local. Investors are not interested to invest their capital since Pakistan is facing great difficulties in both government sectors and private sectors. In local market there are number of units which are competing with each other. There are 10 big giants of the local market of textile industry of Pakistan and fortunately KWML is one of them. The major competitors of KWML are NISHAT TEXTILE SAPHIRE TEXTILE KTM TEXTILE COLONY TEXTILE YUNIS TEXTILE AMTEX CHENAB TEXTILE

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AL-KARAM TEXTILE GULISTAN TEXTILE FAZAL TEXTILE

Technology: KWML is using latest Toyota air Jet power looms which is the latest technology in the textile industry. Marketing Financials: Since KWML does not too much pay attention on marketing and advertising of their textile products, that’s why there is little bit marketing financials are being happened. Target Market: In local market, the target customers of KWML are Upper class and upper middle class of the society House wives for the ho-textile fabrics For garments they are focusing on youngsters and adults Where as in international market: USA European countries Asian countries Foreign youngsters Fashion designers

Distribution Channels: KWML is using only two channels for its distribution whether it is locally or internationally.

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Two methods are mentioned below. 1.

KWML

Agent

Buyer

2.

KWML

Buyer

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Industrial Analysis:

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PEST Analysis: Political Factor: Uneven political conditions, deteriorating law and order situation and instability in gas and electricity prices are adversely affecting the textile sector, while government has hardly taken any step to give some relief or incentives to the mill owners. Textile mill owners and exporter have strongly denounced the recent 31 percent increase in the gasoline prices and demanded from the government to withdraw the recent increase and take serious steps to help textile industry survive through difficult times According to the sources, if prices continue to increase at current rate, the textile industry would find it difficult to survive as the recent increase has already proven deadly and many mills have started to shutdown in the wake huge price increase. It was also witnessed that due to prices increase in gas has not only adversely affected the productivity of the textile industry but has also caused sudden increase in the production cost and has badly affected the economy of the country. On the other hand, textile and the other exporters also facing a lot of challenges due to increase in the production cost of the specific export goods, while such hurdles badly affected the Pakistani exporters to meet the challenges and compete in the local and international markets. Exporters are demanding that government should give them facilities to cope with the existing challenges and not get involved in favoritism. The main political factors which are attracting the industries and as well as for the whole world are 9 Musharaf’s Seat 9 Arrested Judiciary 9 Benazir Bhutto murdered

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The murder of Benazir Bhutto was infuriated matter. Number of people came out with a great anger and numbers of textile companies were burnt by them, just like in Karachi happened. The other issue was neat & clean elections of 2008. no doubt that elections were being held neat and clean but the opposition did not accept the results and new government is still try to control the factors which are creating disturbance. As it is mentioned above that the govt. of Pakistan increased the prices of Gasoline and petroleum, which are the basic needs for the textile industries. In July 2008, the textile companies in Faisalabad shutdown their companies against the 31% increments in prices of Gasoline, also increased the prices petroleum by 10 rupees. Still no satisfied procedure has not been implemented by the Govt. of Pakistan Tight monetary policy also creates a lot of hurdles for textile sector and exporters, and rapidly growing interest rates of the banks is causing the shut down the power looms, and it also crushing down the textile industry and exporters, added sources. The industrialists rejected the imposition of 10 percent withholding tax on electricity bills, small and medium industries, and power looms, while they demanded withdrawals of 10 percent withholding tax immediately for the survival of the industrial sector of Pakistan. Then again, the government is failed to decrease the every day increasing trade deficit. Textile sector of Pakistan contributes huge amount in the economy of the country serious measures are needed for its revival. Economical Factor: Economical factors are also disturbing the all industries of Pakistan as well as the textile industry. From 1999 to 2008 the inflation rate has been increased by 100%. The last and current Government has been failed to control the economy. As the prices have been increased, the suppliers try to get and save more profit from their investments. That’s why prices are decided and put with a high return in terms of profit.

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Before 2008, textile industry was getting number of incentives from the government just like R&D (Research & Developments) and subsidies on the utilities. But some companies misused these opportunities and unfortunately Govt. pulled back these type of incentives. The main problem with the textile industry is shortage of electricity, gasoline and petroleum, due to which Textile industry is bearing too much cost that why they have to increase their prices to earn profit or for break-even. There are some companies which have their own electricity plants but they have to spend a lot of money to run them. Other problems which are facing by the textile industry of Pakistan are 9 Not availability of skilled labors. 9 Labors cost is increasing rapidly 9 Loosing quality of its products in both markets domestically and internationally 9 Poor monitory and Fiscal policies of the Govt. of Pakistan 9 Uneducated people 9 Investors are pulling out their capital from the market quickly 9 Foreign Investments are not coming towards Textile industry These are the factors which are disturbing the textile industry strongly economically. Sociological Factors: Textile industry affecting the society and environment in number of ways, some of them are mentioned below. ¾ Polluting the air by pushing out ruins of chemicals. Different gases in air react with these ruins which become dangerous for human beings. ¾ No proper system to throw out the useless materials and chemicals. ¾ Most of the useless materials and acids are thrown into the fields which are react or disturb the agricultural products seriously. ¾ Since the cost of the production and labor cost are increasing day by day. That’s why the final product cost is also increasing that’s why people are buying low quality products and not spending too much to purchase.

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¾ Textile companies are firing the labors and employees as well because of high production cost and salaries that’s why the unemployment rate is increasing day by day which is not good for the industry as well as for the country. Technological Factor: The technology has been improved and updated in the textile industry of Pakistan and some of the companies in textile industry are acquiring these technologies. By using new technology not only they improve their quality and efficiency but also improve their production as well as reducing the cost of production.

PORTER Analysis: Bargaining power of Buyer: It has been seen from last 3 years that buyers are becoming anger and having problems to purchase the desired products from textile industry of Pakistan. There are several issues which are affecting the textile industry seriously and industry is bearing losses since 2005. The bargaining power of buyers is increasing day by day. The buyers are demanding more and improved quality in very cheaper prices, whether customers are from foreign or are from local markets. The competition at international level has been increased too much. If we look at a glance to USA exports of textile industry from all over the world and especially from Asian countries then we can easily found that Pakistan is offering most less export prices to USA which is 0.91 US dollars per meter. But other countries are getting more than these prices and in these countries; Bangladesh is on top that is getting 3.15 US dollars per meter from USA.

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Although Pakistan is offering the lowest prices but due to poor quality and present condition of the textile industry as well as of Pakistan present condition are the main reasons that Pakistan is loosing its customers. Bargaining power of Suppliers: Bargaining power of suppliers is increasing of textile industry day by day. The Govt. of Pakistan is playing very important role in this activity. As we all know that inflation rate is running upwards like a rocket and utility costs are also increasing day by day. Couple of days ago, Govt. increased the prices of Gas by 31% and all textile mills of Faisalabad strike against this huge increments. Now the cost of petroleum has also been increased due to which affecting the manufacturing costs of the companies. The costs of Yarns and chemicals which are used to dye the cloth and for sizing process have also been increased. Textile companies are bearing too much manufacturing costs, if they come to increase their prices then there is a major threat that customers can move to other companies weather it is foreign marker or local market. Rivalry: The competition in the textile industry is becoming very tough. The Textile mills are competing with each other on the basis of their prices they offer, the quality which they produce. Competition at international level is very furious for Pakistan textile industry. The major exporters of textile products are In Local Market: NISHAT TEXTILE SAPHIRE TEXTILE KTM TEXTILE COLONY TEXTILE

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YUNIS TEXTILE AMTEX CHENAB TEXTILE AL-KARAM TEXTILE GULISTAN TEXTILE FAZAL TEXTILE

In international Market: 9 China 9 India 9 Vietnam 9 Bangladesh 9 Korea 9 Pakistan 9 Iran And Pakistan is offering the lowest prices to USA as well as to other countries. But still Pakistan is lacking its quality and also loosing its customers. Foreign customers are moving to other countries for the best quality. Although their prices are high but they are exporting best qualities of their products. From these countries, Bangladesh is on the top that is getting 3.15 US dollars per meter.

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Threats of new Entrants: There is no threat of now entrance. If some one wants to enter in this industry, that company has to face number of competitors which are the big giants of that industry. On the other hand they have to purchase the latest technology, Fuel prices, high labor costs, opportunity cost etc. and major issue is that inflation is increasing day by day and instability of Pakistan Govt. Threat of Substitutes: There is no threat of substitute. Because Textile products and cloths are the basic necessity of the human life and customers cannot move to other products by leaving textile products.

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Company’s Analysis:

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Financial Analysis: Sr.

Analysis

in 2007

in 2006

Comments

Name: Since we subtracted current inventory, it means that for 1

Quick Ratio

0.541606614

every rupee of current liabilities there are .54 rupees of 0.38402867

convertible assets, which was increased by 0.24 in year 2007. The ratio between the current assets and between

2

Current

0.736088064

current liabilities is less than 1 which means that 0.605316105

Ratio

company is facing number of problems to meet its short-term debt obligations. There was little bit decrement in these problems in year 2007. Profit margin in 2006 was in minus and company had to

3

Net Profit

1.503581132

-0.831932189

Margin

face loss of a huge amount, but in last year the company cover this loss and the profit was 1.5%

Year in 2006 it was near about 4 which was not good for 4

the company but turnover has been increased and

Inventory Turnover

reached at 5.52 5.520115726

4.1328381

Company has improved its value. In 2006 year company 5

Total Assets Turnover:

0.891219378

0.816898724

was earning .8168 by investing 1 rupee for assets but in 2007 it was .8912

The ratio has been increased by 0.3368. A high ratio 6

Fixed Assets Turnover:

1.88810638

1.551336599

indicates the business has less money tied up in fixed assets for each rupee of sales revenue. It is good for the company

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SWOT Analysis: Strengths: Having own electricity plant: KWML having own electricity power plant which is producing not only for the KWML but also providing electricity to other companies and to govt. at subsidy rate. ERP software: ERP (Enterprise Resource Planning) has been installed in KWML that’s why company is saving all records in systems and having huge database. Power Looms: KWML has purchased latest power looms Toyota Air Jet Power Looms. That’s why they have reduced the production cost and have increased the quality and efficiency of their textile products. Cross Cultural Communication: In KWML there are near about 4500 employees who are from different environments and having different cultures but fortunately there is no cross cultural communication. Market Reputation: KWML is one of the major Mills in Pakistan that’s why they have little bit reputation in local market and having trust from investors.

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Weaknesses: Employee’s motivational level: The one weakness of KWML is that their employees are not motivated that’s why they are getting off and putting their resigns in front of managers and executives. This is the responsibility of HR department to find out at to see at the time of hiring them that what the thing is that their employees can be motivated. Every booked order is delivered lately: The delivery of each contract is always not done on time. The customer has to wait for 4 to 5 weeks to get his/her desired product. The main reason is that late purchasing of raw material. Raw material just like Yarn and Sizing material is not available on time and some time it happens that there is shortage of raw material during the running contract that’s why production department has to wait for the raw material. Administrative Expenses: There are high overhead charges through out the year particularly administrative expenditures. Management whether it is lower management or upper management, the expenditures are same but company is getting equally profit from them that’s why expenditures are increasing. Reliability on Foreign Customers: Always organization has to rely on foreign customers and it would become risk especially in financial matters and possibility of fraud would be there. KWML is too much depending upon their foreign customers. They have limited number of foreign customers but these are also losing by lacking of quality and little bit high cost.

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Commercial Department: Commercial department of KWML is showing its little bit bad performance. Means always the yarn is purchased late and on credit and payments are done by the department always very late. There is no proper or pre-plan for the month or for couple of weeks so that amount should be received to pay the suppliers. Each time purchasing of yarn is done belatedly so that looms not run and hence per day cost increased and depreciation also. Godown Position: There is no proper placing for final products to place them safely and at the time of their dispatch there is possibility of mistake. ERP Software: It’s good that KWML has ERP software in their systems. But there are number of errors that are occurred much time. For example, during the dispatch of product, you have to click all the rolls manually. There is no option to select them all and other problem is to calculate the weight of packed rolls. You have to do all these things manually. Communication Gap: There are a little bit gaps in communication between the departments. May be these confirm each and every thing from each other but still they make mistakes and blame each others to safe them. Team Building: A major problem is team building. There is almost no concept of team. Each person is doing individually and performing his/her activities.

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Casual Attitude: The attitude among the employees is very casual. No one following the rules and regulations of the company. Some implementation is done among the executives but not at managerial level. HR Department: HR Department is almost useless and only performing two activities. These activities are making salaries and attendance of the employees and workers. They are not working to train the employees and making appraisals to evaluate them. Marketing of textile products: KWML has no proper planning for the Marketing. They advertise about their selves only from newspapers. That’s why limited number of people knows about them. Threats: Political instability: As we all know that the political situations of Pakistan are one of the worst situations of the whole world. Each new government establishes its new rules and regulations which impact the industries badly. Now a day there are many major issues which are affecting the textile industry as well as other countries just like Musharaf’s impeachment, PM Shaukat Aziz Fraud, New elections for Provisional and national assemblies and the major issue was the murder of BB Banizr Bhutto. Now the new government of Pakistan has implemented some new rules for the textile industry which are almost of them are not in fever of the industrialists. These are 9 31% increment in the prices of Gas 9 Near about 10 rupees per liter increment in price of petroleum 9 Bann to export the raw cotton 9 No subsidy for the research and developments in the textile industry Against these rules and implications, All Faisalabad Textile Mills boycott in July 2008 by shutting down their Mills and factories. Now the government has provided them some subsidy in Gas prices.

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High consumption of petroleum: The high consumption of the petroleum is also the major issues because in international market, their prices are going up and touching sky, due to which the freight costs are increasing day by day and hence the cost of production, is also increasing rapidly which is becoming the reason of losing foreign customers of Pakistan. Shortage of electricity: The government of Pakistan still unable to provide the required quantity of electricity, the usage of electricity has been increased. The companies who have their own electricity plants are save but those who don’t have are facing a major problem of shortage of electricity. Employees: Kohinoor Weaving Mills limited is facing a major problem of their employees because they getting off from KWML. They think that they are not getting reasonable and valuable salaries and incentives from the company. The major reason is also that company is losing its value and reputation in the local market as well as in international market, that’s why they are getting off from the company to secure their future and present as well. Poor Research & Developments: KWML has not been working for better Research and Development Department for some years. They are not focusing to improve their technology and expand their market share. They just keeping focus on their current systems which are producing not too much good quality products that’s why some of foreign customers are dissatisfied from them and shifted towards other suppliers.

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Increment in freight charges: The prices of petroleum have been increased and still increasing rapidly. That’s why the freight charges have been increased and the cost of productions has also been increased by the huge amount. Due to these increments, the sale price has also been increased but customers are not ready to pay more for a good quality instead of better quality. And transport companies are demanding more increments to use their transportation services. International and local competitors: One of the major threats at international level which KWML and textile industry of Pakistan has to face, is international competition which is growing up and competitors are capturing the market share rapidly that’s why Pakistan’s market share in foreign market is cutting down gradually due to high cost but poor quality of their textile products. In local market, there are many companies in Pakistan who are improving their quality of textile products by acquiring new technologies. The big giants of Pakistan textile industry are NISHAT TEXTILE SAPHIRE TEXTILE KTM TEXTILE COLONY TEXTILE YUNIS TEXTILE AMTEX CHENAB TEXTILE AL-KARAM TEXTILE GULISTAN TEXTILE FAZAL TEXTILE

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Lowest price of fabric in world for USA & UK countries: This would surprise for all of us that Pakistan is offering lowest prices the UK and USA market. But sorry to say that these prices are coming down gradually due to losing the quality in their products and services as well. In USA the price per meter is $0.91 which is the lowest price in compare with other international and especially Asian Suppliers. KWML also facing the same problem same which is faced by the Pakistan textile industry. But there are some customers who are still working with KWML which is good for the company for its present situation and for future.

Opportunities: New Technology: The technology has been improved for the textile industry and these technologies are being acquired by the international competitors as well as by local competitors so they are producing good quality textile products and increasing the efficiency as well as decreasing the cost of production. KWML has the opportunity to invest for the new technology. By acquiring the latest technology, they can increase the production quality, efficiency and can decrease the cost of production. Motivating the employees: HR department can prove and show them they are here for employees by motivating the employees performing their best. They can find the motivation level of their employees and give them incentives to motivate them. Projects for the local market: KWML has the opportunity to capture the market share locally by launching new projects just like they are launching “Dhanak “in August 2008. They can start new projects in garments, Apparels, and in home textile.

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Advertising: KWML has the opportunity to advertise about their selves to promote their textile products. They can advertise in international magazines about their selves KWML can publish its own local business magazine to promote their selves Can be advertised over the internet (electronic Marketing) KWML’s own Shops: KWML can open its own shops in local market where they can display their garments products and Apparels as well as curtains. The big advantage would be that advertising would be done automatically and your textile products would also be sold to local market. Online Shopping Store: KWML can open its online store where they can show their garments variety and apparels. The advantage of this step would be ¾ Online Marketing ¾ Capturing the market over internet internationally ¾ Capturing the market over internet locally ¾ The material which you put on your fair price shop can be sold out at online shop.

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Major Threats for the Industry: Rising in cost of Energy and workforce: Rising input and energy costs coupled with higher financial charges have deteriorated overall sectors performance in the last couple of years. On the other hand investment on balancing, modernization and renovation (BUR) of textile has been continuously declining since 2004-05 after a record of $928.6 million investment in a year. The main reason for depression in this economic lifeline of the country is the rise in bang interest rate, decrease in cotton production, high cost of energy, long hours of load shedding, and higher wages of skilled workmen as compared to Pakistan's international competitors and general law and order situation of the country. Rising in freight charges: As the prices of petroleum is increasing rapidly, domestically and internationally which are affecting the company’s cost of freights. Due to increments in manufacturing cost & freights, the profit ratio has been decreased because customers are demanding the better quality products of textile in low cost. That’s the reason that Pakistan’s textile price is the lowest price in world at export level which is $0.91. Political Instability: The decades-old Pakistan based international textile buying houses have shifted to India, Bangladesh and Middle Eastern countries due to uncertain political situation. Just like Judiciary Issues of Pakistan, President Pervaiz Musharaf issues, blames of European countries and specially America of Terrorism against Pakistan and other major issue of Benazir Bhutto murder and elections of Feb 18 2008. It’s true that elections were being held calmly and clearly, after elections new government changed the already existing policies which impact all the sectors of Pakistan including Textile. The prices of utilities and petroleum were increased by govt. rapidly which was pushed down by force before the elections. The new govt. has also banned to export the raw cotton to the world’s countries by saying that export of raw cotton has been banned due to the increments in the prices of raw cotton. Cotton

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should not be more export infect it should be used domestically because textile companies and baring high raw material cost due to which sales prices at domestic and internationally level are increasing day by day. Now the prices definitely come down at domestic level and production cost should be reduced. Internationally Competition: The decades-old Pakistan based international textile buying houses have shifted to India, Bangladesh and Middle Eastern countries due to uncertain political situation. The traditional buying houses of Pakistani products have told Pakistani producers / manufacturers to come to their new countries of residence along with their products/samples if they wanted to get supply orders. Since the removal of quota regime, Pakistan's textile sector has been facing intense competition from neighboring countries on export front. The exports of textile products continues to decline and showed 3.14% decrease in the first nine months of the current financial year as compared to the same period last year. The total textile exports were $7.765 billion in July-March period of 2007-08 compared to $8.017 billion in the same period of previous year. Such a huge drop in textile exports resulted in serious repercussion on balance of payments as this sector traditionally contributes 67%to total exports. Almost all the products in the category of textile exports, particularly in value-added sector, performed poorly during the period under review, which turned the overall export of textile products to negative. Exporters have predicted further decline in shares of textile sector in overall export of the country if the present state of affairs continue to persist in the coming days. Textile exports also missed their targets for the said period while the export of other products not only registered growth but also achieved the targets set for the period. The second quarterly State Bank of Pakistan (SBP) report said fall in the textile exports was attributed to both supply and demand factors. On the supply side, textile exports were adversely affected by the rising cost of production due to increase in domestic cotton prices and tariff rates, as well as by the frequent power shortages and political unrest. On the demand side, textile and apparel product exports appeared to have suffered from the slowdown in the US economy.

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The major competitors of Pakistan Textile Industry are given below with their selling prices in US states.

Country

Prices ($)

Pakistan

0.91

India

1.91

China

1.5

Bangladesh

2

Vietnam

3

Note: The above mentioned prices are in dollars and are per square meter. Same thing is happening with Pakistan textile industry in the other countries of the world as well as for the company. Research & Developments: State Bank of Pakistan (SBP) has informed the Economic Coordination Committee (ECC) of the Cabinet that the textile industry was grossly misusing the research and development (R&D) fund, and the government should review its policy of injecting billions of rupees for protecting this inefficient sector of the economy. Previously, the textile industry was enjoying refund and rebate facility on exports, however, this policy was discontinued in 2006-07 on reports that a number of inefficient textile units were getting huge fake refunds, misusing the facility. Now ECC took SBP Governor's views very seriously and asked the Ministry of Finance (MOF) to come up with some other strategy to help the textile industry to become more result-oriented to compete with other players in the world market in the future.

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As the Govt. is not supporting the textile industry for Research & Development to improve the industry, companies are also not much paying attention to the Research & Development. That’s why investors are not investing too much in this industry and industry is not able to acquire or purchase the new technologies to improve their productivity, efficiency, quality and saving the manufacturing costs.

A snapshot of International Competitors in Industry: Garments account for 80% of overall exports by Bangladesh - US$9.5 billion out of a total US$12.18 billion in export earnings in the financial year to June 2007, with forecasts that it will cross the US$11 billion mark this year. The Bangladesh Garment Manufacturers and Exporters Association is expecting to double apparel exports to US$18 billion by 2010. A substantial share of the fabrics produced in China is being converted into garments in Vietnam, which is therefore a major exporter to the US with exports of $4.6 billion in 2007. But analysts believe these indirect exports of China would also decline in the coming months, leaving a larger part of the US market for countries like India to capture. In 2007, China launched a series of policies, including subsidy to high quality cotton seed and policy insurance. According to the "Eleventh Five-Year Plan" (2006-2010), China plans to pick up the construction of high-quality cotton production base in Xinjiang Uygur Autonomous Region by investing CNY750 million, all of which have greatly enhanced the enthusiasm of farmers to plant cotton. Viscose prices are heavily falling in China, as a result of a low level in demand and a new reduction in raw material costs. Filament prices are especially under pressure these days as inventories are surging in absence of demand. Staple fiber prices are still 20% above their level in the same period last year. India produces about 28 crores of mulberry silkworm eggs per year. This production is met by three agencies namely, Private Licensed Silkworm Seed Producers (LSPs), State Departments of

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Sericulture (DOSS) and the National Silkworm Seed organisation grainages under the Central Silk Board (CSB). The share of these agencies during 2006-07 was 74.0 %, 15.4 o and 10.6 respectively. Preliminary data suggests that world textile fiber consumption increased by 4.8% to a record 67.7 million tonnes in 2007. World cotton consumption expanded by 3.8% to a record 26.9 million tonnes in 2007, marking the ninth year of continuous expansion but the second year of a decreasing rate of growth. Wool prices are now more obviously falling in Australia, mainly due to a lack of demand from China while available quantities are also much larger than previously anticipated. A rising Australian dollar is putting downward pressure on prices. Beijing is expected again closing down facilities around Lake Tai in Jiangsu and Zhejiang, therefore depressing demand from China's wool factories. Bangladeshi apparel exporters set an export target for local RMG worth $11 billion in 2008, but, the attainment of this target depends on the pressure of gas at the industry level, said President of Bangladesh Textile Mills Association (BTMA) Abdul Hai Sarker.He said total investment in the country's Primary Textile Sector (PTS) is $5.25 billion, while the number of textile factories is more than 4,000. According to a recent survey by China Cotton Textile Association across 17 provinces, nearly half of the textile companies surveyed want to quit and venture into other businesses and nearly 45% have started diverting export goods to the domestic market. U.S. apparel imports declined in major categories in the first quarter of 2008. China lost market shares in nearly all categories under review while imports from Vietnam were surging at the same time. Bangladesh lost ground with woven shirts while making strong progress with trousers. Central America is back on the underwear market with also better results in man-made fiber categories. EU's imports of polyester staple fibers steadily increased in the last three years. Shipments from Taiwan dramatically fell in 2007 after antidumping duties had previously been set on Taiwanese fibers. South Korea benefited from a sharp rebound as a result while PSF imports were surging from India.

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U.S. apparel import prices generally raised in a large number of categories in the first two months of 2008, especially for wool and manmade fiber products. China further raised its prices in most important categories like shirts and trousers, leaving the lower end of the market to a surging Vietnam. India is more directly confronted with China although offering lower prices. U.S. imports of cotton terry towels further rose in the last year with India surprisingly taking additional shares of the market. The final domination of a surging China now looks less evident, even with a removal of the U.S. quota at the end of the year. Imports from Pakistan continued slowly rising on the lower end of the market. Spun yarn prices are falling across the board in China, in line with a lack of demand from downward textile and clothing industries. Prices were down about 200-600 yuan per ton depending on fibers. Spun viscose yarn prices were sharply down while cotton and polyester yarn prices less significantly fell. Yarn prices may further decrease in the near term. Polyester intermediate prices were more stable in the last week of April in Asia. A new surge in crude oil prices to fresh record levels offered some support to spot markets for PX, PTA and MEG. May contract prices for paraxylene and glycol were also nominated at higher levels than in the past month. Demand from textile industry in China is still depressed by yuan's appreciation; however, pessimism is again dominating the polyester chain.

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Recommendations: They can advertise in international magazines about their selves KWML can publish its own local business magazine to promote their selves Can be advertised over the internet (electronic Marketing) By holding the seminars on textile industry and offer to attend the seminars to their customers International business seminars in multiple countries and offer their products to already existence and new customers. Make a documentary as a business story about KWML and offer it to show out through such channels which can accept this offer for example National Geographic Channel which shows such programs on different companies in the world. Monthly Budget, by making monthly budgets for each department especially for the commercial department, the late shipments and late purchasing of yarn can be vanished. Organize fashion shows in foreign countries as well as in local markets

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Conclusion: In August of 1947, a Islamic country was founded in south Asia with the name of Pakistan. Pakistan has its own and unique history whether you talk about its culture, people, handicrafts, environments, government, weather, industry, or technology. Pakistan economy is one of the growing economies in the world and attracting foreign investments from many sides of the world. But this growth is increasing gradually. Pakistan industry has been faced a lot of problems and different types of ups and downs in its history. But from year 2000 to up till now, Pakistan industry is facing more than these all problems. Textile industry is one of these industries which is facing these problems. Textile industry is contributing to Pakistan’s GDP near about 8.65% and in total exports, it is contributing near about 62%. The overall worldwide share in exports of textile products is near about 14% which is decreasing slowly but surely. Right now Pakistan textile industry is facing a lot of problems which are directly related to government. The major problems are mentioned below. 9 Musharaf’s impeachment 9 New government rules and regulations 9 Increments in costs of raw materials 9 Increasing cost of Gas and Petroleum 9 Decrement in foreign investment 9 Political instability These are the major problems which are facing by the textile industry of Pakistan. KWML (Kohinoor Weaving Mills Limited) is one of the big giants and groups of textile in Pakistan textile industry. KWML was listed first time in the market in 1987 in IPO. KWML was running

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under Maple leaf Cement Company till 2006. But in 2006 it separated from Maple Leaf and came into existence with the name of KWML (Kohinoor Weaving Mills Limited). KWML fortunately has its own major divisions just like Dyeing, Weaving, Hosiery, Home Textile, and Genertek Division. KWML is capturing the market share in local market near about 9.3% and it also exporting its fabrics and garments products to the foreign countries especially to USA and European Countries. As the Pakistan textile industry is facing many problems. KWML is also facing these problems and try defending against them. KWML also facing number of internal problems such as employees turnover, old technology, having no monthly plan and budgets, every time late purchasing of raw material and then of course late delivery and shipment. The main factor on which they are not paying too much attention is marketing of their textile products. They don’t advertise about their products, whether you talk about the greige fabric, dyed fabric, garments, and home textile. They always show dependency upon their limited foreign customers as well as on local customers and they don’t try to get and meet to new customers. They have to advertise and meet new customers to improve their quality, and capturing the market share whether it is local or foreign market share. They can use e-marketing concept to advertise over the internet.

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References: www.aptma.org.pk/ www.saleemtex.com/ www.dallasnews.com/.../dws/bus/columnists/jlanders/stories www.ptea.org/ www.alibaba.com/countrysearch/PK-suppliers/Textile_Fabric.html www.dyedfabrics.com/ www.fibre2fashion.com/news/textile-news/pakistan/ www.just-style.com/article.aspx?ID=101227 www.wikipedia,com www.pide.org.pk/Research/Report180. www.bilaterals.org/article.php3?id_article=9230 www.bharattextile.com/newsitems/2003963 www.gia.com.pk/ www.epb.gov.pk/ www.spyfu.com/Term.aspx?t=553759 www.bizeurope.com/businessdirectory/0000000463.htm www.iptu.co.uk