Report Nat East

ON

Nat NatEast Enterprises ses

Yaseen Ahmad MBA- Finance Submitted in partial fulfillment of the requirement For the degree of Master of Business Administration At

Virtual University of Pakistan M. A. Jinnah Campus, Defense Road, Off Raiwand Lahore Pakistan

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ACKNOWLEDGMENT All praises and thanks to Almighty Allah. The Lord and Creator of this universe by whose power and glory all good things are accomplished. He is also the most merciful, who best owed on me the potential, ability and an opportunity to work on this project. I am grateful to my respected teacher Mr. Bilal Ahmed who has guided me in each and every step of this project. Indeed, without her kind guidance I may not be able to even start this project. May ALLAH give her the reward which he deserves. I am also grateful to all those members who are related to Nat East Enterprises. Despite of the most hectic schedule, Mr.Waqas Ahmed (Accountant Manager) helped me so much. I'm really grateful to you Sir for clarifying my concepts and making me learn from your experience. Whatever I learnt from you will definitely help me in my upcoming study and the professional life ahead. Thank you so much for being so cooperative and so helpful every time. I hope Sir I have been up to your expectations. In the end, I am thankful to all my teachers and have a lot of prayers for them who give me the knowledge and make me able to complete my master’s degree. Here I have special thanks for Mr. Bilal Ahmed whose guided me to complete my final project. Yaseen Ahmad.

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I dedicate this report to my loving parents whose prays, affection and support are always a source of encouragement for me to reach at this destination and a humble icon for others in future. My parent and teachers who give me real eyes that help me to leads myself and others in the dark and cruel world.

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EXECUTIVE SUMMARY I have completed my master’s degree in Business Administration from Virtual university of Pakistan, Lahore, and internship is compulsory for this degree because university has recommended the internship. Internship helps us to get the practical knowledge of the field and we get a chance to implement our knowledge which we have gotten from our sixteen years of education. We become aware from the field and its requirements that which types of abilities we should have so that we can perform well in the field. I did the internship in NatEast enterprises Miana Pura Sialkot is the manufacturing Organization and named as Leather products of Sialkot in Pakistan. In Pakistan a large of Industry

like, Leather, Textile industry, Cotton industry, are

providing and producing the product for domestic and intentional. NatEast is one of these industries. NatEast is the reputable firm in the Sialkot sector because their marketing and production strategy. In the section of overview of the organization, describe the organization history their formation and the business background. The Volume of business is the initial step in this section toward finding their position in the market when they established. The main products which they are offering to their reliable customer to produce strength in the market. In the section organization structure, the organization culture and No of employee described. The offices and the location of the firm. The Three Partners and their Ratio in the capital. In the section plan of internship, include the description of the internship programme and their starting and ending date. Structure of finance department including the detailed of particular department where internship done and the period of spending in these department during internship. Function of finance is described most specific because my MBA degree is related to The Accounts and Finance specialization. Therefore my Overall time mostly done with these

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departments and also the production because they interlinked closely for the accounts purpose to made financial statment. Finance Function section also including function of finance, Funding generation, mobalization, and source and how to allocate it. At the end in my repost most important step is analysis of financial statement horizontal and vertical analysis. SWOT analysis is also done to produce organization value and their judgment. All supported material is also attached which support the this Report. The Completion is done through the NatEast co operation and my parent’s prayer and teacher’s guidance.

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Scanned Copy of internship Certificate & Evaluation form

Scanned Copy of internship Certificate

Scanned Copy of Internee Evaluation form Scanned Copy of internee’s Evaluation Form

Scanned Copy of internship Certificate Scanned Copy of internship Certificate Scanned Copy of internship Certificate

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Table of Content SCANNED COPY OF INTERNSHIP CERTIFICATE.....................................................VI SCANNED COPY OF INTERNEE EVALUATION FORM............................................VI INTRODUCTION OF ORGANIZATION’S BUSINESS SECTOR..................................4 OVERVIEW OF THE ORGANIZATION.........................................................................16 Brief History......................................................................................................................16 Nature of the Organization ...............................................................................................17 Business Volume................................................................................................................17 Product Lines.....................................................................................................................18 Martial Arts................................................................................................................................................18 Sports wear.................................................................................................................................................21 Fitness accessories.....................................................................................................................................23 Accessories................................................................................................................................................24

Competitors........................................................................................................................25 ORGANIZATION STRUCTURE.....................................................................................27 Organization hierarchy chart.............................................................................................27 Number and Profile of employee.......................................................................................28 PLAN OF INTERNSHIP PROGRAM..............................................................................29 Brief Introduction of Branch.............................................................................................29 Starting & Ending Dates of Internship..............................................................................29 Departments of Internship.................................................................................................30 INTRODUCTION OF DEPARTMENTS..........................................................................30 Business and Administration Department.........................................................................31 Production department.......................................................................................................34

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Methods of production.......................................................................................................40 Analysis of Business Operation.........................................................................................44 PRINCIPAL FIRMS..........................................................................................................50 VENDORS........................................................................................................................50 (150)..................................................................................................................................50 Marketing Department.......................................................................................................56 Human Resource department.............................................................................................67 STRUCTURE OF FINANCE DEPARTMENT................................................................72 Departmental hierarchy.....................................................................................................72 No of Employees...............................................................................................................73 Finance and Accounting operation....................................................................................73 FUNCTION OF FINANCE DEPARTMENT...................................................................80 Accounting System of the Organization............................................................................80 Finance system of the organization...................................................................................81 Use of electronic data in decision making.........................................................................82 Mobilization of funds........................................................................................................83 Generation of funds...........................................................................................................84 Sources of funds................................................................................................................85 Allocation of funds............................................................................................................85 CRITICAL ANALYSIS.....................................................................................................85 Financial Analysis..............................................................................................................86 Interpretation .....................................................................................................................95 SWOT ANALYSIS OF THE NAT EAST ENTERPRISES............................................100

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Strength............................................................................................................................100 Weakness.........................................................................................................................100 Opportunity......................................................................................................................101 Threat...............................................................................................................................102 CONCLUSION & RECOMMENDATIONS..................................................................102 REFERENCE & SOURCE..............................................................................................103 ANNEXES.......................................................................................................................104

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Introduction of Organization’s Business sector Nat East Enterprises are manufacturers and exporters of martial arts & sports wears. The Organization is 100% export oriented unit having highly qualified staff at its back having a vast experience in the manufacturing process and maintaining quality tools to the International

standards

and

specifications.

We are committed to provide best quality and services to our customers. Our main objectives are customer confidence, customer satisfaction and provide services at right time. Under development program we continuously are working on new materials, Formulas and Designs to upgrade the performance of our merchandise. Creating/Development had been upgraded and today our total setup is computerized to meet world's latest demands.

Business Sector Nat east enterprises Situated in Sialkot under the cluster of Leather, sports wear garments. Sialkot industry is facing domestically and internationally competition in these products. Different programmed are initiated to develop this business in the Sialkot industry. The impressive programmed was initiated in Sialkot by TDAP in collaboration with partner agencies (UNIDO, SCCI). The government in the trade policy 2008-09 has announced five clusters. Those clusters are: •

Leather and Leather Products.

•

Gloves and protective equipment.

•

Sports Goods.

•

Sports wear.

•

Surgical instruments.

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Sialkot Industry composed of different cluster relating to these products. These clusters play significant rule to initiate business sector locally as well internationally. The programme includes the detail Nature, product and department which help the industry to promote this business sector.

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Cluster Sect oral and geographical concentration of enterprises (especially small ones); produce and sell a range or related or complementary products and are thus faced with common challenges and opportunities. Clusters are considered to increase the productivity with which companies can compete nationally and globally.

Definition of Leather Leather is a material created through the tanning of hides and skins of animals, primarily cattle hide. The tanning process converts the skin into durable and long lasting versa bile nahral material for various uses. However, in Sialkot, Leather is primarily used in making garments, gloves, and upholstery items.

Types of Leather Hides and skins are normally available as cured and raw material. The curing being carried out in order to prevent bacterial attack and disintegration. Some commonly used raw materials are: •

Sheep skin (Maysha)

•

Goat skin

•

Cow Hides

•

Cow calf

•

Buff hide (Maja)

•

Reptiles

•

Crocodile

•

Fish skin

•

Horse and donkey leather

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•

Camel hide

•

Pig leather

•

Kangaroos

Leather products List of leather products is as follows: •

Leather jackets

•

Motorbike suits

•

Vascoats

•

Belts

•

Bags

•

Automotive leather goods

•

Saddler

•

Industrial use

•

Pouch

•

Chapel

•

Punishing instruments

•

Gloves

•

Arms leather goods

Geographical Location of Sialkot Sialkot is district is situated between Gujranwala, Gujarat, Narowal, and Indian Occupied Kashmir. It is 829 feet above sea level. Total Population (district) 300.0000 (Census 2006) Population (city) 120,000

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Area 3016 km’2 Density 903 persons/ km2 Attitude 256 meters amsl

History of cluster Sialkot is famous for the production of leather products. Leather cluster Sialkot developed in its current shape as export started here in mid 80’s. In 1978 to 1980 First Leather Production was established in Sialkot, juki machines were imported in 80’s. 6 juki machines were imported at that time. Master Bashir was pioneer in manufacturing; he was the first, who started his own Manufacturing. His shop was in Purannagar Street no 1. He used to produce both local and international standard products. London was the hub for exports at that time, where Brick lane was the market. Exporters got orders from there till 1995. Five English persons, Two Indians and four British origin Pakistanis place orders to Pakistan and other countries like Scandinavia, Germany were the main market at that time for exporters. The peak period of leather Industry exports was from 1985 to 2000. Sialkot leather cluster was the only to manufacture motorbike suits. No other city could produce motorbike suits at that time and till Date 90% motorbike suits are manufactured in Sialkot cluster. Then Pakistan started export of finish leather to other countries that caused prices growth of leather. Pakistan also exported leather to China till year 2000. Then they stopped importing leather because it cost them very expensive and became out of reach, that’s why they stopped importing from Pakistan. But prices never came down and they are still very high although there is no shortage of leather at current. Once at that period when Pakistan exported finished leather to other countries 10000 Vendors became jobless and they protested against government. At that time they made 8

their own R&D to make new designs and patterns and remained successful in shape of obtaining good orders of export.

Leather cluster in Sialkot Most of the firms were established in late 80’s and 90’s and so on. Mostly these firms are situated on Daska Road, Pasrur road, Factory area, Bonkan Pura, Wazirabad Road, and Head Marala Road. Majority of labour come from Fatehgarh Agency, surrounding areas of Doburji, Nollmor, Gondal, Godhpur, Marakiwaal, and Siadpur etc.

Trade bodies Pakistan Leather Garments Manufacturers Exporters Association (PLGMEA) PLGMEA established in 2001.role of PLGMEA is that exporter of leather products come under one umbrella. And discuss their problems and try to remove them. Resolve claim matters of exporters. Arranging trade fairs for their members. Since the establishment of our associations leather garments industry Has facing numerous hurdles particularly after 9/11 and other threats coupled with global recession sharp decline in export of leather garments? 1. To protect promote and develop Pakistan leather garments and industry & allied industry 2. For that purpose the management strived for resolving various issues 3. In order to save the industry from the negative factors as well as to encourage them to face the situation by adopting various positive 4. To settle controversies between the members of the association. 5. To establish and promote contacts in foreign countries and develop trade relations with them in order to popularize and leather products of Pakistan

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6. To lay out, establish maintain. Manage and control of the affairs of the market in leather garments and allied products. 7. To safeguard and promote the interests of the labour employed by the leather garments and allied industry. 8. To organize local or international fairs & exhibitions to help the manufacturer of leather garments & related products to get benefit out of it.

Sialkot Chamber of Commerce and Industry SCCI was established in 1982. Role of SCCI is to facilitate their registered members by solving their claiming matters. Arranging trade fairs for their members With other bodies like TDAP. It also facilitate their members in visa policy in 2007 to 08 no visa rejection All visa purposes are been entertained. SCCI also take special interest is making infrastructure betterment of city. Establish dry port for facilitate our exporter. Establish seerat academy Child labour elimination program City Package Plan

SCCI made Sialkot international airport, which is huge target, which they achieve.SCCI also made Sialkot dry port trust. Where shipment is made to Karachi. It gives huge

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benefit to this cluster. SCCI also generate funds for other educational and other healthy activity.

Current Institutional Linkages Trade Development Authority Pakistan (TDAP) TDAP was established in Sialkot in1963. Its old name was export promotion bureau Pakistan Purpose of making this body is enhancing the exports of Pakistan.TDAP take several steps like arranging trade fairs as much their own expense. It is also sponsoring cluster development program in Sialkot. In also other export oriented cities of Pakistan like Lahore, Gujarat, and Wazirabad clusters are the main examples of this. Its also do role as a marketing of Pakistani products of export quality in other Countries. Like Asian or European countries. Expo centers arranging exhibitions .it also arrange seminars conferences and workshops that how exporters increase their export and develop the country and get revenue for this country. DAP also promote exporters to enter these markets. And get hold of that market.

Vocational Training Institute Vocational training institute educate employees of cluster that how to handle new technology. They arranging short and long term courses for training Computer based education their students trying to produce skilled labour. Their new generations and getting use to with new technology

SMEDA SMEDA was established to help small and medium enterprise that how they establish themselves. Helping them to get micro level financing short terms plans. Convey knowledge for small enterprises that how much they plan their business present business development program and facilitate them. Also facilitate program for lower and middle management. 11

The provider and facilitator of support services to SME’S the key resource base for SME, S in Pakistan The voice of SME, S

1. Donor coordination &International linkages (DC&IL) 2. Policy planning & strategy 3. Business Development services

4. Policy, strategy and regulatory advice relating to SME’S 5. Sect oral studies and industry research

6. Coordination of the Government for SME’S development 7. Assistance in raising finance 8. Financial advice

9. Project identification 10. Business plan development 11. Technical advices 12. Marketing advice (Branding, labeling) 13. Packaging, distribution, promotion

14. E Market-electronic commerce support 15. Business Matchmaking 16. Regulations &policy level support

17. Institutional &networking support.

Punjab Small Industries Corporation PSIC

Punjab small industry corporation is provincial institute its role to provide loans to small industries of Punjab; it has district development office in Sialkot. Establish industrial areas for small industries. providind credit facilities to small entrepreneur in new existing

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business in last three years about 52 cases under credit scheme for small industries (cssi2002) was applied and 44 loans were sectioned.

Banks There are 48 banks in Pakistan of which 33 are working in Sialkot and 27 leasing companies in which 8 leasing companies working in Sialkot. They provide loans to industrialists. Banks also deal in advances loan they also deal in liability and assets products.

Private BDS

There are twenty BDS providers in Sialkot. They help entrepreneurs to guide in how to get ISO certifications.

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National scenario Leather is the second largest industry of Pakistan. Pakistan is at 5 th position among exporting countries of leather and leather products. Sialkot cluster is growth oriented of leather products and leather Garments.

Leather export trends (amount in us million$)

Commodities 03-04

04-05

05-06 06-07

07-08

Leather tanned

251

309

263

316

375

Apparels and

324

326

460

350

490

Clothing Total

575

635

723

666

865

Source: PLGMEA This data of export shows consistent increase from last two years in tanned leather export. And decreasing factor in apparels and leather garments from last year but in last year it increases.

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Leather exports from Sialkot (value in us million $)

Products

03-04 04-05 05-06 06-07

07-08

Leather Garments

186

241.1

189

182

& Goods Change over (05-06 to 06-07) (18.5%)

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203.7

Overview of the Organization

Brief History NatEast Enterprises is a family concern partnership business which started by 3 family partners a) Mr. Shakeel Ahmed b) Mr. Azamatullah c) Mr. Jameel Ahmed. The Organization was established in 2002 with few capital resources and at first it got an order from local market to make some Leather products. The Organization complied with the order within time and achieved its target successfully. After that it decided to expand the business and start export business instead of local market, which was the actual target of the Organization and the management at that time. To achieve that target Mr. Azamatullah Partner of the Organization personally visited Korea and got valuable orders concerning Martial arts and sports wear Goods from there. To comply with this different item orders management engaged some venders and with the passage of time to comply the different requirements of different customers it engaged more venders for all other products. It also expanded their field of trading and frequently works for better position. Mr. Shakeel Ahmed, Managing Partner of the Organization highly educated (M.A.Economics) is a very talented and most experienced person who always leads the Organization for excellence. He knows the changing environment and demands of people. With his recommendation the management set its own unit of Martial arts and with the passage of time started manufacturing of Sports wear for better , Competitive advantage. The management always tries to manage the products And comply with changes.

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Nature of the Organization As per history I mentioned the Nat East Enterprises is one of the Leading manufacturer of Martial arts and Sports wear. On the other hand the Organization is also engaged in the Trading of other Fitness accessories to increase Annual turnover and give incentive to the buyers. The Organization's legal status is Family concern partnership. Now this time there are 3-partners of the Organization With equal distribution of shares.

Organization

Nat east Enterprises

Formation

2002

Type of Organization Partnership Board f Directors

Mr. Shakeel Ahmed Mr. Azamatullah Mr. Jameel Ahmed

Managing Director

Mr. Shakeel Ahmed

Head Office

Business Volume

The Enterprises is family Own business therefore three partner have the Partnership ratio 40% Mr. Shakeel Ahmed, 30% Mr. Azmatullah, 30% Mr. Jameel Ahmed. The

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Organization started its working in 2001 with the overall capital of Rs. 80, 000, 00/= and now at the moment the Nat East Enterprises business volume is Rs, 65 Million = per year. As we take a look at the previous history of the export, we can find that overall export increase 14% to 20 % every year, which is a good sign for its improvement. On the other hand the average profit earned by the Organization in last year was Rs 30 million which is 30.5% of the total sales.

Product Lines Martial Arts Karate Uniform NT - 1003

Karate Uniform 8-oz in 100% cotton drill dyed “Black”. Pant with draw string waist with white belt. Also available in elastic waist and different colors.

Taeko wondo/Kungfu NT - 1105

Kung Fu uniform 8-oz in 100% cotton drill dyed Full “Black”. With black neck, black cuff and black buttons. Pant with draw string waist open bottom. Also available in different colours.

Karate Uniform

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NT-1001

Karate

uniforms

8-oz

in

Pant

with

draw

"Bleached".

100% string

Also available in elastic waist and colors.

Judo uniform NT - 1206

Judo uniform reversible100% cotton "blue / white". Reversible pant in drill with full knee Re-enforcements.

Ninja ju-jitsu uniform NT – 1251

Ninja uniforms 8-oz in 100% cotton drill “Black”. Also available in special black & white canvas stuff.

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cotton waist

drill with

white belt.

Belts NT - 1304

8 Stitch Bi color Fast Color.

Protective equipment NT - 1604

Heavy weight Silk. Soft Touch

Thai boxing trouser NT - 1702

Heavy weight silk Soft Touch

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Sports wear Jacket NT - 106

Padded Jacket Outer 10% Polyester Taffeta Up Coated Inner 10% Polyster10 GRM With Quilt 2 Zipper pockets on chest 2 Zipper pockets on sides 1 Cell pocket inside the inner 2 Button on front flop Velcro Tape On Arm Opening Color Royal Blue and heavy blue Track suit NT - 1102

Taekwondo uniform 8-oz cord Design 65% polyester & 35 % cotton with "white" or "Black" collar. Back Embroidery. Pant with elastic waist.

Ladies suit NT - 201

Smash Ladies Suit

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Outer 100% Trinda Polyester Inside Brushed Hooded Upper And Mesh Penal On Font With Piping 2" Elastic on arm Opening And Trouser trouser opening 3 button, White panel 3" with net mash arm opening 3 button lower opening with mesh panel.2 Elastic at waist Belt, Color black and dark gray

Soccer suit NT - 255 Soccer Kit

Soccer Kit 100% Polyester Jacquards Mesh

T shirts NT - 307

CLUB SHIRT 65% COTTON 35% POLYESTER 4 CLUB COLORS STRIPS ON FRONT PIPING COLLAR WITH 3 BUTTON FULL SLEEVE ARMS WITH CUFF APPLIQUÉ EMBROIDERY ON FRONT WEIGHT

GRM

350COLOR

LIGHT

YELLOW AND ROYAL BLUE STRIPS Short NT - 352 Fashion Short

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GRAY,

RED,

BLACK,

80% COTTON AND 20 % POLYESTER GSM 260 4 FLAP POCKETS ON SIDES LENGTH KNEE LONG COLOR BATCH

Cordura suits NT - 401

Seam Sealed Water Proof Lining KEVLAR Material on Shoulder & Elbow Adjustable Strap on Sleeves Full Sleeve Zip Out Quilted Lining with Insulation Material Soft Collar Reflective Material on Front & Back Soft Protectors, Shoulder, Elbow & Back Backbone padding Available Sizes, XS, S, M, L, XL, 2XL, 3XL

Rain suits NT - 455

Rain suit is guaranteed to keep any working professional dry, Comfortable and highly visible. The lime green/florescent yellow Meets certifications standards for background fabric And

reflective

Available

material. Sizes:

Available Small

Fabric & Coating: Polyurethane Coated Nylon

Fitness accessories

Weight lifting belts

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Colors: through

Lime

Green 6XL

NT - 551

6"wide-Embossed- Reinforced Neoprene belt, Nylon web closure, Roller buckle

Leather lifting Belts NT – 603

EXTRA FORCE - Genuine Leather lifting Belt. Top quality cowhide - 2.50 thickness leather - soft suede lining - Built in foam - Lumber pad - Double prong seamless - Roller buckle - Double stitched edges, double loop to secure belt tap - Colors available: Light Tan, Dark Tan, and Black

Accessories NT - 701

Features neoprene and steel hook in palm. Wrist padded with foam for extra comfort and support - one size fits all

NT - 705

Protect hands like a glove and use as lifting grip Neoprene grip strap combined with neoprene padded - Wrist wrap combination ring and Velcro closure

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NT-704

Neoprene - nylon wrist wrap. One size fits all

Competitors NatEast Enterprises is situated in the Major export industry in the Punjab and also the Pakistan. Competation is always created for the competitor stage. NatEast succeed the survival stage now they are facing the competition in the market. Firm major competitor is those which are established their business before their starting. Their goodwill in the market is strong as the runing the business many years.

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Second competitor is those which are establishing their business with the new technology and lot of investment in the current market. The penetrate the product. In the first stage competitor includes Raja Industries M/S Leather Field Silver Star sports Comet sports M/S Fair Brothers In the second stage competitor includes M/S Mass Sport M/S Shan Sport M/S Rabko M/S Billo Trading

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Organization Structure Organization hierarchy chart Managing Partners

HR/Admin Department

Factory

Product

Quality Assurance

Business Departmen t

Financial Department

Marketing Department

Technical Departme nt

Quality control

Account’s Manager Marketing Manager

Stock Accountant

Quality Control

Sales /Export Manger Assistant Accountant Assistant

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After Sales Service

Number and Profile of employee As the Organization comes in the list of small and medium enterprises that's why it has 20 employees who are engaged in office work and also in the manufacturing units of Sports Goods. For the manufacturing of other different products the Organization has venders and they are also very responsible and skilled according to their work. The detail of employees other than partners according to their job specification is as under.

Name

Designation

Qualification

Mr.Ahsan Manzoor Business Manager Miss.Naila Help desk Mr.nadeem Admn.assisitant Adnan Yaqoob Computer Operator Mr.Ajmal Production and operation Manger Mr.Ali Purchase manger Mr. Kareem Quality super visor Abas Ali Store supervisor Mr.Azmattulah Senior Manager Mr.Shafqat Ali Sales And Marketing Mr.Irfan Ali Export manager Mr.Adnan Saleem Assistant Manager

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Experience

MBA B.A M.A BCS MBA

2 Years 1 Years 1 Years 1 Years 4Years

M.A M.A F.A MBA MBA

3 Years 1 Years 4 Years 10 Years 6 Years

M.A BSC

5 Years 3 Years

Waqas ahmed

Accounts manager

MBA,ICMA

Ali Raza Danish Ahmed Riaz Razaq Tanveer Mirza Pervaiz Rafeeq

Ass.Accountant Ass.Accountant Clerk Clerk Clerk Office Boy Gate Keeper

Module B.com B.com B.com B.com B.com F.A F.A

3rd 2 Year 1 Year 2 Year 1 Year 1 year 1 Year 5 Year

Plan of internship program Brief Introduction of Branch I have worked in the main Branch which is situated at Miana Pura. Organization is divided in 2 main parts a general and manufacturing area. Manufacturing area is restricted area for outers and every person going into manufacturing area is strictly checked by guards. At the entrance gate there is a sub office of administration where gate pass is issued to every employee to enter inside the factory and persons who visits the organization. Gate passes are also issued to vehicles coming and going outside the Organization. On the left side after a garden there are offices of all the managers and Managing director. This area is subdivided into Finance Department, Admin Department, and Human Resource Department.

Starting & Ending Dates of Internship I Started internship on March 10th 2009 and ended on May 1st 2009 In NatEast Enterprises.

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Departments of Internship

I did my MBA in Finance so it was necessary to do the internship in the Finance department. Due to this reason I decided to select the Finance department of NatEast Enterprises. In this Organization each department is governed by director. Under the manager Mr. Waqas Ahmed was managing the Finance department. Mr.Shakeel Ahmed chief executive of the Organization has played a leading role in the Finance aspects of the products; he is supported by the Mr.Azamatullah fully aware of the international modern marketing trends. Mr.Azamatullah is the director of the marketing department and Mr. Shafqat ali is the marketing manager. The production department also include in my internship programmer because ist necessary for the costing Accounting. The Fianance department done the work related also for purchase and sales department to passing the Receipt and payment. Internship period is basically based to collection of all data to perform the financial analysis of the Organization. Therefore finance department fully supported me.

Introduction of Departments Nat East Enterprises is a manufacturer firm they produce the goods which are required all processing units to convert it into finished goods for customer. In the Department section

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here we described the main department function and working under their managers and supervisors how they coordinate and manage their work. My mostly work spend on the production department because they are mainly linked with the finance department. Because how could you asses the cost if you don’t know form beginning. Accounts relating to this involved the cost activity Like Absorption, marginal costing, activity based costing, EOQ are the mainly portion to manage it. But here our prospect is to financial department to made reliable information for the external user. All other department where I spend the time is also described under this section.

Business and Administration Department The main function of administration Department to interact all other department to generate the documentary evidence and monitor their work in the form of stored data. Admin department ensure the activity and their safety. Each visitor must firstly interact with the admin department then they move toward the other like the Material supplier in the Nat East enterprises first interact with First desk staff the move toward the related department like finance for billing or the Production to negotiate the material terms. They keep checking all record through their computerized system. Like the visitor first come to the gate verify their identification and then moved to the forward step in the organization. In this department there are three major Sections in this deartment.Number of employee in this department include Name Designation Mr.Ahsan Manzoor Business Manager Miss.Naila Help desk Nadeem Admn.assisitant Adnan Yaqoob Computer Operator

Qualification MBA B.A M.A BCS

Experience 2 Years 1 Years 1 Years 1 Years

Help Desk is the very important post in the admin department their function is to provide support to staff on all Organization supported applications. Troubleshoot computer

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problems and determine source, and advice on appropriate action. Complete application project-based work. The three employees are working in the Nat east enterprise in this section.

 Answer staff questions in person and via phone on all Organization supported applications.  Troubleshoot computer problems.  Determine source of computer problems (hardware, software, user access, etc.).  Advise staff on appropriate action.  Serve as liaison between staff and the technology department to resolve issues.  Work one-on-one with staff on application projects.  Provide recommendations on Organization application purchases.  Document resolutions for future reference. Administrative Assistant Provide administrative support to a department and/or Manager. Duties include general clerical, receptionist and project based work. Project a professional Organization image through in-person and phone interaction. They are performing the responsibility like  Answer telephones and transfer to appropriate staff member.  Meet and greet clients and visitors.  Create and modify documents using Microsoft Office.  Perform general clerical duties to include but not limited to: photocopying, faxing, mailing, and filing.  Sign for and distribute DHL/Fed Ex/Airborne packages.  Coordinate and maintain records for staff office space, phones, parking, Organization credit cards and office keys.  Setup and coordinate meetings and conferences.  Maintain and distribute staff weekly schedules.

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 Collect and maintain PC inventory.  Support staff in assigned project based work.  Other duties as assigned. Administrative department also relate their function with the business department for the documentation. There are two Employees working in this department. Computer Operator Perform a variety of computer operations. Monitor console control panel and make procedural and/or operational corrections as necessary. No of employee is one in this department. Responsibilities are  Operate and monitor mainframe and mid-range computer and peripheral equipment to include; printers, tape and disk drives.  Observe operation of equipment, control panels, error lights, verification printouts, error messages, and faulty output.  Monitor console control panel for faulty output or machine stoppage.  Make procedural and/or operational corrections as necessary.  Contact appropriate staff to resolve console control panel errors.  Determine source of computer problems (hardware, software, user access, etc.).  Advise staff on appropriate action.  Remove and distribute computer output.  Serve as liaison between staff and the technology department to resolve issues.  Provide recommendations on Organization technology purchases.  Document computer problems and resolutions for future reference.  Maintain confidentiality with regard to the information being processed, stored or accessed.  Other duties as assigned.

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Business and administration departments work together to achieve their objectives. Business department mainly made their document be collecting all information to the other department and outsider resource. Business department provide the data regarding to the searching the parties research about business innovative policy, customer segmentation toward business opportunity.

Production department

Production is the functional area responsible for turning inputs into finished outputs through a series of production processes. The Production Manager is responsible for making sure that raw materials are provided and made into finished goods effectively. Mr. Ajmal are the manager and Handle all Production Department to make sure that work is carried out smoothly, and must supervise procedures for making work more efficient and more enjoyable. Production department in the NatEast enterprises also done their production from outsource facility due to un availability of some machinery. Mr. Ajmal supervises four employees which are performing their duty under their instruction. About 70 workers are to be engaging in this department which performs cutting, stiching, embroidery etc. Name Mr.Ajmal Mr.Ali Mr.Kareem Abas Ali

Designation Production and operation Manger Purchase manger Quality super visor Store supervisor

Five production sub-Functions 34

Qualification MBA

Experience 4Years

M.A M.A F.A

3 Years 1 Years 4 Years

In a Nat East Enterprises the production function split into five sub-functions: 1. The production and planning department will set standards and targets for each section of the production process. The quantity and quality of products coming off a production line will be closely monitored. In businesses focusing on lean production, quality will be monitored by all employees at every stage of production, rather than at the end

as

is

the

case

for

businesses

using

a

quality

control

approach.

2. The purchasing department will be responsible for providing the materials, components and equipment Like Knitted Cotton, Leather etc required to keep the production process running smoothly. A vital aspect of this role is ensuring stocks arrive on

time

and

to

the

right

quality.

3. The stores department will be responsible for stocking all the necessary tools, spares, raw materials and equipment required to service the manufacturing process. Where sourcing is unreliable, buffer stocks will need to be kept and the use of computerized stock control systems helps keep stocks at a minimal but necessary level for production to continue

unhindered.

4. The design and technical support department will be responsible for researching new products or modifications to existing ones, estimating costs for producing in different quantities and by using different methods. It will also be responsible for the design and testing of new product processes and product types, together with the development of prototypes through to the final product. The technical support department may also be responsible for work study and suggestions as to how working practices can be improved. 5. The works department will be concerned with the manufacture of products. This will include the maintenance of the production line and other necessary repairs. The works department may also have responsibility for quality control and inspection.

35

A key aspect of modern production is ensuring quality. There fore Mr. Ajmal ensure that all Function performed consistently to achieve the desire out put. The emphasis on the Quality therefore the term quality means fitness for purpose i.e. a product, process or service should do exactly what is expected of it.

Total quality management

Leather Jacket plants in Nat East build quality into every stage of the production process. Every employee is expected to take responsibility for managing quality issues in order to make sure that waste is minimized and quality maximized. This is often referred to as total quality management and is part of the lean production methods used in modern industry. For businesses to be competitive, Production and Marketing need to work in an integrated way. Marketing is concerned with knowing and understanding the requirements of customers, so that Production can provide the market led products that are required. This also requires excellent communication systems to be in place. For that purpose the internal and External Quality Control system must established to achieved the desire Consumer demand Output.

A quality system - internal Nat East enterprises adopted the internal Quality system to ensure production department effectiveness. Internal quality system is a group of interrelated parts that make up a whole. A quality system therefore consists of parts (such as policies and processes) designed to ensure quality. A variety of organizations work with BSI to create standards for QMS. The standard specifies requirements for a QMS where an organization:

36

 needs to show that it can consistently provide products that: a) Meet customer requirements b) Meet any legal requirements.  Aims to improve customer satisfaction as a result of applying the system. This includes continually improving the system. ISO 9001 sets out eight quality management principles. These include:  customer focus  leadership - a commitment to quality by the leaders of the organization  Involvement of people - everyone in the organization having a part to play  Making sure that those processes which create quality are identified  Continual improvement of the system.

A quality system - external

37

Internal systems are ones that are built inside an organization. However, in addition, modern businesses need to build external systems. External systems are those that involve people outside the organization - e.g. suppliers. Nat East enterprises have long supply chains in which they source materials, parts and finished goods from across the Different area in Pakistan and also form the Korea and china... Take, for example, a Leather Jacket. Some of the components may come from Qasoor, others from Korea, Like Inner Cotton, Knitted cotton, Woven. These separate components will then be assembled into a sub-assembly i.e. part of the finished Jacket. This sub-assembly may take place in other unit, whilst a number of parts may then be transported and delivered to a final assembly plant. Some Production parts are outsourced. This has led to a change in attitude. Instead of an Organization having a 'them' and 'us' attitude where 'them' are the suppliers, it now makes sense to see the process as a shared one in which everyone relies on each other. This is known as interdependence. Operating activities (or operations) are the ongoing activities that a business is involved in - e.g. processing a customers order in an Main unit, producing a Leather belt or Track suit in a Pasrur as out sourced because in Sialkot the many outsourced production units are available at cheap cost and faster production process. It is important that these operations are controlled effectively to make sure that managers achieve desired

38

objectives.

If it is noticed that there is a defect to a single Piece it is essential to put into effect control

procedures

so

that

the

line

can

be

put

right

immediately.

Production variety is inevitable and this can lead to organizational problems. For example, an increase in the number of component types will require more space in the stores. Control of variety is essential in reducing storage space, the number of production runs, types of machines, production aids and in making production control easier. As firms move towards specialization, opportunities increase for mass production. Mass production

is

the

production

of

goods

on

a

large

scale.

Typically the greater the volume of mass production, the greater the benefits of economies of scale as the firm moves towards its lowest unit cost size. It is often assumed that

mass

production

will

affect

quality.

However, this is rarely the case. With mass production, quality will be more uniform and will not depend upon the scale of production but upon the skill of managers. Automation and robotics have enabled managers to gain far more control over operating systems. Computer Aided Design (CAD) enables high levels of efficiency in the design of products. Computer Aided Manufacturing enables high levels of control and standardization

in

manufacturing

processes.

CAD/CAM - computer-aided design and computer-aided manufacturing. A product is designed with a CAD programmed and then the design is translated into instructions which are transmitted to machines that are dedicated to the manufacture of items such as car parts, or the finished assembly.

39

Methods of production

Two major processes should come together in the preparation of a product or service for market: 1. Market research to find out what people want to buy, and how they want it 2. Product design and development to look at different ways of producing a good or service. There are several different methods of producing goods.

Job production

Involves the production of single, individual items. Nat East used it when Customer demand are unique are the Goods are out of routine work like HIGHLY Embroidery Item Fashion

Jackets

Trouser

etc.

Firms might specialize in producing one-off jobs such as customized motor bikes. The production process is concerned with transforming a range of inputs into those outputs that are required by the market. This involves two main sets of resources - the transforming resources, and the transformed resources. The transforming resources include the buildings, machinery, computers, and people that carry out the transforming processes. The transformed resources are the raw materials and components that are transformed into end products.

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Any production process involves a series of links in a production chain. At each stage value is added in the course of production. Adding value involves making a product more desirable to a consumer so that they will pay more for it. Adding value therefore is not just about manufacturing, but relates to all processes e.g. advertising, promotion, distribution, etc that make the final product more desirable. It is very important for businesses to identify the processes that add value, so that they can enhance these processes to the ongoing benefit of the business.

There are three main types of process: job, batch and flow production. Job production

Job or 'make complete' production is the creation of single items by either one operative or a team of operative's e.g. the Humber Bridge or a frigate for the navy. It is possible for a number of identical units to be produced in parallel under job production, e.g. Leather cutting of Jacket of a similar type. Smaller projects can also be seen as a form of job production, e.g. hand cutting a Leather, Embroidery, etc. Batch production

The term batch refers to a specific group of components, which go through a production process together. As one batch finishes, the next one starts. For example on Monday, Machine A produces a type 1 Track suit part, on Tuesday it produces a type 2 Track suit, on Wednesday a type 3 and so on. All Track suit will then go forward to the final assembly of different categories of suits.

41

Batches are continually processed through each machine before moving on to the next operation. This method is sometimes referred to as 'intermittent' production as different job types are held as work-in-progress between the various stages of production.

Flow production

Batch production is described as 'intermittent' production and is characterized by irregularity. If the rest period in batch production disappeared it would then become flow production. Flow production is therefore a continuous process of parts and subassemblies passing on from one stage to another until completion. Therefore the Nat east adopted it to made the gloves, bike gloves, Martial belts. Units are worked upon in each operation and then passed straight on to the next work stage without waiting for the batch to be completed. To make sure that the production line can work smoothly each operation must be of standard lengths and there should be no movements or leakages from the line, i.e. hold-ups to work-in-progress. For flow production to be successful there needs to be a continuity of demand. If demand varied, this could lead to a constant overstocking of finished goods. Like the Gloves, Working Gloves unit mostly adopt this type of process in the Nat east enterprises. Stock control

Stock control is play a massive role in the Nat east enterprises because they hold the stock to accomplish the orders at that limit where the quantity can be utilized at effective cost no extra cost will be bear on extra unit take.

42

Businesses hold stocks in a variety of forms: •

raw materials

•

work-in-progress

•

finished goods

•

consumables

•

Plant and machinery spares.

The aim of stock control is to make sure that a business always has sufficient stocks to meet its own needs and those of consumers. However, it needs to keep the minimum amount of stock that it can so as to avoid damage and waste, and to minimize the cost of holding

stock.

Having too high or too low a stock is harmful. High stocks represent money lying idle when it could be put to better use, whereas low stocks could result in not being able to take on and meet orders. The table illustrates the disadvantages of having the 'wrong' stock levels:

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Analysis of Business Operation Business operation carries the all production material which is required to complete the production unit. Therefore their source, quantity utilization is essential for the production department. In the Nat east enterprises following material are to be used and the source of material can be described in this phase.

Raw Material Raw Leather in Pakistan comes from slaughterhouses from different regions. Leather of every region has its own characteristics and qualities. Raw leather is brought to Karachi, Kasur, Lahore, Multan, and Sialkot, for further processing so it can be used for export purposes.

Threads Different sorts of threads are used in manufacturing of leather items, among which cotton and nylon threads are very common and those are easily available in local market.

44

Button Buttons are also easily available in local market both best and low quality

Zips All kinds of zips used in manufacturing are imported from China, Korea, Japan, and Taiwan.

Sundries Sundries are easily available in local market.

Embossing It is a process, used to emboss logos and designs on the product. It is done through heating the product where screens are used for printing. Locals emboss leather garments.

Embroidery Embroiders are available in the market. It is a separate business as mostly Embroidery is done out of factory out sourcing.

Screening Screening work is also done in market on very competitive rates.

Rubber Logo Logo processing is done both inside the factory and out of factory.

Beads work plus Frill and Studwork It is used in motorbike garments for American market.

45

Production operations Production operation includes the activity which is performed to achieve the productivity of the system. As described above which material are used in the Nat East enterprises Production department, now it’s the time to made output for the customer. The operation involves the activity and processing of unit For Material generation to Quality control step. There fore here we are taking some single unit Like Leather product who they are generating through different phase.

Pattern making Pattern making is a design or sample prepared on demand of customer or importer. What type of product he wants. In Leather and leather products cluster, most pattern making is done manually. There is also computer based pattern making but our pattern masters are not aware about such techniques due to lack of technological skills. Some institutions have installed computer based pattern making courses like invesmark (PGS Model), invesmark

(GENMA),

Invesmark

(WINTRO),

Invesmark

(LECT),

Invesmark

(INVCOPY). Digitizing of manual pattern making for grading Computerized pattern Grading of Manual pattern Use of plotter for pattern making

Cutting Cutting is the most important phase of product making. Cutting should be up to mark (as according to pattern design) and as per customer demand.

46

It gives actual shape that what pattern makers do. Modern technology saves time with the help of electric cutters but unfortunately our cutter masters are not very much keen on using this technique.

Embroidery Embroidery is a kind of stitching. It is a kind of punch stitching in leather jackets and suits. This technique is used to attach names, logos and brand names.

Stitching Stitching is basically to unite different cutting pieces. It gives actual shape to the product after pattern making and cutting process Stitchers charge more then pattern and cutting master. In factories there is a specialized chain system, one person making shoulder will make only shoulders. One person is busy in back making side and one in front. But outsider stitcher did single handedly from cutting to stitching stitcher make product up to standards as a demand from importer. One-needle lock stitch machines are used for stitching Open stitch (kinaray ki salai) Double stitch (cheervy salai) Raw edge (kachi lab)

Button Taking It is done through manual machines and through button dies.

Line Checking

47

Line checking is to check whether all process of making product manufacturing up to mark. If there is any hurdle, n he checks that process and removes that difficulty. In Sialkot cluster there are many brands like juki, Mitsubishi machines are being used for this process. These machines are available in market also second hand machines are also available in market. Now china made juky machines available in market, at cost 12000Rs.

Finishing Finishing is to give final touch to a product that as it is done on customer demand. Infect, it is a kind of final checking. It sees that is there any fault if there is any fault it could be removed.

Manufacturer In house and outsource manufacturer available in market there are 250 makers in Sialkot. Marakiwall, pasrur road, S I E state. Most of the tanneries in ugoki road and capital road. These manufacturers fulfill the demand of cluster.

Makers Local makers are available in cluster they are mainly situated in pull Aik, defence road, hajji Pura road, s I e area. They fulfill 60% of total demand of industry reqirements. Their rates are bit high relatively compared with in house making.

Raw material Supplier Raw material suppliers are present in the Sialkot cluster. Other raw material suppliers are in Kasur, Lahore, and Karachi.

48

Machinery seller Machinery sellers are present at market on defense road, shahab pura, Raja bazaar, China made juky machines are also available in market. Second hand Japanese made machines are available in market. Customer pay more focus on second hand Japanese machine because it more durable then china made machine china made machine contain same working ability and fine quality. Japanese second hand machine and china made new machine has no such difference.

Makers In Cluster nearly 200 makers who make products for firms they make quality products of export quality most of firms make their from these makers. Especially small firms make their from these makers.

49

Future Cluster Map SMEDA

Raw material Machinery suppliers (130)

PSIC

VTI/TEVTA

Principal Firms Large (20-25) (PLGMEA) SME’S (425) (PLGMEA)

Importers / Buyers

Private BDS (20)

End Product Retailers

Commercial banks

VENDORS (150)

SCCI TDAP

PLGMEA Week Relation …………………… Good

(1,2,3)

_______________

(4,5)

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Value chain of leather jacket (40ft cow leather)

Raw leather Rs 3000

Checking Rs. 15

Pattern making Rs. 20

Cutting Rs. 30

Sewing Rs 250

Checking Rs. 20

Packing Rs. 50

Final Checking Rs. 20

Shipping Rs. 275/Kg

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Overheads Fusing Rs 15 Solution (kiwi) Rs. 10 Thread (sunbeam) Rs. 4 Electricity Rs. 7 Button Rs. 10 Aster cutting Rs. 100 Logos Rs. 15 depend on order size Rubber logo 12 inch Rs. 10 Printing ink Rs. 15 Embroidery 1000 stitches Rs. 5 Needle machine Rs. 20 Kilting Rs. 45 Poly-thane bag Rs. 5 Box width Rs. 10 for 1 jacket

Division of leather making jacket Shoulder 12 ft Front 10 ft 52

Back 10 ft Lining 03 ft

Remaining leather use for lining and pockets Weight of jackets Cow made leather 2.5 kg Sheep made leather 2.0 kg

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Value chain of Motorbike suit

Raw leather Rs. 6000

Pattern Making Rs. 20

Checking Rs. 20

Cutting Rs. 50

Stitching Rs. 500

Checking Rs. 15

Final Checking Rs. 10

Lining Rs. 30

Packing Rs. 50

54

Overheads Fusing

Rs. 30

Slotion making

Rs. 20

Electricity

Rs. 15

Aster cutting

Rs. 150

Freight charges

Rs. 275

Hanger

Rs. 5

Logos

Rs. 15-25 (depend on order)

Embossing

Rs. 5/1000 stitches

Qulting

Rs. 90

Hanger

Rs. 18

Poly thane

Rs. 10

Nocks Ross logo

Rs. 5

Printing ink

Rs. 30

Protectors

Rs. 120

Costing of zips can go up to above Rs. 1500 as special order Weight of motorbike suit is 4.50-5 kg

Division of leather in motorbike suit Shoulder

12 ft

Front

10 ft

55

Back

10 ft

Leather pant 35 ft Maximum gage of motorbike suit is up to 1.6 Many firms have permanent employment system, they pay their employees six to eight thousand rs on average, excluding overtime. Overtime is paid 1.5 times higher than the normal wage rate. Some firms pay as per piece manufactured by the labour.

Marketing Department Almost all the major activities like marketing, production, finance, administration etc. are controlled through the partners. All the major decisions are taken by management executives in weekly meetings and then communicate further to the employees. All the power is exercised in the head office because the Managing Partner and 2 partners sit over there. The marketing research unit works under the supervision of Senior Export Executive and Partner of the Organization Mr. Azamatullah. He is also the in charge of:

1:

Marketing Department.

2:

Export Department.

3:

Quality Assurance Department

MARKETING DEPARTMENT The task of marketing department IS to creating, promoting relations, delivering goods & serving to the customers. This department is responsible to managing the demand of products, increasing sales volume, collecting market information and

56

taking decisions about quality control. Senior export executive is the head of this department. EXPORT DEPARTMENT Export department is sub-section of marketing department. Basically in export department and marketing department, some of the functions are intermingled, which we cannot be separate to maintain the quality control and goodwill of the firm. The export department functions are Correspondence with Customers, Documentation, Rebate Claims, and Dealing with Cargos, Managing Schedules, Dealing with Banks in export transactions and dealing with other export related organizations. This department has also responsibility to forward orders and its instructions to Production department for meet the customer requirements. Export is a very risky business, when order is received then this department checks that how much risk is involved in this order or how can we fulfill the entire requirements.

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Number of Employees working in the Marketing Department. Name Mr.Azmattulah Mr.Shafqat Ali Irfan Ali Adnan Saleem

Designation Senior Manager Sales And Marketing Export manager Assistant Manager

Qualification MBA BSC

Experience 10 Years 6 Years

BSC M.A

5 Years 3 Years

The main work of the marketing department is to control all the marketing Activities like product planning, advertising and promotional campaigns, pricing, Packaging & Forwarding. All the decisions regarding the above are taken in the Head Office at Sialkot. The Chief Export Executive manages to forward the goods through different cargo agencies and also responsible how to save time regarding shipments. Marketing Operation: 3 main persons of this Organization handle the marketing operation. Chief Export Executive: In the absence of Mr. Azamatullah, Mr. Jameel Ahmed handles Marketing & Export Department and he is well talented and experienced person. All the major decision related to Marketing department taken by the Senior Export Executive Mr. Jameel Ahmed with the coordination of Managing Partner. He also personally visits to customers and discuss for mutual interest. He is the one who also participate in the Trade Fairs for getting more business.

58

Sales & Marketing Manager (Korea): The Organization has also engaged a person in Korea who covers the Korea and few countries near to Korea. Mr. Azamatullah Mostly lived in Korea therefore he has been Engage in the Marketing Policy for their Own Business to insure the Customer searching and their demands full fill as their satisfaction. Nat east lasso import the Fabric like Woven, Knitted cotton.Mr Azamatullah also deal with the supplier about the terms in Korea. Organization from the last two years and has a good grip due to Mr. Azamatullah Korean & Japans languages.

Export & Marketing Manager (Pak): The third one person Mr. Irfan related to marketing department is an Export Manager who is working in the Main office for the betterment of business. His main job is to find customers through Internet by using search engines and by sending mails. He is also responsible for the export documentation, rebate claims, bank documentation and sampling with the assistance of Mr. Shafkat ali how works as Marketing manager in the absence of Mr. Azamatullah.

59

Marketing Strategy: In concern with the sportswear, Organization is more willing to expand their Business in Europe. On the other hand there are different market segmentations Available in Europe as related to Sports Wears and Garments range which is Shown in below said table. Segment

PRODUCT CRITERIA

High price luxury Limited collections, segment made with special care; sometimes handmade,

BRAND NAMES

FASHION CRITERIA

Doice & High fashionable Gabbana, Prada, Collections. Exclusively Georgio designed materials and Armani,

high quality materials, Designer /brand name stands for exclusivity and fashionable clothes

Donna Karan.

artworks Trend-setting in fashion

Upper middle price segment

Collections are produced after presale; extra attention to fitting and

Max Mare, China, Hugo Boss, Blumarine, Marni,

Large Variety of styles and Of materials. Styling and Fitling are vitally important.

Market share 15 Percent

Accessories. ' Brand-name goods; Strenesse, Marc Product in line with the good cain largest fashion trends. quality materials; broad ranae in desion

Middle price segment

Collections are produced after presale; good to

French Good fitting is important Connection, In- Recognizable by brand-

Medium quality materials.

wear, Benetlon, name visible on outside

Market share 5 Percent.

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Market share 30 Percent

Trend-following or classical assortment; brand-name aoods

S. Oliver, Esprit, Mexx

Low to middle price segment

Produced in larger quantities to lower the price; basic styles, less

Private labels, like C&A, Promod, We,

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Collections with a view to current fashions

Source: CBI market information database URL: www.cbi.nl As per table we saw there is much segmentation available in the market In which: •

First one is high price luxury segment, which have 5% share of the

Market. In this fermentation only big brands survive with superior quality Products and they got extra profit margin from the buyers. •

Second is upper middle price segmentation which covers 15% share

Of the market business. In this segmentation there are also brands survive Which have their own registered designs and products are Also perfect according to requirements. •

Third segmentation available is middle price segmentation, which

Covers 30 % market share with B quality products of the different brands. The sales volume is sufficient in this segmentation because the products Are affordable for middle class buyers. •

Low to middle price segmentation covers the 40% share of the market.

In this segmentation different importers sell the product with their own private Labels and names. In this segmentation the prices are low and affordable For the customers and on the other hand most of the companies in Europe Are dealing in these things with their own names. Nat East Enterprises also try to focus their business upon this segment because the buyers are more in this segment and quality required is in middle class range. •

Low or very low price segment covers 10% share of the market. In this segment no brands survive with lower quality of products. The products are of standard formats and no extra worries involve in this segmentation. But quantities required are very cheap which helps only in improving turnover instead of increasing profit margin.

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•

The Organization has more potential for improvement and business gain. But due to more competitors within the countrywide market and from India, Taiwan, china etc., the Organization is facing a swear competition and because of this the export management is keenly in touch with their strategies.

•

The management is always committed to attract the old and existing customers. For this purpose it is offering 5% to 7% extra goods on each and every order. It is also offering promotional items to retain the customer.

•

The management is also committed and working to attract new customers with competitive price offer strategy and new + innovative designs of products. It is always committed to satisfy the customers through quality improvement and for this purpose Organization adopts ISO Certification in 2001-2002.

•

The management ;s also working as a trader through which it can easy and better facilitate their customers and also increase the annual turnover of the Organization.

Product Planning, Development & Management: It is a reality that the overall Organization or marketing department of the Organization is not seriously concerned with the new product planning or development, which is not good for its future. The management or marketing department is working to comply with the different requirements of different customers but with existing products, designs available in the market or some similar to the brands. The Organization also engaged venders to comply with these different product orders, which is the cause of no more improvement towards innovation.

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Pricing Strategy: As the Organization is export oriented and due to this it always considered about competition within the market where it is going to export or offer prices. In pricing strategy the Organization's first focus is upon:•

To achieve a target return

•

To maximize profit

•

To increase sales volume

•

To maintain and increase market share...

It also consider about market situation and country's economic situation. All the other factors for pricing like different costs and profit margins will come later in its pricing strategy. Near about 50% business of the Organization is on advance basis, which covers the commercial risk and lot of problems to manage resources for orders and all of This is due to good reputation of the Organization, which created creditability among All the buyers. 30% of the business in EU is on L.C. at sight or C.A.D. basis, which is also very secure for the Organization and management to handle orders. Only 20% business of the total export is on 30 to 60 days credit basis. As I observed by myself the executives always reduce and increase their different markets or for different customers. Some times in few competitive products it also offer profit margin from 7% to 40% after calculation of fixed & variable costs for Prices lower than its cost for just to retain the customers. That's why customers considered Nat East Enterprises as a trust worthy firm. Distribution Strategy: The opportunities for Nat east enterprises to chose its distribution channel depends on external factors (demand and requirements of importers/buyers) and internal factors. In Europe the main distribution channels are as under:

64

, .,, Source: CBI market information database URL: www.cbi.nl/disciaimer. Wholesalers: By buying on his own account, the importer/wholesaler takes title to the goods and is responsible for its further sale and distribution in-his country. He is familiar with local markets and can supply considerable information and guidance to the exporter in addition to the primary business of buying and sealing such as administration of import/export procedures and holding of stock. The development of a successful working relationship between exporting manufacturer in developing countries and importing/wholesaler or importer can lead to a high level of co-operation with regard to appropriate designs for the market, new trends, use of materials and quality requirements. Retail organizations: Buyers at clothing multiples, Horne shopping companies and variety stores, which have mainly or exclusively private labels in their assortment, divide their budgets between the purchase of finished products via direct imports (sourcing readymade products) from low-wage countries and sourcing from own design. Home shopping companies are keener than other retail distributors about reorder facility. They want to start with small orders to test the market and make a firm, but not final, bulk commitment a few months later. If an item sells like a hot cake, they expect subsequent supply of maybe three folds Agents are intermediaries between manufacturer and retailer, receiving a commission from the former. Capital requirements are limited because this

65

cooperation is based upon commission. However, agents mainly work with brand names and are therefore less interested for most exporters in developing countries. As concern to Nat East Enterprises the management is adopting to find Wholesalers and Retailer organization in their distribution strategy with the help of their Sales & Marketing Manager Mr. Shafqat Ali. Promotional Strategy To promote the export of Organization products in market, Nat East Enterprises is applying following tools: Trade Fairs Participation: This is by far the most important promotion tool, as the Organization has the opportunity to present its products in front of importers, agents, manufacturers and retailers. Organization representative participates in ISPO, Euro-Bike, Intermit fairs in Germany & ECMA in Italy as an exhibitor or visitor. Organization brochures and Catalogues: Organization uses broachers and product catalogues for providing relevant information to potential customers. Organization sends by air and distributes freely printed brochures and catalogues in trade fairs to potential customers. Visit of different Buyers and firms As personal contacts always work best in any sector, the Organization is investing time and money to visit different buyers and firms. Representative spends additional weeks after a trade fair to follow up on contacts and to make appointments with the most promising trade partners. Organization stationary: In order to build the right image for Organization, the management uses printed stationary in shape of order book, Letter pad, Fax message, Invoice and Packing List.

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New Year & X-MAS Card: Organization also sends New Year and Christmas card to customers for building profitable business and personal relations. Promotion: This applies to the use of e-mail and website. Organization has 2 different websites: - www.Nateast.com.pk Export department has engaged in sending e-mails to Potential Importers about Organization and its products. Sampling: Sampling is a very important tool to increase sales of Sports Goods & Sports Wear. Before placing the order, every customer wants to see original product and with required logo so that samples are playing good role in sales promotion. Organization send samples to customer free of cost through DHL, TCS or TNT couriers.

Human Resource department Human resources are the people that work for an organization, and Human Resource Management is concerned with how these people are managed. Nat east enterprises Human Resource Management (HRM) has come to mean more than this because people are different from different Location and the other resources that work for an organization. People have thoughts and feelings, aspirations and needs.HRM has thus come to refer to an approach, which takes into account both: 1. The needs of the organization 2. The needs of its people. Human Resource Manager mainly Provide leadership and coordination of Organization Human Resource functions. Develop and implement corporate Human Resource strategy and programs including the

67

Primary Responsibilities  Create Organization strategic recruitment and selection plan.  Coordinate Organization equal opportunity programs to achieve diversity goals.  Create Organization strategic training and organizational development plan to meet personal, professional, and organizational needs of Organization employees.  Oversee compensation programs to ensure regulatory compliance and competitive salary levels.  Oversee the design and development of compensation strategy and programs.  Direct the administration of benefit programs to include: health, retirement, death, disability, and unemployment.  Evaluate and recommend improvements to benefit programs.  Coordinate the administration and negotiation of union contracts.  Develop and coordinate grievances and mediate workplace disputes.  Evaluate procedures and technology solutions to improve human resources data management.  Recommend and maintain an organizational structure and staffing levels to accomplish Organization goals and objectives.  Evaluate Organization culture and provide recommendations on changes to accomplish Organization goals and objectives.  Evaluate and recommend human resource outsourcing opportunities and identify potential vendors.

In the Nat east enterprises Different individuals have their own needs and aspirations. HRM therefore involves finding out about the needs and aspirations of individual employees, through the appraisal process and then creating the opportunities within 68

the organization (e.g. through job enlargement) and outside the organization (e.g. through taking up Training opportunities) for employees to improve themselves. HRM therefore relates to every aspect of the way in which the organization interacts with its people, e.g. by providing training and development opportunities, appraisal to find out about individual needs, training and development needs analysis, etc. HRM Department comprises of the HR Manger, Two Assistant Manger and a payroll assistant. Mainly there are 5 people which deal with the HR department. Each person performing their duty according to their responsibility. HR Department run different programmed to trained the employee and for the new worker which is helpful to retain the worker. During the duration of my training following main functions are to be analyzed deeply How they performed and managed and the HR Management.

Training and development needs analysis

An analysis of the opportunities and experiences that is required for individuals to train and develop in order to meet organizational and personal objectives. A training and development plan can run under the Hr manger which is assist by the assistant. Then created set out how these needs can be addressed in practical steps. In the Cutting Department new worker can’t manage their functions for that purpose the four day programmed introduced by the Nat east enterprises to train the new worker. The training and development programmed designed for technicians at the Organization. Technicians are appraised by their line managers to identify their personal training and development needs. They then work with a professional consultant on development

69

training activities as well as attending relevant courses either at the training centre or on external courses.

Employer/Employee relations

Employer/employee relations refer to the communication that takes place between representatives of employees and employers. Much of the employee relations involve employees and employers working together. Indeed, part of the aim of the Sialkot Labour association policy today is to create a system of shared responsibility of employers and employees for working practices, conditions and other areas of working life. This policy of shared responsibility is called co-determination. Discussions between employers and employees typically cover the following areas: •

pay

•

bonuses

•

the work environment

•

disputes

•

work schedules

•

grievances

•

health and safety

•

hours of work

•

Production targets.

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Successful employer/employee relations involve striking a balance of interests. From the employer's point of view, industrial relations is about having the right to manage - the ability to plan for the future so that a Nat east enterprises can continue success, to make profits for its Partners and to keep its employees motivated. From the employee's point of view, it is all about securing the best possible conditions and living standards for employees.

High labour turnover

Where employees are not happy with working conditions this frequently leads to high labour turnover, bad timekeeping, and high levels of absenteeism. It may also occur in the form of slackness by individuals, poor working, and deliberate time wasting and similar practices. Other evidence of discontent will be revealed in complaints, friction, ignoring rules and apathy. There are a number of forms of organized trade union action, including: •

withdrawal of goodwill

•

a go slow

•

working strictly to the rules set out in work rulebooks and sticking rigidly to only doing tasks set out clearly in a job description

•

refusing to work overtime

•

Going on strike.

All of these actions are undesirable:

71

•

they reduce Organization profitability, and its' ability to fulfill orders

•

they harm employment prospects, and reduce wages of employees

•

they lead to festering discontent

•

They cause problems for customers and the economy as a whole.

Nat east enterprises accommodate other Healthy facility to manage theses discrepancies which enhance the employee working condition. Thus it is very important to create harmonious workplaces for the benefit of all concerned. The work of HR Department in the enterprises is primarily concerned with outlining good practice and models of harmonious working practice.

Structure of Finance Department Finance department is containing 3 rooms. Finance manager’s Office is situated there along with accounts office, 2 Assistant accountants, and 2 Clerk.

Departmental hierarchy Financial Department

Accountant

Assistant Accountant

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Clerk

No of Employees NatEast Enterprises Finance department composed of 6 employees are working on permanent basis/status at the moment.

Finance and Accounting operation In Accounts Office, Accounts manager, two Assistant accounts manager and 3 more persons are there to handle the all the accounting process. Tasks handled by accounts office are •

Daily Journal Vouchers

•

Cash payment Vouchers

•

Cash Receipt Vouchers

•

Bank Payment Vouchers

•

Bank Receipt Vouchers

•

Posting the vouchers in work sheet (Registers of accounts).

•

Taking Vouchers from Sales and Purchase office and posting them on excel work sheet Accounts.

•

Generating Report of Cash flow, Income statement and Balance sheet.

Finance Functions •

Budget preparation

•

Budget administration

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•

Cost allocation

•

Accounts payable

•

Contract administration

•

Billing

•

General accounting records

•

Fixed assets records

•

Custody of funds

•

Investments

•

Debt administration

During my internship period following activity will be performed under the instruction of the senior. Daily Journal Vouchers I learned here how to fill the Daily voucher as in first we have to recognize the type of transaction. Lets say 1 of our debtor asked to take money from 1 of our creditor and our creditor is willing on this then we are going to pass a journal entry in which we will debit our creditor and credit our debtor so the entry will be Creditor-------------xxxxxxxx Debtor---------------xxxxxxx For entering this transaction we first write the date at the top right corner of the voucher. Then we write the names of creditor debtor in particular column we have to write the name of debtor which is being credited with a bit space as mentioned above. After that we write the amount of money in specific columns then at the end of these columns we write the total amount of money being transacted in this transaction. If there are more then 2 accounts involved then the total amount will be different from at least 1 individual account. At the end we write the money in words and signature there. 74

Cash Payment Vouchers Cash payment voucher is prepared for keeping record of Cash’s payment which includes payment to creditors and payment for daily cash expenses. In this kind of vouchers only Cash account is credited and other accounts like daily expenses accounts and creditors’ accounts are debited. Daily expense accounts consists a lot of expense which are used in Organization, it depends on type of Organization and resources used in Organization. Such as if we are giving cash for stationary or cash for Mobil oil for Vehicle used for transport of employees. For writing this kind of voucher first and important thing is to recognize the type of expense such as to which account a particular expense belongs say. For example if there is a bill of fuel then we have to recognize where is it used, there is 2 usages of fuel one for vehicle for transport of employees and other is used for generator, so we have to check where it is used and then particular account should be debited. Admin & selling Exp -------xxxxx Creditor’s name------xxxxx Cash--------xxxxxx Here cash will be sum of both the Admin & Selling expense and creditor. After filling the voucher the entire supporting are attached along with voucher.

Cash Receipt Vouchers Cash Receipt voucher keeps record of all the payments received by any source of income. It might be against advance given to employees or cash received from debtors. In this kind of vouchers cash is debited and debtor or other accounts against which cash is being received is credited. For example if we received cash from our debtor then the entry will be 75

Cash ----------- xxxxx Debtor--------xxxxx After filling the date we write the cash a/c and debtor in particular and their amount in specific columns, then total amount at the end and amount in words. A cash receipt slip is also filled by accountant whose one copy is given to debtors and other copy is attached with the voucher. Bank Receipt Vouchers Banking related issue is also handled by Accounts office. Nat East Enterprises is doing business with 2 bank located in Sialkot. Standard Chartered Bank and Muslim Commercial Bank. When payment is received by any debtor or Organization it submits some money in bank account then Bank Receipt Voucher is filled to keep the information about the bank account and transaction. In this case Bank account is debited and other account will be credited which might be debtor or cash. Bank Name/Account--------xxxx Cash------------------------------xxxx Debtor----------------------------xxxx

Bank Payment Vouchers Banking related issue is also handled by Accounts office. When payment is made by bank to some particular account such as creditors or when Organization withdraws payment for office used then Bank Payment Voucher is filled. In Bank Payment Voucher Bank is always credited against some particular account which might be a creditor or drawing for office or owners’ personal drawing. In this case the transaction being posted in Voucher will be

76

Drawing ---------xxxx Creditor----------xxxx Bank Name/Account--------xxxx

Posting the vouchers After filling the vouchers these are checked by accountant and the manager then these are these are given to subordinate for posting one person post them on hard copy and other one on computer. Cash payment voucher are first posted on Cash book which is daily maintained and shows cash flow of NatEast Enterprises, then these are posted on ledger. In first we write the date on cash book and then we write Cash in hand on the left side of cash book then we write amount in particular column ahead of description column. Then we write the cash Receipt voucher’s Voucher no. at the left hand of page then description such as against which account cash has been received then after write the amount in amount column we write the total amount of cash in last column. After that we write the total amount at the bottom on the page. Then we go to right hand page where we post all the cash payments made. We have to keep track of voucher number so we write the first voucher first after sorting the entire cash payment voucher. We write the voucher number in first then description of voucher in which we write the all the account names against which cash has been paid then we write the amount in the right column. After that total cash payment is written at the right most columns. At the end we write the cash in hand which is subtraction of total cash amount at the left side and all the expenses made to date. For convenience we write the Total amount at the bottom of right page then we subtract the expenses and write it on the row before the total amount. Then Cash payment and Cash Receipt voucher are posted in general ledger. I first find the account’s page from index of accounts then open that page and write the voucher number and description, in description if there is any supporting with voucher then particular

77

reason or some other detail from supporting is written on description cell then amount is written in right side. Bank book is also prepared in the same way we write the bank payment and bank receipt voucher number then we write the cheque number and the name of person to whom or by whom the amount is being given or received. Then we write the particular amount in Debit or Credit side. If we are receiving money then we write it in Debit column and if we are Giving or drawing money then we write in credit column. At the end of we write the total amount which is always Debit amount and can’t be credit. When I finished my posting in general ledger, cash and bank book I was sent on computer to post the vouchers on computer. It was much easier then posting in hard copy. There were different links for pages where we can post all the entries. For example for posting cash voucher there was different link which opens a new window and we write the voucher number and description and amount. Not like the paper cash book there was only one column for amount which was for cash payment or cash Receipt, it depends on the page opened. And all the same things happen with other vouchers, bank payment and bank receipt had different links. I was told about the software that it safes all the data in MDB format which is used for Microsoft access database and it can be easily converted to excel format. It was a bit difficult for me to use Microsoft access database and retrieve data from there and convert them into excel format. After posting the vouchers it was checked by accountant either it is correctly posted or not. Sales and Purchase Vouchers Sales and Purchase Vouchers keep information about the transactions of Sale of products and Purchase of goods or raw material, which might be against cash or credit. Sales and Purchase departments fills and post these vouchers on computer which directly saves in Organization’s main computer where database is located. Then these vouchers are sent to accounts office to post them on hard paper, general ledger. Posting the voucher of sales

78

and purchase is same as above mentioned vouchers. Their voucher no. and description then amount and total amount is posted in general ledger. We have to note their credit and debit balance either an account is being debited or credited. Taking Vouchers from Sales and Purchase office and posting them on hard copy Registers of Accounts. Generating Report of Cash flow, Income statement and Balance sheet. Sales Office Sales office takes the Order from Customers and inquires about the availability of the product. Store In charge gives them the quantity available of a particular product. Then Sales department send the invoice to customer by fax or mail. Before the departure of explosives Van Gate keeper issue a Road Permit and Outward Gate pass to van driver. On copy of Road Permit and outward gate pass is given to driver and 2nd copy is sent to sales office and one is kept by gate keeper. Then sales office prepares the sales voucher. After filling the voucher that is posted in computer which is stored in main computer. Sales Voucher Sales Office take the Road Permit and Gate outward pass from Gate In charge. If both tally with the information of the order issued to store department then sales voucher is prepared. We write the date then description of the transaction and amount in Debit or Credit column the total amount and amount in words. Purchase Office Purchase officer keeps track of purchase of inventory for the Organization. It takes information about the requirement of the production by store in charge then inquires about the rates of inventory form our sellers and purchase goods by issuing purchase order. When goods are reached at factory then first their Gate inward are issued by Gate keepers. When these goods are reached to store then store in charge issue a Goods

79

Receipt Note. One copy of all the things GRN, Inward and Purchase Order and with any supporting or bills provided by seller is sent to Purchase officer then they fill the voucher and post them into computer. Purchase Voucher Filling the purchase voucher is not much different then filling and posting sales voucher. In first we check all the supporting and tally all the invoices then we fill the voucher and debit the goods and credit our seller.

Function of Finance Department Accounting System of the Organization NatEast Enterprises is following the Double Entry system for accounting. Double entry system help full for accounts department because they have dual affect and the error can be tracked easily. Convenience and easiness for the Accounts department is keeping record of their accounts both manually on Hard copies like Voucher, ledger, and control accounts in the register and on soft copy on computer. Accounts department also include the record of following department like Debtors, creditors, Sales and purchase fill the voucher and keep them in files after checking by authorized person then they submit the transactions on computer which is saved into their main server. For 1 or 2 days Sales and purchase department sends their voucher to Accounting department to keep their hard copy registers up to date so that manual accounting system should be maintained. Nat east Enterprises using the periodic inventory system. They are annually mange their inventory account. The depreciation method is on the straight line bases. The Mostly Asset relates to short term basis and their market value can be easily availing. Like stitching machinery, leather cutting equipment. Nat east has a Limited network of computers which are not linked to outer world (Internet). Network of computers are spread in the office department which are not linked

80

to the other factory department. All the IT related issues are also handled by IT Department in the main office department.

Finance system of the organization Finance department in the NatEast is done their function on the limited basis because the finance matter are mostly discuss and decided by the three partners and then given to the accounts manager for the approval and adjustment. Nat east enterprises are partnership firm therefore the finance department taken keen interest about the finance. Therefore each and every rupee can be reported to the three partners. Finance department mostly check the customer payment period which authenticate their behavior for the future dealing in the current orders. The Debtor management is done through the finance because the bettor delay occur and cash utilization is decreased which disturb the over all operating cycle period. Creditor confidence hold is also the responsibility of this department. Maximize the creditor period to utilize the cash but also ensure not to loose the supplier. Other funding is also managed under this department like before issuing the payment cheque verification and the person identity can be enter in the data base. Day to day expenditure also managed through this department. Due to the growing nature NatEast also need to some rebursment procedure by the excusive usage of fund among the partners. All this function managed by IT department. It department is not too vast but growing as business growth. They are using a custom build accounting software which is used to record the transactions and they use MS Excel for report generation. Each transaction is authorized by head accountant and manager. Another challenge of creating and maintaining useful financial organizing systems knows which papers and files to keep and which to toss. Though there's no master list of records retention guidelines that will work for everyone. NatEast Enterprises have established guidelines for what financial papers to keep and how long to keep them and how to sort they and they keep the supporting of vouchers and other papers for long term and other 81

are shredded immediately. Neatest store things like tax returns in a sturdy file box separate from other current files with a label on it. It leaves them with more room to work with and makes it easier to find what they need without having to wade through papers from past years.

Use of electronic data in decision making Electronic data play important role in the decision making of NatEast Enterprises. Data can be gathered quickly for the management and transformed into information as they required. Data files can be created which separate the manual work time which the accountant utilize to manage other work. Spreadsheet work can be done in the NatEast which gives a good and quick presentation about the reporting and monthly budgeting for the management. During my work I attend to how the debtors can be processed by the Using Information system and their Balance. first of all their due balance can be verified easily and quickly by their unique id and Customer name then the request for the material issued to the management gives exact values and figures which top level management required. Because of electronic data they came across to know those minute things which impact a lot on final place. Through this they can measure exact bad Debts Figure and help out to mange the debtor accounts. Assets and liabilities up to a maximum and minimum level can be managed through it. Electronic data can be interconnected in the finance department therefore the Cost Department also managed under same department. The Cost department related function like •

Cost of material used in production

•

Value of raw material in inventory

82

•

valuation of work in progress and finished goods

•

Cost of labor

•

Cost of other expenses in the period

•

Labor in and out

•

Profitability of each product

All theses function required quick assessment which enhances the department function and employee satisfy their worth in the office time and stress out from the overtime burden. From where they can decide which should be kept and which is not necessary. Through this top level management is able to decide which product should be taken into course for further level or which should stop. Electronic data make management able to take decision at any point of time. After making Reports by accountant using MS Excel these are sent to Finance manager one hard copy and he can attain softcopy any time via wired network.

Mobilization of funds NatEast Enterprises are partnership firm therefore the mobilization of fund is limited due to source and generation of fund. There are a number of ways of raising finance for a business. The type of finance chosen depends on the nature of the business. Large organizations are able to use a wider variety of finance sources than are smaller ones. Savings are an obvious way of putting money into a business. NatEast enterprises can also borrow from families and friends. In contrast, companies raise finance by Retaining profit in the Organization.

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NatEast partner are joint family therefore their profit share are reinvest in the organization. That is major utilization of profit in the bossiness. NatEast gain extra finance for business, take out a loan from a bank or other financial institution. The lender of money (Bank) needs to know all the business opportunities and risks involved and will therefore want to see a detailed business plan. Therefore Nat east main utilization of fund is in the production center for the short term basis due to nature of machinery. Funds cab generates many ways but effective use is the best decision for the finance manager. Funds can be reinvesting in the production department which can increase the production. Technology is changing now day by day therefore new machinery is necessity for the production department. Partners now days deciding to stop outsource some of its production material like skinning of leather, Leather tendry, stitching material. They are thinking to incorporate their own plant to produce cost effective and quality material. Training and retaining of employee need also some fund. Due to this many worker can attain set target of production and their wages can be decrease due to this descripencies. Management decide to invest in this section also to retain existing employee an appoint the new with confidence. Marketing department also need some fund therefore the manager demand for it. In the last period of my internship Mr. Azamatullah came from Korea and decided to place their own show room in the Korean market. Some of fund can be utilize for the welfare of the worker, by the medical allowance, worker children education expense.

Generation of funds Sources of finance are where finance comes from. •

Bank loans

•

Owner's (share) capital

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•

Trade credit.

External: Overdraft, leasing, hire purchase, loans, and mortgages.

Sources of funds The major source of finance is the buyers or customer Domestic and international. Funds can be generate and utilized again for the customer satisfaction in the shape of quality product.

Allocation of funds AOC’s funds are allocated to the following departments. Production & Operations Marketing Human Resource Finance The Organization major focus is on short term financing. Major allocations of funds are on these divisions.

Critical Analysis My Mostly Work the Nat east enterprises related to the financial department and also relate to the some extent to production because the finance department and production department are too relating at some extent then other department. Therefore critical analysis and financial statement analysis are measured accordingly. Note: Private Limited companies is limited to publish their financial statement on publish and their shares are not permissible to trade in the stock market. So I skip my investment

85

ratios and market trend of their capital analysis as Virtual University mention in the given format. Relate the theoretical concepts with my practical experience during my internship with the finance Department.

Financial Analysis Financial Analysis is a process which involves reclassification and summarization of information through the establishment of ratios and trends. NatEast Enterprises Balance sheet for the year 2007 and 2008, and Income statement for 2007 and 2008 is given at the end. As per instruction of VU staff, here I calculate ratio of NatEast enterprises. NatEast Enterprises Financial statement are Composed in it. Also the two year data which are used for the analysis ration described below.

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RATIO ANALYSIS: - NATEAST ENTERPRISES

DESCRIPTION:

NATESAT ENTERPRISES FINANCIAL ANALYSIS FOR THE YEAR ENDED NOV 30TH 2008,2007 2008 (RUPEES)

Sales Cost of sales GROSS PROFIT Operating expenses OPERATING PROFIT FOR THE YEAR Non operating expenses NET PROFIT FOR THE YEAR BEFORE TAXATION Provision for taxation

66,801,816 39,810,912 26,990,904 6,128,502 20,862,402 707,946 20,154,456 153,127

NET PROFIT FOR THE YEAR AFTER TAXATION PROFITABILITY RATIOS I) Gross profit margin II) Operating profit margin III) Net profit margin IV) Fixed Asset turnover ratio V) Return on investment VI) Return on Equity

20,307,583

2007 (RUPEES) 58,176,596 32,119,221 26,057,375 7,676,036 18,381,339 650,653 17,730,668 483,583 17,247,103

40.40% 31.23% 30.39% 1.54 times 0.45 times 0.29 times

44.79% 31.60% 29.64% 1.38 times 0.38 times 0.30 times

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Balance Sheet For the Year Ended Nov 30,2008,2007 %

2008

2007

Equity and Liabilities

Rupees

Rupees

Mr.Shakeel ahmed

18,011,586 10,796,3 62 855,6 85 27,952,2 63

Add Net Profit

Notes

40

Less Drawing

13,508,6 89 8,097,2 71 769,7 45 20,836,2 15

Mr.Azmatullah Add Net profit

30

Less Drawing

13,508,6 89 8,097,2 71 589,6 23 21,016,3 37

Mr.Jameel ahmed Add Net profit

30

Less Drawing

18,011,586 10,348,262 855,685 22,330,031

13,508,689 5,174,130 769,745 17,913,074

13,508,689 5,174,130 589,623 18,093,196

69,804,8 15

58,336,301

12,722,5

13,725,526

Long Term debt Liability against Asset subject to Finance Lease

3

88

26 Current Liabilities Short term running finance

2

Creditor

3

Accrued and other liabilities

4

10,350, 000 1,106,1 25 1,0 14,418

6,455,000 1,106,125 2,519,51 8

12,470, 543

10,080,643

94,997,8 84

82,142,470

Asset Tangible Fixed asset Property Plant and Equipment

5

Loose Tool

5

Non Current asset Long term security deposit

35,091,143 8,068,9 78 43,160,121

34,000,143

13,867,988

10,067,895

8,907,877 7,458,796 6,580,531 8,068,978 5,292,858 1,660,717 37,969,7 66

6,907,877 7,761,587 4,008,837 7,065,678 3,202,758 1,058,717 30,005,454

94,997,8

82,

8,068,978 42,069,121

Current Asset Stock in trade

6

General reserve Fund Security deposit Trade debtors Advance receivable and prepayment

7

Cash and bank balance

8

89

84 Finance manager

142,470

Director

LIQUIDITY AND ACTIVITY RATIOS A) Current ratio: Current Asset/Current liabilities B) Acid test ratio: Quick Asset/Current liabilities C) Cash ratio: Cash Equivalent/Current liabilities D) Receivable Turnover period: Average debtors/Credit sales/ 365 E) Creditors Turnover period: Average Creditors/Credit purchase/ 365 F) Inventory Turnover period: Average inventory/Cost of sales x 365 G)Operating cycle H) Working capital Turnover ratio: Sales/Working Capital

LEAVERAGE RATIO Fixed asset ratio: Net fixed Asset/Long term fund Proprietor ratio: proprietor fund/Total asset Debts to net worth: Long term debt/Partner fund

3:1 1.8 : 1 0.1 times

2.8 : 1 1.9 : 1 0.9 times

44 days

41 days

20 days

28 days

158 days 182 days

134 days 147 days

2.6 times

2.9 times

3.39 times 0.47 times 0.61 times

3.06 times 0.78 times 0.76 times

NATEAST ENTERPRISES. COST_ VOLUME_PROFIT ANALYSIS FOR THE YEAR ENDED NOV 30, 2008,2007 2008

2007

(RUPEES)

(RUPEES)

Sales during the period

66,801,816

58,176,596

Less: Variable cost -Production (note 1)

39,810,912

32,119,221

Gross Contribution

26,990,904

26,057,375

4,128,50

70,76,036

Less: Other variable cost

(note 2)

90

2 Net Contribution Less: Fixed cost

(note 3)

Net Profit before taxation

Contribution/sales Ratio in (%)

22,862,402 28,61,07 3

18,981,339

23,001,329

17,247,103

34.22%

32.62%

88,79,804

53,164,80

57,922,011

52,860,115

66.18%

67.36%

3.22%

2.98%

30.06%

29.66%

17,34,236

Break Even Sales: Formula: Fixed cost divided by c/v ratio Margin of Safety Formula: Total sales minus Break even sales

Percentage of Variable cost to Sales

Percentage of Fixed cost to Sales

Net Profit Margin

NATEAST ENTERPRISES %age to 30-09-08 %age to ANALYSIS OF VARIABLE COSTS FOR THE YEAR ENDED NOV 30 2008,2007 sales (RUPEES) sales

30-09-07 (RUPEES)

VARIABLE COST -Production cost: Material consumed

(note 1.1)

31.04%

20,734,075 35.25%

10,358,844

Processing Charges

2.56%

1,019,159

1.82%

586,175

Manufacturing charges

13.0%

5,175,418

8.43%

2,709,256

Power and fuel

10.1%

4,020,902

8%

2,569,537 91

Consumable tools

3.30% 60.0%

1,313,760 1.70% 39,810,9 12 55.20%

546,026 32,119,221

1.1) Material Consumed: Opening stock

10,358,844

10,004,581

Add: Purchases during the year

19,273,118

14,284,706

29,641,962

24,289,287

8,907,887

13,930,443

20,734,075

10,358,844

Less: Closing stock

OTHER VARIABLE COST Freight and forwarding

2.0%

2,738,874

7.07%

500,276

Packing expenses

1.49%

1,128,951

2.03%

143,644

Insurance

0.25%

239,819

0.31%

21,936

Advertisement and Agency commission

0.10%

72,814

0.14%

9,906

Free samples and postage

0.51%

480,305

1.07%

75,713

Foreign guests entertainment

0.19%

613,909

0.14%

9,906

Foreign tour

0.59%

507,026

1%

70,760

Export development surcharge

0.69%

466,945

0.24%

16,982

Cartage

0.36%

400,142 0.16% 4,128, 502 12.16%

11,321

6.18%

NATEAST ENTERPRISES. %age to %age to ANALYSIS OF FIXED COST Total Total (ON THE BASIS OF TOTAL FIXED COST) fix. 30-09-08 fix. FOR THE YEAR ENDED NOV 30 2008,2007 cost (RUPEES) cost

70,76,036

30-09-07 (RUPEES)

FIXED COST: 92

Staff salaries and benefits

31.0%

886,933

25.96%

450,208

Repair and maintenance

7.0%

200,275

8.49%

147,237

Charity and donations

5.0%

142,054

9.60%

166,487

Vehicle running and maintenance

2.0%

7.28%

126,252

Printing and stationery

1.5%

1.00%

17,342

0.52%

9,018

2.29%

39,714 327,944

219,381

Legal and professional charges

2.81%

71,813 43,20 2 80,39 6

Telephone, fax and internet

2.10%

60,083

Electricity/ Sui gas bills Fee and subscription

2.84%

Newspapers and periodicals

1.22%

Postage, telegram and courier

5.52%

ISO certification expenses

2.51%

Miscellaneous expenses

1.16%

357,634 18.91% 81,36 9 1.38% 35,0 20 2% 158,0 46 6.58% 71,92 7 2.41% 33,30 3 1.11%

12.84%

367,361 12.65%

Depreciation

12.50%

100%

2,861,073

CHIEF EXECUTIVE

100%

23,932 34,685 114,199 41,882 19,337

17,34,236

DIRECTOR

Working

Ratio

Formula

Year 2008

Year 2007

Gross profit margin Operating profit

Gross profit/Net sale

26,99,904/66,801,816x100 =40.40%

Operating profit/Net sale

20,862,402/66,801,816x100 =31.23%

26,057,375/58,176,596 x100 =44.79% 18,381,339/58,176,596 x100 93

margin Net profit margin

Net profit/Net sales

Sale to Sale/Fixed Asset Fixed Asset Return on Profit/Investment investment Return on Equity Current ratio Acid Test Ratio Cash ratio

Debtors turnover Period Creditors Turnover Period Inventory Turnover Period Operating Cycle

20,307,583/66,801,816x100 =30.39% 66,801,816/43,160,121 =1.54

20,307,583/18,011,586+18,011,586 +18,011,586 20,307,583/45,028,964 =0.45 Net income/Equity 20,307,583/69,804,815 =0.29 Current Asset/Current 37,696,775/12,470,453 Liabilities =3 : 1 Quick Asset(C.AInventory37,696,775-8,907,887Prepaid)/Current 5,292,858/12,470,453 Liabilities =1.8 : 1 Cash Equivalent/Current 1,660,717/12,470,453 liabilities =0.1 times Average debtors/Credit 8,068,978/66,801,816/365 sales/ 365 =44 days Average Creditors/Credit 1,106,125/19,273,118/368 purchase/ 365 =20 days Average 10,358,844+8,907,887/2 inventory/Cost of /39,810,912/365 sales/365 =158 days Debtor days+ Inventory days44+158-20 Creditor days =182 days Current Asset37,696,775-12,470,453 Current Liabilities =25,226,322 Sales/Working 66,801,816/25,226,322 Capital =2.6 times

Working Capital Working Capital turnover ratio Fixed Net fixed Asset ratio Asset/Long term fund

43,160,121/12,772,526 =3.39 times

=31.60% 17,247,103/58,176,596 x100 =29.64% 58,176,596/42,069,121 =1.38 17,247,103/45,028,964 =0.38 17,247,103/58,336,301 =0.30 30,005,454/10,080,643 =2.8 : 1 30,005,454-6,907,8773,202,758/10,080,643 =1.9 : 1 1,058,717/10,080,643 =0.9 times 7,065,678/58,176,596/365 =41 days 1,106,125/14,284,706/368 =28 days 10,004,581+13,930,444/2 /32,119,221/365 =134 days 41+134-28 =147 days 30,005,454-10,080,643 =19,924,811 58,176,596/19,924,811 =2.9 times

42,069,121/13,725,526 =3.06 times

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Proprietor Ratio

proprietor fund/Total asset

18,011,586+13,508,689+13,508,689 18,011,586+13,508,689+ /94,997,887 13,508,689/82,142,470 = 0.47 times =0.78 times

Debt to Net Worth

Long term debt/Partner fund

12,722,256/18,011,586+ 13,508,689+13,508,689 =0.61 times

13,725,256/18,011,586+ 13,508,689+13,508,689 =0.76 times

Interpretation Gross profit Margin Gross profit is an Organization’s residual profit after selling a product or service and deducting the cost associated with its production and sale. In 2007 its 44.79 and in 2008 its 40.40.Its decreasing which occur due to its purchasing cost and some production relating expense which increase in the current year. Operating Profit margin Its tell us the operating expense utilization how they contribute in the each dollar of sales to earn the profit. Nat east OP margin in year 2007 31.60 is and in Year 2008 31.23.There are not much difference which affect the ratio. Therefore the utilization in both years of operating expense is same. Net profit margin This ratio tells the earning at each dollar of sales by the Organization. NatEast NP Margin in 2007 is 29.64 and in 2008 its 30.39.ration is increasing but not effective as they need. Organization needs to decrease the expense or increase the sales or by decrease the sale price per unit to increase the sale. Sale to fixed Asset Its tell us the investment done in the asset is efficient to product goods and the asset can take effective part in the production of sale. NatEast sale to fixed asset ratio in 2007 1.38 and 2008 1.54.The ratio increasing its means the asset are effectively contribute their investment in the production of unit.

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Return on investment Performance measurement to tell us the effective use of investment by the Organization. NatEast ROI in the year 2007 0.38 and in 2008 its 0.45.ROi is increasing which create the investment efficient. Return on Equity ROE of NatEast comprises of Partners fund which are invested in the shape of retained profit and loans. The ratio in 20070.30 and in 2008 0.29.The ratio can’t create any difference because the fund or partners capital same in the both year. Profit is not also to fluctuate as much. Current ratio The ratio tells us how many companies possess current asset to pay the current liabilities. the considerable ratio is2:1.Nateast Current ratio in 2007 and in 2008 which is considerable good because they have 2 rupee to pay for each 1 rupee liability. Acid test ratio Acid test ratio tells the most liquid asset which is easily convertible into cash and paid the current liabilities. In the year 2007 NatEast Acid test ratio is 1.8:1 and in the year 2008 its 1.9:1.its means the Organization may increase the inventory or prepaid which possible to decrease the Quick asset. Cash ratio Cash ratio tells us how much you have cash in hand including bank which is most fastest easy to paid the current liability.2007 ratio is 0.1 times and 2008 0.9 times. Debtor turnover period Debtor days tell us the receivable period .the customer paid their bills in how much days. In 2007 41 days its and the year 2008 44 days. Creditor turnover period Tells us to pay the creditor during the credit period. In the year 2007 its 28 days and 2008 its 20 days which is decreased due to this the cash utility is also decrease. Inventory turnover period

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A ratio showing how many times a Organization’s inventory is sold and replaced over a period In year 2007 its 134 days its mean 2.72 times in a year 2008 154 means 1.9 times a day this period relate too much time to convert the material because the large unit production on the Bulk quantity. Operating Cycle Operating cycle defined the period to convert the raw material into finished goods available for sales. In the year 2007 the OP period is 147 days and in the year 2008 158 days. Working Capital Working capital tells us the Organization how much current asset have to pay the current liability. The showed the efficiency of the Organization. In the year 2007 19,924,811 is and in the year 2008 25,226,322. Working capital Turnover A measurement comparing the depletion of working capital to the generation of sales over a given period. This provides some useful information as to how effectively an Organization is using its working capital to generate sales. In the year 2007 2.9 times, 2008 is 2.6 times. Fixed asset turnover A financial ratio of net sales to fixed assets. The fixed-asset turnover ratio measures an Organization's ability to generate net sales from fixed-asset investments - specifically property, plant and equipment (PP&E) - net of depreciation. A higher fixed-asset turnover ratio shows that the Organization has been more effective in using the investment in fixed assets to generate revenues. In the year 2007 3.06 the ratio is and in the year 2008 the ratio is3.39. Proprietor ratio Shows the partners or director contribution in the organization. The ratio is 2007 0.78 times and 2008 0.47 times. Debt to net worth

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Organization to pay its debt by utilizing its total worth in the organization. The ratio is 2007 0.76 times, 2008 0.61 times.

BALANCE SHEET & INCOME-EXPENSE STATEMENT

Accounts Receivable: A short-term asset, usually representing a credit for a completed sale.

Cash: Money on hand in checking, savings or redeemable certificate accounts.

Current Assets: The sum of a firm's cash, accounts receivable, inventory, prepaid expenses and marketable securities which can be converted to cash within a single operating cycle.

Current Liabilities: Measurable debt owed within one year, including accounts payable, accrued liabilities, taxes due and short-term notes due.

Inventory: The stockpile of unsold products.

Long Term Debt: Liabilities due in more than one year.

Cost of Sales: COS includes the purchase of raw materials and manufacturing finished products. For non-manufacturing classifications, Cost of Sales includes providing the 98

services the entity sells. Other costs are included in the cost of sales to the extent that they are involved in bringing goods to their location and condition ready to be sold. Nonproduction overheads such as development costs may be attributable to the cost of goods sold Costs of bring electricity to the point of transmission, or administrative screening, appointment and delivery of services to patients (including supervision), could be included in COS for electric utilities or medical offices respectively. The costs of services provided will consist primarily of personnel directly engaged in providing the service, including supervisory personnel and attributable overhead. Net and Gross Profit: Gross Profit is sales minus the cost of the product or service. Net Profit reduces the Gross Profit with selling and general & administrative expenses (including depreciation), miscellaneous other income and expenses, such as interest expense and taxes.

Labor Costs: While labor expenses are most explicitly reflected in the Payroll expense line item, additional costs may be included in Other SG&A, Cost of Sales, or Net profit categories. These may include overhead, supervisory, administrative and contract wages and salary, as well as owner profit taken as salary or wages. The spread of these costs varies from industry to industry. . In the Startup-Sole Proprietorship Cash Flow series, the labor portion of Cost of Sales is broken out as a percentage of total sales.

Net Working Capital: Current assets minus current liabilities.

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Net Worth: Current assets plus fixed assets minus current and long-term liabilities. Sales: Annual volume of sales. Total Assets: The sum of current assets and fixed assets such as plant and equipment. Total Liabilities: Current liabilities plus long term liabilities such as notes and mortgages due over more than one year.

SWOT Analysis of the Nat East Enterprises

Strength

 Strong business background  Experienced labour  Competing international challenges in limited recourses  Direct link with importers  Dry port and airline cargo services available  Quality leather producer  Doing marketing their own.  Produce short and big orders  Marketing through IT (cd,s web sites)

Weakness



Unskilled labour 100



Hesitate to get bring new technology



No R&D at any level.



Not enough chemical industry to fulfill local requirements



Not healthy environment for employees.



Shortage of labour



No branding



Shortage of Raw Material &accessories.



No quality industry of accessories.



Most of Entrepreneurs are un educated



Trust level is very low among each other.



Negative price coating to importer



Not much opportunities for new exporters

Opportunity

 Business development services by TDAP, SMEDA  Association office present in cluster  By strengthen the capacity of institutions VTI (TEVTA)  Can produce skilled labour in good number  Low rate financing can built the capacity of Production  Enter new markets  Attend trade fairs with the help of (TDAP)

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 Get

help

from

SMEDA to

built

their

strategy

for

establish

their

business

Threat

 Worst law and order situation is Pakistan  Old methods of production will cause lot of damage in future  Rates of interest are increasing by banks. Globalization  Importers moving to other countries because they are getting cheaper rates than Pakistan.  In the scenario of WTO regime, Pakistani Exporters are also required to go for the compliance of the issue regarding Environment standards, quality control, and quality valuation.

Conclusion & recommendations NatEast enterprises working well in the Sialkot business sector but due to technology advancement and quality product create massive competition among the Organization. NatEast needs some forward step which put him toward the top manufacturer organization in the business sector. Therefore they need to take some necessary steps in every department which are generally recognized during my internship period. In the production department their basic need to get better access to Raw material Markets by organizing better local marketing policies. Trade fairs and better advertisement are published in the local as well nation magazine try to achieve the auctions which are stated in the magazine for the best interest of the Organization.

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To retain the labour its massive step if the Nat east want to growth because the Sialkot area have talented and hardworking Labour which are available at cheap and timely pattern. Therefore give incentive and bonuses to their labour and also time relaxation because during the Power load shedding worker need some mind healthy activity which are motivate them. Electricity is the major problem now theses days which are addressed almost every sector. To remove this, capitalize their fund in the form of Heavy power Generator not to get access of power at short term basis. International market to be analyzed deeply through international magazine which are not monitored marketing department. Better awareness can be get through trade magazines and association and also strengthen the association. Make a research and development department for the current product and future product because grip the market done through future product orientation for that purpose sampling department can research in the current product and introduce new changes in the current as well new product. Making better links between cluster and Training facilities for workers financed partly by the Sialkot exporters and the government for a more skilled supply of labor in the that sector. To bring better innovation techniques through research and development. Arrange seminars of cost reduction and production productivity courses like (NPO) Making networks combine them in joint purchases, exchange of labor.

Reference & Source www.NatEast.com.pk www.SCCI.com.pk www.ebp.gov.pk 103

www.smead.org.pk www.google.com www.cbi.nl

Annexes Abbreviations: CPC: PLGMEA: PSIC: SCCI: SME: SMEDA: TDAP: TEVTA: UNIDO: VTI:

Cleaner production center Pakistan Leather Manufacturing and Exporters Association Punjab Small Industries Corporation. Sialkot Chamber of Commerce & Industry Small and Medium Enterprises Small and Medium Enterprises Development Authority Trade development authority of Pakistan Technical Education & vocational training authority United Nation Industrial Development Organization Vocational Training Institute

Diary Sheet for the month of April 2009 Name of student: Yaseen Ahmad Virtual university Reg No: Mc070400494 Enterprises

PERIOD

Brief description of work experience (Highlight new skills and experience)

Training Organization: NatEast

analysis of work experience (in hour) HR

MD

POM

FD

IT

ADM

104

10.03.2009 to 01.05.2009

Performed the Training in the NatEast enterprises. Worked on various Department of organization including Human resource department, production department, Marketing department, Finance department

TOTAL

Legend :

HR = Human Resource MD=Marketing Department POM = production operation Management FD=Finance department ADM=Administration department

___________________ Signature of Student

___________________ Signature of Supervisor (Name: )

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