Transcript
INTERLOOP LIMITED
THE LARGEST MANUFACTURER AND EXPORTER OF SOCKS IN PAKISTAN
AN INTERNSHIP ON Interloop Limited, The hosiery miracle of Pakistan
By: NAME: MOHSIN RASHEED ROLL NO: 220677
Submitted To: Mohi-ud-Din Islamic University Nerian sharif, Ajk in Partial Fulfillment of the requirement of the degree of Master of business Administration (Finance)
June 22, 2012
DEDICATED TO, My parents and the Respected Teachers who Always try to find ways And thinks to provide which I do not know and don‟t have
Contents PART-I INTRODUCTION ....................................................................................................... 12 CHAPTER 1......................................................................................................................... 12 1.1 OBJECTIVES OF STUDYING THE ORGANIZATION ............................................ 12 1.2 COPMANY PROFLIE ............................................................................................... 13 CEO Message ................................................................................................................... 14 1.4 BOARD OF DIRECTORS.......................................................................................... 15 CHAPTER 2
OVERVIEW OF THE ORGANIZATION .................................................... 19
2.1History of interloop Limited ........................................................................................ 19 2.2 Nature of the Organization .......................................................................................... 20 2.3 STATUS OF BUSINESS ............................................................................................ 20 2.4 Organizational structure .............................................................................................. 21 2.5 Management level ....................................................................................................... 23 2.6 Business volume ......................................................................................................... 23 2.8 CERTIFICATIONS: ................................................................................................... 26 2.9 Policies of interloop Limited ....................................................................................... 27 CHAPTER 3......................................................................................................................... 30 CORPORATE OBJECTIVES AND COMPANY IN GENRAL ............................................ 30 3.1 Corporate Social Responsibilities ................................................................................ 30 3.2 Environment of company ............................................................................................ 36 2.3 Customer‟s Profile ...................................................................................................... 37 2.4 The Achievements of Company .................................................................................. 41 2.5 company‟s Products .................................................................................................... 45 Chapter 4 .............................................................................................................................. 50 4.1Administration Department .......................................................................................... 50 4.2 HR & Development Department ................................................................................. 51 4.3 MERCHANDISING DEPARTMENT ........................................................................ 52 4.4 EHS Department ......................................................................................................... 55 4.5 Engineering Department ............................................................................................. 56 4.6 IMPORT & EXPORT Department .............................................................................. 57 4.7 MIS Department ......................................................................................................... 59 4.8 Organizational Development Department .................................................................... 60 4.9 Introduction of Production Planning & control (PPC) & Production Development (PD) ......................................................................................................................................... 62 4.10 P&S Department .................................................................................................... 63
4.11 Productivity Improvement Department ...................................................................... 65 Chapter 5
Export Performance of Interloop Limited ...................................................... 66
5.1 Introduction to Export Department .............................................................................. 66 5.2 Objectives:.................................................................................................................. 66 5.3 Achievements: ............................................................................................................ 66 5.4 EXPORT DOCUMENTATION.................................................................................. 67 5.5 Company as a ............................................................................................................. 69 Proud Manufacturer of Prestigious Brands Customers ....................................................... 69 5.6 Volume of Export ...................................................................................................... 75 5.7 Measures of Company Export Performance................................................................. 76 5.8 Conclusion...................................................................................................................... 77 PART –II FINANCE DEPARTMENT OVERVIEW ................................................................ 78 Message From director Finance: ........................................................................................... 78 CHAPTER 1......................................................................................................................... 79 CHAPTER 2......................................................................................................................... 88 Part III Theoretical and practical concepts ............................................................................... 93 PART 1-CRITAICAL ANANLYSIS .................................................................................... 93 CAHPTER 1 FINANCIAL STATMENT.......................................................................... 93 2.1.1. Vertical and horizontal analysis of consolidated income statement .......................... 94 2. Vertical and horizontal analysis of consolidated Balance sheet Liabilities side ....... 95 Common-size Analysis (vertical and horizontal)............................................................. 95 2. Vertical and horizontal analysis of Balance sheet ..................................................... 97 Common size analysis (vertical and horizontal) Assets Side ......................................... 97 Interloop Limited............................................................................................................. 97 CHAPTER 3......................................................................................................................... 98 Analysis of Accounting Ratio................................................................................. 98 5.1 Inventory/stock turnover ratio: ................................................................................. 118 PART 2 ANALYSIS OF MANAGEMENT PATTERNS ........................................................ 125 SWOT Analysis ............................................................................................................. 125 Part IV summing up ................................................................................................................ 142 FINDINGS & RECOMMENDATIONS ............................................................................. 142 CONCLUSION ...................................................................................................................... 148
Acknowledgement All praises are for Allah almighty that has bestowed upon human being the crown of creation and has endowed him with knowledge and wisdom. After Allah, is the last prophet Mohammed (SAW) who brought for us revelation and unlimited knowledge and civilized the barbarian human being. Although this report base only my name but numerous people were very important to the development of this report without the support of them I could never successfully completed the project as well as the report. First of all I would like to say thanks to my parents who brought me up and made me able to face challenges of this dynamic environment. Their love and guidance is with me like a torch throughout my life. No doubt, I am nothing without my teachers. These were the personalities who polished all my abilities such as Sir Naeem Bukahri, Sir M.Muzamil, Sir Abid mahmood, I am highly thankful to the staff member of Interloop Limited. Who really cooperated with me and provide me their complete guidance. This acknowledgement will remain incomplete without the name of my great teacher Sir Rana Adnan who has a vital role in my project report. I am heartily thankful to the following persons whose cooperation enables me to compile this comprehensive report.
Mrs. Javeria Ali (Assistant Manager QA. Lab) Mr. Qamer Shahzad (Sr. Manager MIS) Mr. Muhamad Fiysal ( Manager HR) Mr. Ghulam Qasim Saheen(Sr. Manager EHS) Mr. zahid Hussain ( Manager Processing)
Finally I am thankful to CEO, Directors, General Managers, and Specially Director Finance Mr. Muhammad Masood who give me chance to enhance my understanding about the system of Interloop Limited which would ultimately help me for my future career
Thank you all!
Preface The pre-requisite of internship program is to make the students business to be aware of the actual knowledge and practice of professional organizations and also, acquaint them with the real management process. With an intention of grooming the best executives of the future, the Institute of Govt College University Faisalabad has organized a comprehensive internship program. Students are placed in leading organizations of business arena to gain firsthand knowledge and insight into their management and working. So, when I am going to choice the sector of business, I selected the hosiery a subdivision of textile business a growing and competing sector with the other business of the world. Getting a chance of working in Interloop limited, it‟s proved to be very beneficial for me. I think that I gained comprehensive insight into the working of a textile firm. But nothing could have been possible without the co-operation and guidance of the executives of Interloop limited. After the completion of internship program, internship report has been prepared just in accordance with the practical exposure. It has been my endeavor to stipulate my experience in a way that the reader may clearly understand the core concepts.
EXECUTIVE SUMMARY Being the student of finance I am to be working in the organization how is in growing stage as Interloop limited making and managing a competitive environment in the international businesses. So my working with interloop Limited is an approach how a factory while in this situation compete its competitors, by studding the financial position of interloop limited it seeming to me, the total business is managing by the educators. The interloop Limited is a vertical integration and growing unit of sock manufacturing ,as the 5s techniques and total quality improvements made the company a setup start with the customers and end with customers ,the environment of the company is good ,physically ,behavioral and democratically. management is fully motivated and focusing on their vision, the vision statements is in its prescribed form easily understood by all the level of management .the level of management is very simple and motivated . The Interloop Limited is being a manufacturing company is a good and best in its finance making, gerating and managing. I try my best to explain the interloop Limited main activities and functions, structure and a customer focusing company, this is not only effort but company is truly customer orientated company. Corporate social responsible and employees care is the main key characteristics of the company which is thoroughly explain. Consistent with company‟s goal of being the most respected manufacturing company, and its corporate philosophy which emphasizes shared responsibility to the communities where we live and work, Interloop Limited strives to join its partners in addressing community challenges through honest, constructive and meaningful dialogue
In PakistanInterloop Limited has been, and continues to be energetic in its support for projects and initiatives that seek to develop the community. Be it through its philanthropic arm „the interloop Limited Foundation,‟ or through timely transfer of expertise particularly in areas related to the advancement of the international textile sector and employee volunteerism, interloop Limited remains committed to making a difference. From 2001 to 2010, interloop Limited developing industry-leading initiatives and delivered best-in-class programs, products, and services to our partners and the communities they serve. In 2008 the president of Pakistan gave the best exporter trophy award. Company is targeting the USA and UK markets and they are producing the variety of socks. The merchandising department plays a vital role in the company. They work just like a bridge between the buyer and seller. They have an excellent HR department which improves the intellectual, emotional and social capital of its employees. They are fulfilling the corporate social responsibility by giving the aids to the corporate social responsibility by giving the aids to the IDP‟s of floods and earth quake. Their imports and exports departments control all the shipment activities. Processing and finishing departments support them to convert the raw material into finishing products. Just like the other companies Interloop Limited is also facing the political, economical, social and technological problems. Interloop Limited has many opportunities to be more successful in the future but some threats may also affect them like political instability and electricity load shedding in Pakistan.
Project Report
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PART-I INTRODUCTION
CHAPTER 1 1.1 OBJECTIVES OF STUDYING THE ORGANIZATION My actual objectives of studding the INTERLOOP LIMITED fulfill the following requirements that are in fact the real objectives of mine; To fulfill the requirement of Department management science &IT for the degree of MBA (finance). To improve my knowledge about Finance Department and other different departments of this organization To be a better Manager of financial activities of a huge and manufacturing concerns. To build up knowledge and confidence in future regarding my practical work. To highlight strength and identify weaknesses residing internally with the Finance Department of this organization. To make better understanding of theoretical financial concepts being implemented in real world setting and in dynamic environment To have more insight into the type of situations actually being encountered in a daily organizational work and practical activates.
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1.2 COPMANY PROFLIE
1. Company Name: Interloop Limited 2. Address City Office: Al Sadiq Plaza, P-157 Railway Road, Faisalabad. Factory (Socks Division I): 01 Km, Jaranwala Road, Khurrianwala, Faisalabad, Mills (Spinning Division): 7 Km, Jaranwala Road, Khurrianwala, Faisalabad. Factory (Socks Division II): 7 Km, Jaranwala Road, Khurrianwala, Faisalabad. 3. Contacts Telephone No. + 92-41-4360400 Fax NO + 92-41-4360100 Email:
[email protected]
Internet: http://www.interloop-pk.com 4. Contact Persons: For Yarn Mr. Tariq Rashid
[email protected] For Hosiery Mr. Muhammad Shahzad
[email protected]
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CEO Message
It gives me immense pleasure to share Interloop’s continuous triumph with its stake holders. Our 3 year business plan prepared in December 2006 was successfully completed in year 2008. We successfully diversified in to Men’s and Ladies dress and casual socks, Infant socks and enhanced our capacity in fine gauge Athletic socks. We also enhanced the capacity of our state-of-the-art Spinning Mill. We were able to gain the confidence of Nike during 2008. We completed a 9 megawatt Energy Division with cogeneration and a second Hosiery Division. This facility included 880 knitting machines, a world-class dye house, and 5 ton capacity yarn dyeing plant. By the grace of God, in the area of specialization, Interloop has completed 17 years of its existence and has established it self as one of the leading players on global level. We have now formulated a 3 year plan which will entail investment of US$40 Million by the end of 2011 to enhance our manufacturing capabilities globally. We plan to achieve a total global hosiery production of 38 million dozens by the end of year 2011 with an estimated FOB turn over of 170$ millions. Interloop is fully aware of its role in nation building and social responsibility. We have been continuously sponsoring various welfare activities including the SOS children’s village in Faisalabad. Interloop has now signed a MOU with The Citizen Foundation, which runs 530 schools, for establishment of 8 schools in Faisalabad district .Interloop had also set up a Tent Village at Chattar Kallas in Azad Kashmir for the earthquake victims in cooperation with UNHCR, UNICEF, OXFAM, WFP, WHO and Azad Kashmir Government. Musadaq Zulqarnain C.E.O SUBMITTED TO
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1.4 BOARD OF DIRECTORS
Musadaq Zulquarnain President & CEO
Navid Fazal COO
Jahanjab
Director Technical
Tariq Rasheed Director Sourcing
Director Finance Muhammad Masood
Saeed Jabal Director Business Administration
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VISION STEATMENT "We will strive to be one of the leading players in the global hosiery business by providing best value to our stakeholders through improving our processes to match best international practices. We will diversify in to other fields." At Interloop, we strive to look ahead and be ready for what the future brings. We have consistently endeavored to understand the world around
us, and the challenges it brings, as well as recognizing and harnessing our own strengths, in order to equip ourselves for the future. Our Vision 2015 describes that future state so that we can align our efforts towards its achievement.
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MISSION STATEMENT To achieve the higher satisfaction level of the external customer and of the internal customer as well, which helps Interloop to maintain good customer-supplier chain with in the company? Customer satisfaction defined through quality and quality is defined by the customer as products and services that through out their life meet needs and exceptions at cast that represents value. To be a business house of customers of first class. To be a changed leader. To produce innovative, relevant and cost effective product by setting and maintaining high standards. To earn profits by achieving the optimal level of production by using the state of art technologies. To provide ideal working environment to employees and to take care in their career planning and reward them according to their skills and responsibilities. To meet social and cultural obligations towards the society being a patriotic sand conscientious corporate citizen
Our core Values SUBMITTED TO
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our values are built on the strong moral foundation We are set tattoo achieve our vision by allowing our values to take root within the soul of our operations processes and trying to live by them. Our values are the core principles that guide each and every one of us in the way we conduct our business as well as the manner in which we interact both with each other and the world at large. They represent what we stand for as a company.
I-CARE Integrity
CARE
We are ethical in our Functions & dealings
We nurture a caring environment internally
We are of benefits to community we operate in
We acquire, nature and reward talent
We make efforts to preserve environment
We ensure self respect of the work force We encourage teamwork
ACCOUNTABLITY
RESPECT
WE accept responsibility
We have respect for environment
We are accountable in our matters
We have respect for the people
EXECELLENCE We aggressively face competition We encourage deployment of latest technology We arrive at decisions through collective wisdom
We meet or exceed customer expectations in quality of product & services these values are the driving force guiding our business processes. Through our values we are able to define “Who are we?” and also foresee “Where do we want to go?”
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CHAPTER 2 OVERVIEW OF THE ORGANIZATION 2.1History of Interloop Limited
Past As in most of the coo speeches, it is sought out that Interloop have too much interesting and a gorgeous success in the business world, the company stat its work in 1992 with few machine, as 10 knitting machine without any other facilities, where two brothers Mr. Naveed Fazal and Masdizq zluqranan, work by themselves with their few but label team a present which is the true result of hard work and result of planning. ” I have personally visit that site in Khurianwala, from where the interloop started it’ production’
Present It now has 2300 machines and a workforce of more than 10000. Interloop Limited has transformed itself into one of the WORLD'S largest Socks Manufacturer and Exporter. It is a Limited Company located in Pakistan's Industrial hub Faisalabad; also known as the "Manchester of Pakistan". Interloop is an integral part of this business community, continuously striving to revolutionize business practices in this region. Interloop is a complete vertical unit with all processes ranging from yarn-spinning to packaging and it employs a Centralized Computerized System which
Future In pursuance of our goals to achieve and maintain good quality, Interloop has now set up a High-Tech Spinning Unit that will ensure finest quality yarn made from the best available natural cotton. This project will enhance the value of money for our customers by offering even more competitive rates to our clients. Hard work and utmost commitment from its employees and management, strict Quality Control Measures, timely Shipments and reliable Service Standards have been paramount towards Interloop's phenomenal growth. It is one of the very few firms in Pakistan with an impressive Social Responsibility Portfolio, realizing that a commitment to sustainability in all areas of commercial activity endorse the long term interests of a business. This is the result of true leadership as in coo,s Blog in may- 07-2011 SUBMITTED TO
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“Dear colleagues we started a journey over two yeas ago with the lunch of TPM and 5s activates, in the beginning it was painfully slow. After the lunch of leans initiatives this gathered peace and I am happy to report the initiatives are paying back. PGO played a key role during this journey, though his departure is a loss I am fully confident that you will the same pace and we will INSALLAH be one of the best hosiery companies by 2015. Keep your focus and do not loose momentum, this absolutely critical.”
2.2 Nature of the Organization Interloop LTD falls in textile processing. It is a company form of business established under companies ordinance 1984 and regulate under the industrial Law of Pakistan Interloop LTD is socks manufacturing Company producing the world Best Exports Brands though there vertical, integration unit have complete set up form spin to knit ad knit to final.
2.3 STATUS OF BUSINESS The Group consists of: Locally 1. Hosiery Divisions with the name: Hosiery Division I Hosiery Division II Hosiery Division III (acquisition made from Kohinoor Hosiery) 2. Yarn Dyeing Division 3. Interloop Spinning Limited 4. interloop Diary Limited (New Added) Internationally 1. Interloop Bangla Limited 2. Interloop Limited North America
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2.4 Organizational structure 1. functional structure
Chief Operating Officer
COO
Director Technical
Director Finance
Director Sourcing
Director Business improvement
CEO
Manager Supplies
Manger PPC
Manager Operation s
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Manager Admin
Manger Finance
Manager I&E
Manger ENGEERI NG
Manager QA
Manager EHS
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2. Divisional structure
Chief Operating Officer
General Manager Hosiery
General Manger Spinning
General Dairy
General Manager Yarn Dyeing
Comments on Organizational structure of interloop Limited: Interloop organizational structure is simple and very much more chances to enhance and to delegations opportunities are in the structure, the company is using both the types flat as well as Tall organization structure through which job description, job and the functions of the management can flow easily, planning is possible ,leading can be done ,motivation can be achieved ,and control can be functionalized . Over all organizational structure is continues improve be the company, so it is in its good form.
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2.5 Management level
Upper level
TOP Level
1. Board of Directors 2. CEO 3. COO MIDDLE LEVEL MANAGEMENT
Middle level Managers Officers
Lower level Supervisor/ Technicians/Auditors Operators Helper
FIRST LEVEL MANAGEMENT
2.6 Business volume Production Capacity Socks Division
Spinning Division
Yarn Dyeing
3000 computerized knitting machines
20,400 spindles
6 dyeing machines
100,000 dozens/day 61,700 pounds/day (36 million dozens/year) (28,000 KGs/day)
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11,000 pounds/day (5,000 KGs/day)
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Year
2006
2007
2008
2009
2010
2011
Capacity Knitting per month
2.8 Million dozens
Dyeing per month
2.8 Million dozens
Packing per month
3 Million dozens
Minimum order qty
2,500 dozens( variable as per terms)
Minimum Lead time
45-60 days after approvals Short lead time possible for repeats
Volume/Dozens 12,245,561 15,375,158 20,000,000 21,000,000 25,000,000 30000000 13% 26% 30% 5% 20% 80% Growth
GROWTH HIstory 180 160 140 120 100 GROWTH HIstory
80 60 40 20 0 2006
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2007
2008
2009
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2011
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Dozens 40000000 35000000 30000000 25000000 20000000 15000000 10000000
Dozens
5000000 0 2005
2006
2007
2008
2009
2010
2011
2012
2.7Number of Employees Permanent Employees Piece Rated Workers Total:
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7266 3560 ------------------------------10082
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2.8 CERTIFICATIONS: Interloop has a very clear and stringent policy in order to comply with world’s most demanding, quality and social standards.
ISO 9001:2008
EPA Certificates
OKEOTEX.100
OHSAS 18001
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EFP Certification
ISO 14001:2004
Registration certificate HDII
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GSV
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PNAC-CBA-001
2.9 Policies of interloop Limited
1. Quality policy Policy o f QA lab (ISO 17025) “ ILQA LAB is committed to provide the testing that meets both the needs of the customer and requirement of ISO/IEC 17025 .We do this by ensuring that all p[ersonal apply and continullay look to improve the effectiveness of plocies and procedures in our management system. Testing results are reported with in stated limts of uncertainty and detection limites as decribed in l;ab scope “ Dated 20th January, 2012 2. Company Quality policy “MAINTENANCE AND IMPROVEMENT IN THE QUALITY OF OUR PRODUCTS (SOCKS) AND OUR QUALITY MANAGEMENT SYSTEM IS THE CORNER STONE OF OUR QUALITY POLICY” Quality Objective Maintain the quality of our product as required by the customer Invest in equipment and Human resources Safeguard the interest of our stock holder like customer, employees Review the quality management system for continuous improvement.
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3. Social Policy Social Accountability Policy “We at interloop Limited are committed to provide a better working environment to our employees by establishing and maintaining SA 8000 standard requirements Labor law of Pakistan Buyers standards of engagement Sa 8000 requirements ILO conventions The company is confident that through its constant monitoring and efforts, it motives its employees, produce better quality products and create culture of continues improvements “ Dated 10th May, 2008 Environment policy Interloop is committed to compel with all legal requirement and identifying the environmental impacts of all aspects of its business to set targets for these impacts reduction We focus on industry best practices to drive down energy consumptions reduce waste and manage its disposal affecting to minimize detrimental effects. Dated 10th May, 2008 4. Policy of Environment Health and Safety 1. Purpose This policy establishes guidelines for the EHS issue Management and company’s vision towards maintaining world class standard sin this regards 2. scope This policy covers Hosiery Divisions of company 3. Policy Interloop is committed to operate in a manner that will reduced the EHS risks to all its Stake holders it will continually review its processes and make improvements that will reduce the EHS risks it will try to protect and SUBMITTED TO
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conserve the environmental and will devote adequate resources that are required to achieve this goals
Interloop will invest in equipments that will conserve energy make work pale safe and reduce risk to environment a interloop will arrange to develop and implement EHS standard that concern with the national /international standards
It will arrange to import proper training to its workforce for implementing these standards to maintain the EHS standards to maintain the EHS standard will be the responsibility of line manager in impleneting the EHS standards.
Interloop will endeavor to seek relevant EHS certificate like ISO 140000
Interloop will comply with all relevant EHS standard and required by law
A continues us review of EHS issues will be ensured through internal audits and efforts will be made to improve the system Dated 15th April, 2008
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CHAPTER 3
CORPORATE OBJECTIVES AND COMPANY IN GENRAL 3.1 Corporate Social Responsibilities interloop has evolved at a pace faster than what anyone might have imagined a decade ago and has shown continuous commitment to behave ethically; and contribute to economic development while improving the quality of life of our workforce, their families and the local community at large. At Interloop we believe that profitability and growth, combined with development of our employees and communities and protection of the environment endorse the long-term interests of a business.
THE CITIZENS FOUNDATION SCHOOLS (INTERLOOP CAMPUSES): Interloop Limited has signed a Memorandum of Understanding (MoU) with The Citizens Foundation (TCF) to construct four Secondary Schools (two for Boys and two for Girls) and six to eight Primary Schools in five years, and even more in future as well out of own funds including the cost of building, furniture, utilities and vehicles. Each builta-school project will also be taken up with provision of schools support for three years. Interloop believes in playing an active role in social development by providing health, education and sports facilities to the less privileged class of the Country. The aim of construction of these schools is to promote quality and formal education for less privileged children in an environment that encourages intellectual, moral and spiritual growth. The preference for construction of schools will be given to the rural areas and urban slums of District Faisalabad, characterized by extreme poverty where people neither have the means nor access to quality education. The Citizens Foundation (TCF) is engaged in various public welfare projects especially in the field of provision of quality education, establishment and management of non-profit educational institutions. TCF is a professionally managed, a non-profit organization and one of the Pakistan’s leading organization in the field of formal education. TCF has established over 660 school units nationwide with an enrolment of 92,000 students including 46 school units in Faisalabad, Jhang and Chinoit where 10,000 students are studying. Interloop Limited will Insha Allah spend an amount of 170 Million Rupees for this purpose in five years. This has also been made part of Interloop Corporate SUBMITTED TO
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Objectives. Interloop Limited has constructed four Secondary Schools in March 2010, two TCF Secondary Schools (Interloop – Begum Sarwari Sadiq Campus) in Village 242 / RB Dasuha and two TCF Secondary Schools (Interloop – Dobotex Campus) in Village 229 / RB Makuana i.e. separate Campuses for Boys and Girls. Classes have been started in all these schools w.e.f 15th April 2010. Eight TCF Primary Schools (Interloop Campuses) will be constructed in next four years (two schools every year). Land for four schools has been purchased. Construction of two Primary Schools will be completed by end of March 2011 and classes will start in April 2011. Total cost of Primary Schools will be approximately 113 Million Rupees including 3.97 Million Rupees as three years school support expenses per school.
ASSISSTANCE FOR IDP’s OF SWAT / GOJRA: The mass exodus of population from and surrounding areas of Swat was a human tragedy of great dimension. Every citizen played its part contributing to well being of IDPs (Internally Displaced Persons). Interloop Limited was second to none in contributing its Corporate Responsibility. Interloop immediately dispatched food items and distributed amongst IDPs of District Nowshera, as the people of these areas deserved full support and needed to be treated with sympathy, love and kindness. Moreover, arrangements for provisions of meal for IDPs of Gojra were made through Government Administration Gojra during and after the disturbance period. Optimism and hope were the galvanizing spirit to accomplish the Corporate Responsibility by Interloop Limited.
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Earthquake Tent Village Interloop is proud to be a part of the biggest ever humanitarian aids for the largest natural disaster that ever struck Pakistan in October 2005, killing over 80,000 people and rendering millions homeless. Interloop was quick to show solidarity to its countrymen struck by this great catastrophe and immediately chalked out a plan to set up a “Tent Village” in Muzzaffarabad to ease the suffering of the victims. Chattar Kalas Kohala, Muzzaffarabad was selected as the appropriate site because of its proximity to water supply, easy road access and availability of electricity. Interloop has been fortunate in this noble cause, as many local and international organisations stepped forward to help Interloop establish this facility which was designed to accommodate 1500 people. Caritis, a French Organization collaborated with Interloop to install a state-of-the-art clean water supply system. This facility also included pore flush toilets, showers and laundry slabs which were constructed with the help of OXFAM. Food was provided with the help of WFP. UNHCR donated bedding and health related arrangements were made in collaboration with WHO and UNICEF. Interloop was also running a school with the help of UNICEF. Keeping in view its overall plan and facilities, it was declared a "Model Tent Village" by UNHCR.
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SOS Children's Village: Our Company's Social Investment Programme aims to support activities in the areas of education, health, community development and environment, dedicated to the welfare of underprivileged members of our society. As part of this programme, Interloop has been supporting the SOS Children's Village in Faisalabad for the past 7 years by building a cottage at the SOS Village that provides complete housing facility to approximately 10 children. In our efforts for continuous development, we encouraged our European Client, Dobotex to build a major Community Centre at the SOS Village and assisted them in completion of this project. The Community Centre caters to the needs of nearly 150 orphaned and/or abandoned children and is designed to accommodate events such as weddings, stage plays and annual functions. Currently Dobotex in collaboration with our Company is constructing a Youth Home, which will house 25 children.
Sponsorship of Regional Cricket: Interloop identified that sports activities are imperative for an all-round development of many young individuals. Cricket is a passion, common to everyone in Pakistan. Interloop joined hands with Pakistan Cricket Board in 2005 by becoming the Official Sponsor of Faisalabad Wolves, Faisalabad Regional Cricket Team. It was a historic deal as we became the first and the only firm to sponsor domestic cricket. The main purpose of this deal was to direct the long built-up energy of this young generation into fruitful operations by providing them a platform to excel further. We believe that Interloop identified and captured an opportunity which can sincerely represent the concept behind social responsibility. The sponsorship continued for two years. Interloop Limited sponsored Twenty/20 Cricket Match organized at Iqbal Cricket Stadium, Faisalabad by Regional Cricket Association / Pakistan Cricket Board in SUBMITTED TO
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April 2010 to promote cricket in Pakistan. We are proud to be a corporate entity working towards sustainable development by linking large foreign based companies and local community projects.
Waste Water Treatment Plant: Our Environmental Protection System ensures that all dyes and chemicals used in the Production Process must not contain any harmful substance. All such elements are safely stored and disposed off after use. The Waste Water Treatment Plant treats all toxic chemicals and dyes before disposal.
Special Plants Production: Interloop has embarked upon a Research Project with NIBGE (Nuclear Institute of Bio-Technology and Genetic Engineering) helping to produce special plants to be irrigated with treated water, which will absorb colours from the treatment canals. After filtration by these plants, the water in these canals can be used for normal irrigation.
Fair Price Shop:
This project aims to reduce the cost of living for Company's employees by providing certain articles of daily use at very cheap rates. All workers can purchase necessities of life on a quota base determined by the Managing Committee. The shop includes items like Cooking Oil, Sugar, Tea, Detergent, Wheat Flour and Company Products etc.
Employee Benefits:
The Company provides healthy and hygienic food to all employees at nominal price. Free uniforms, Health Insurance and on-site Medical Care are provided to all employees.
Day Care Center: Interloop has had a solemn pledge to give a peace of mind to his every employee at work. In this regard “Child Care Centre” has been setup in the Mills SUBMITTED TO
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premises to facilitate female employees. During the working hours, their children are being pampered by the motherly, baby-sitters. Having firm conviction of Social Institution, Interloop always encouraged the people to earn their bread & butter, beyond any social constraints.
Transport Facility – A Leading Edge: Interloop Limited provides pick and drop facility to all its employees, round the year during all weather and in all shifts. Transport fleet consists of 55 all types of vehicles. Transport ply and covers the entire routes and area of Faisalabad and Jarranawala cities and all villages in route having turn round radius of 65KM. Total monthly outlay of the Company on transport is Rupees 7.5 Million. This is the leading edge, distinction and satisfaction – the Interloop enjoys in accomplishment of Corporate Social Responsibilities over others.
Support to rescue 1122 Being a social corporate responsible interloop Limited has always develop their community by all means so for this purpose rescue 1122.interloop paid RS/-120000 for their vehicles ( ambulances etc.)Maintenance
Sponsorship of Regional Cricket Interloop is committed to promote healthy sports activities to keep the youth of Pakistan on right track one of the steps to the cause is financial support to Cricket at regional •
Other Notable CSR Activities – 2009 -2010 – Assistance provided to IDPs of Swat & Gojra – Cornea Transplantation
Rs.550,000.00 10 Patients
– Ophthalmic Eye Treatment – Tuberculosis Treatment
309 Patients 903 Patients
(Interloop is committed to own its social responsibility of medical care to poor Patients in future as well) SUBMITTED TO
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3.2 Environment of company The environment of the company is very healthy and worker friedlay, following are the best practice to reduce the environment impacts on the human health;
For Effluent treatment Wastewater Treatment Type
Biological-Aerobic
Capacity
180m3/h
Operation
Round the Clock
Water Sprinkler Systems The objective of the sprinkler system is to re-use the ablution water for Irrigation to conserve water by reducing the pressure on natural water resources.
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Special Plants' Production: an effort to improve Environmental Ecology: NIBGE (Nuclear Institute of BioTechnology and Genetic Engineering) • Australian Kiker • Eucalyptus • Epple Epple
2.3 Customer’s Profile Interloop Producing World's Most Prestigious Brands Interloop has been exporting 100% of its goods to all parts of the World for the last 16 years and enjoying highest appreciation from its clients over the product and service. Client’s satisfaction is one of the pivotal elements of our continuous success. Interloop aims and its team is determined to provide even better consistent quality services to the best of its abilities.
Customers Portfolio USA •
GOLD TOE
•
K-MART
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RENFRO CORPORATION,
•
CANDOR HOSIERY
•
CHARLESTON HOSIERY
•
CRESCENT HOSIERY
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•
INTERNATIONAL LEQ WEAR GROUP(ILG)
•
HOPE HOSIERY
•
PHILIPS HOSIERY
•
ABC HOSIERY
•
NEW CENTURY HOSIERY
•
ISACO
•
HCI DIRECT
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EUROPE •
PUMA, EEC (DOBOTEX)
•
WOOLWORTHS, UK ( Thru Zivtex)
•
BENJAMIN SA FRANCE
•
VIVARTE, FRANCE
•
ALBER ITALY
•
PRO ACT FRANCE
•
FILA, EEC
•
DUNNES STORE IRELAND( Thru ZIVTEX )
•
DIA SPAIN
•
COTEM KID-SPAIN
•
FRIENDS TEXTILE, ESTONIA
•
FIPOTEX-DENMARK
•
OBERNDORFER BEINMODEN- AUSTRIA
•
SERGIOTACCHINI
CANADA •
LAMOUR HOSIERY
•
MCGREGOR INC
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AUSTRALIA/NEWZELAND •
WOOLWORTHS, AUSTRALIA
•
SLAZENGER, RIO (HOLEPROOF AUSTRALIA
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2.4 The Achievements of Company
As Interloop has continued to grow and establish itself on the national and international stage, we have been graced with recognition for our superior performance as well as our industry-leading practices. Below are some of the recent accolades with which Interloop Ltd. has been blessed.
7th Best Export Performance Trophy for Interloop Every year, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) hold a Best Export Performance Awards ceremony to recognize the biggest exporters in the country across several industries. By the grace of God Almighty, this was Interloop's 7th time winning a Best Export Performance Trophy. The ceremony was held in Karachi on the 22nd of December, 2008. It was a moment of pride for all of us when the Prime Minister of Pakistan, Mr. Yousaf Raza Gilani, awarded the trophy to our CEO, Mr. Musadaq Zulqarnain. This achievement is a reflection of the vision and commitment of our top management as well as the dedication of Interloop's entire workforce.
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Many congratulations and thanks must go out to all the Interloop team; our management, executives and labor force. Their competence and commitment in every aspect of the business, from the efficient use of resources to the meticulous customer service we strive for, has endowed Interloop with such successes. We humbly thank God Almighty and pray for continued success in the future
OHSAS 18001:2010 Certification With the blessing of God the Almighty, Interloop Limited has been successfully certified for Internationally recognized OHSAS 18001:2007 (Occupational Health and Safety Assessment Series) by LRQA (Lloyd's Register Quality Assurance Limited). EHS Department was continuously endeavoring for implementation of OH&S standards from the start of this year. Not only they succeeded in implementation of these standards but also got it accredited from UKAS (United Kingdom Accreditation Service). It's a true picture of team work of all Departments of Interloop Limited. Occupational Health and Safety is the core value associated with all the operations being carried out at Interloop Limited. The Company aims and committed to adhere with most stringent OH&S Laws and Regulations. This certification has enabled Interloop Limited to identify the workplace hazards and apply appropriate control measures to prevent our employees, contractors and visitors from injuries and ill health.
TESCO “Every Little Helps “Award
Interloop Limited is immensely proud to be able to have Tesco, the world's 3rd largest food and general retailer, in its client portfolio. When Interloop CEO, Mr. Musadaq Zulqarnain, attended the SUBMITTED TO
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Tesco international suppliers' conference in Hong Kong on the 3rd of April, 2008, there was a wonderful surprise in store. Interloop Ltd. was declared the recipient of one of Tesco's four awards for its non-food suppliers, given out at the end of the conference. The four categories were innovation, CSR, Improvement and Every Little Helps (the TESCO theme). Interloop was awarded the "Every Little Helps" accolade. Tesco cited the following reasons for its choice of Interloop as the recipient: 1. 100 % on-time delivery 2. 100 % quality audits passed 3. 70% growth in Interloop's business with Tesco over the previous year 4. An investment of US $ 25 million by Interloop in adding capacity in yarn manufacturing, yarn dyeing and Laboratories. Recognition of Interloop's OHSE Best Practices Employer's Federation of Pakistan (EFP) in collaboration with International Labour Organization (ILO) is organizing Occupational Safety Health and Environment (OHSE) “Best Practices Award” in seven difference categories for the last five years. This year also EFP asked to submit the nomination forms with all the supporting documents and pictures till 25th March 2010. After that a Committee checked all these forms and announced the winners. We are pleased to mention that Interloop Limited won OSHE Best Award 2010 in Textile Apparel and Leather Category this year also. This award is a recognition of our sincere efforts towards implementing and sustaining EHS Standards in true spirit SUBMITTED TO
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Other achievements On time shipment Quality standards Increasing capacity of $ 25 Million 70% business growth Every Little Helps By TESCO world’s 3rd largest retailer
Best Export Performance Trophies INTERLOOP has won FPPCI (Federation OF Pakistan Chamber Of Commerce and Industry) Export trophies of the Year 2001-2002 and Year 2004-2008. It WAS the fist time that a knitting unit has won this trophy, that too a socks knitting company. Sr. # Financial Year FPCCI Trophy # Category
Receiving Date
1
2001 - 2002
26th
Special Merit Trophy
29-Aug-2003
2
2002 - 2003
27th
Special Merit Trophy, Best Export Performance Trophy
29-Aug-2003
3
2003 - 2004
27th
Best Export Performance Trophy
07-Dec-2004
4
2004 - 2005
29th
Best Export Performance Trophy
04-May-2006
5
2005 - 2006
30th
Best Export Performance Trophy
27-Dec-2006
6
2006 - 2007
31st
Best Export Performance Trophy
01-Dec-2007
7
2007 - 2008
32nd
Best Export Performance Trophy
22-Dec-2008
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2.5 company’s Products
Output after a specified process on a given input (raw materials) is called a PRODUCT.
Choice of product is actually the choice of profit.
The product for which, raw materials, labors and other accessories are easily available, yields great margins and bulk volumes.
If the product is unique and exclusive, not only profits are high but also the competitors are less and business enjoys itself.
The INTERLOOP (PVT) LIMITED is manufacturing the premium quality of cotton sports socks.
Parts of Socks:
Major parts of the socks are given below 1. Welt 2. Rib SUBMITTED TO
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3. Heel 4. Foot 5. Toe 1. Welt: It is the opening part of the Socks. Elastic is necessary in each part of welt for its grip. Welt attached to rib with Nylon, which is called Tie down. Double welt is used in sports socks and single welt is used in dress socks. 2. Rib: After welt the portion of socks is known as rib and generally motif are placed here. To tie these two parts together, a very small portion is also exists which is known as tie down. 3. Heel: The portion above the heel and below the Rib is called high heel. In some type of socks high heel portion is included in rib. 4. Foot: This part of sock is between toe and heel. It is the main part of the sock and it function is to cover the foot. 5. Toe: It is the closing part of the sock and it covers the toe of the foot. These parts of sock are shown in the following Picture.
Types of Socks:
There are almost six types of socks are made. 1. 2. 3. 4. 5. 6.
Mid Calf/Crew Socks Ankle/Quarter Socks: Anklet Socks: No Show/No Socks Tube Socks Knee High/Work Socks
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1. Mid Calf/Crew Socks: This type of socks is normally used in sports. Its rib is bigger and elastic is used for a firm grip.
2. Ankle/Quarter Socks: In these kinds of socks, leg portion is not defined/ knitted. Heal type for these socks can be real or
pouch. This kind of sock is also used in sports.
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3. Anklet Socks: These kinds of socks have also no rib and its welt comes on ankle of foot. It is also used in sports.
4. No Show/No Socks: In these kind of socks, no rib no welt. This kind of sock is also used in sports.
5. Tube Socks: These kinds of socks are without heel and toe. It is knitted like a tube and is shaped after worn.
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6. Knee High/Work Socks: In this kind of socks, welt is up to the knee and therefore it is also called work socks.
Formation of Socks:
Sandwich Terry: In the formation of this type, three yarns are used namely main, plating and main. It can be full or half terry. In this type, platting yarn is used between the two main yarns with separate sinkers.
Rough Terry: In the formation of this type, two yarns are used (with same sinker) namely main and plating. It can be full or half terry.
Plain/Half Terry: In the formation of this type, two yarns are used namely main and plating. A different proportion of sinkers makes the fabric half or no terry.
Arch Sports: In the formation of this type, there are few coats of elastic to make grip on foot as well.
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Chapter 4
Departments/ functional units of Interloop Limited 4.1Administration Department Introduction The role of administration department is very important in any organization. The services being provided by the administrator department elated with the every employees of company. The administrator team is regularly putting effort to improve administration relates services as much as possible according to the company policies and as per the satisfaction o f all employees. Functions of admin department 1. Transport facilities 2. mess &meal 3. security services 4. housekeeping 5. Protocol Duties 6. Horticulture 7. Liaison with government depts. 8. Reception 9. Telephone Exchange 10. Motorcycle/cycle stand& car parking services 11. Mosque affairs &religious services 12. Gymnasium facilities 13. hostel facilities SUBMITTED TO
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14. Gate Office /weigh Bridge 15. monitoring of IP cameras 16. Mail Receipt/dispatch 17. Medical service
4.2 HR & Development Department
Introduction In addition to being the leading Socks Manufacturing Organization in the Country, Interloop is also a large scale employer. Presently, we have more than 9,500 workforces. These people are supported by more than 630 Executive Officers, who are providing managerial input and guidance to them. With such a large base of people, it is imperative to have a world class HR Function which is able to harness the combined efforts of our people towards achieving excellence in all aspect of our activities.
SUB- DERTMENT OF HR &D The HR&D is divided into the following sub departments Time office The time office is a place where the daily enrollments record is kept by the E-program specially design for the employees in out time and other detail like leaves and shift rotations etc. Welfare office The welfare of the employees is very necessary, so for this purpose the separate office is built for the social security ,and EOBI and other welfare activates and institutions. Recruitment office The new hiring in any organization is the need of today, to keep track the day to day activities of Inerloop limited so the employee selection and recruiting is done in this office; the office is fully equipment with the modern techniques of recruitment the staff is very corporative.
HR philosophy and practices Our HR philosophy is based on the belief that we can increase our overall Human Capital by improving the following:
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Intellectual Capital: Processes which will improve specialized knowledge, skills, tacit knowledge, and imagination of our people. Emotional Capital: Developing a culture which breeds self confidence, ambition, and courage. Developing Leadership capabilities and encouraging team based environment is an essential ingredient. Social Capital: Leveraging social contacts for business and personal gains, strengthening networks of our people with outside world, trustworthiness etc. are the hallmark of this process.
Objectives constantly striving to transform Interloop into a more "Caring & Sharing" Company. We believe that the success of a company comes through its workers and we have recently launched an initiative, known as "Project CARE" for this purpose. This project is recognition of our people's performance and dedication towards Interloop Long Service Awards, supporting children education, integration of families through social activities and guaranteed jobs for our long serving employees are some of the salient features of this program. The focal points of our core values. We aim to acquire, nurture and reward talent. The reason is simple: our people are the drivers of our vision. Their efforts are responsible for our operational excellence, product quality and ultimately, customer satisfaction.
4.3 MERCHANDISING DEPARTMENT The person who follows up the consignment from confirmation to shipment is known as a merchandiser. No business in the world would run and makes progress unless it has a good marketing strategy towards its product, and has a talent to promote the sales. Marketing is supposed to be the most critical and imperative part of any business.. In the INTERLOOP LIMITED, merchandising department is divided in two sections. 1) Europe Section 2) USA/ Aust Sec
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Manager USA
MDZR
Manager EU
Asst. Manager
Asst. Manager
Sr. Officer
Sr. officer
MDZR
MDZR
MDZR
MDZR
MDZR
Merchandising department function as a bridge between the customer and the factory/ company. They work for maintaining, running customer and search for new customers and orders. They are 1. Internet 2. Old customer 3. Repute 4. Reference 5. Sample presentation
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Procedure of New Inquiry
Project Report Procedure of Old Inquiry
1. New Customer
1. Old Customer
2. CEO
2. Order Inquiry
3. Manager Merchandizing 4. Price of Product 5. If Acceptable
3. Price and Shipment Details 4. Confirmation 5. Order Placement
6. Sampling Approval 7. Order Inquiry 8. Confirmation 9. Order Placement
Basic Function of Merchandiser: A merchandiser performs the following functions. 1.
Arrangement of Printed & Packing Accessories
2.
Trim Card Approval
3.
Proto Type Approval
4.
Carton Size Approval
Follow up for Payment L/C or TT etc SUBMITTED TO
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4.4 EHS Department
Introduction EHS department: is committed to ensure that all the operations are being carried out so that EHS Risks are reduced to prevent the adverse effect to all stake holders. EHS Department: is pouting the efforts to protect and conserve the environment by allocating adequate resources that are required to make these improvements and complies with legislative as well as other requirements
Functions of EHS To ensure a better work environment by protecting. To comply with legal as well as customer’s Requirements Environment Occupational safety Occupational Health And welfare of people engaged in employmen
Objectives
1.C-TPAT certification
2 OHSAS 08001 certification
3.Ergonomics Study
4. UP gradation of EHS steamers in HD-1
5.Accidental Reduction Strategy
Achievements
Best OHS practices Award 2009 by employees Federation of Pakistan OHSAS 18001 certifications C.TPAT certifications SUBMITTED TO
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4.5 Engineering Department
Introduction Engineering Department is father sub divided into following main sections; 1. Electrical 2. Mechanical 3. HAVAC 4. Civil 5. Machine shop 6. Boiler House Department hierarchy
Main Functions Maintained of all production machine, electro-mech. systems and civil structure Of all production Areas Installation of new systems and machines according to plants SUBMITTED TO
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Continues efforts to improve The efficiencies of systems and machines Workflow Activities Engineering department has divided the technical activities in the followings;
Planned
Unplanned
Planned /preventive Maintained is carried out on the basis of our pre-planned Schedules computer software called “CMMS” is being used for this
Objective To minimize the breakdown time of production, machines New installation in minimum possible time Continuous efforts make systems &machines energy efficient
4.6 IMPORT & EXPORT Department Introduction Of department Handles all logistical arrangements and finance transactions relevant to inflow of production inputs and outflow of our products In this rereads we coordinates with customers ,sullpliers, Government Offices and service Proviso such as shipping lines ,forwards ,transport companies and bancs ,to execute and follow up on myriad activates such inbound and outbound shipments, documentation and payment
Objectives To ensure the timely delivery of all export shipments under cost effective arrangements and complying the customer’s SOP , Government Rules / Regulations & benefits with minimum transit times and maintaining their receivables at lowest level SUBMITTED TO
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To ensure the delicacy of all inbound consignments at factory as per agreed terms / conditions under Government Rules /Regulations & benefits and L/c opening , Payables monitoring and payments to Suppliers are carried out per due requirements
Achievements
Successful executions of DTS shipments For Nike & JCP by carrying out the shipments Forms US warehouse. 2. NIKE e-Po Trade; Staring of paper free EDI documentations with NIKE and receipts of payments without printing a single Paper Receipt of 100% claims under R&D scheme of Government o Pakistan (2005-2010) Exporting out DDU, DDP, CIF, shipments and import shipments on Ex-Works and FOB basis saved substantial revenue for the company
Main functions Relative support to develop new customers Pre-shipment Formalities Origin Custom Clearance Shipment Documentation Destination Handling Receivable Monitoring/Follow –up
Import section Support in the finalization of new Foreign Supplies Pre-shipment Formalities Origin Formalities Payable Monitoring Payments Remittances
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Work flow Activates o Logistics ,destination Duties /Tariffs & Necessary Documentation of new customers o Pre-shipment Formalities o Origin custom Clearness o Compliance of customer’s SOP /requirements o Destination formalities for DD u/DDP/DTS shipments o Receivable monitoring/Follow-up
4.7 MIS Department Modern business is spurred on by technology and innovation. The driving force behind these two things is information and how it is used. For decades, business used Information as a strategic tool to grow customer base, market share, cut costs and to Gain the overall target of increased profits and efficiency. In the modern environment, Information on its own isn't enough, what's required is a way to use this information Properly, keep it secure and to make it accessible to the appropriate entities. To do this, a new strategic asset has been developed. The new asset is Information Technology and in the business context it's called Management Information Systems (MIS). Being a progressive company and keeping in view the importance of Information Systems for the success, Interloop Limited has invested substantially in Information Technology. As a business strategy and tool to enable improved productivity and
Objectives The MIS department is established with a purpose to align the MIS initiatives of company with its key performance indicators, thereby ensuring efficiency, transparency and accountability in the reporting SUBMITTED TO
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system of Production Planning, Production Management, Finance and HR with a focus on timely availability of required information. The key objectives of the MIS department are: 1. Provide reliable, consistent data flow mechanism and secure information online. 2. Enable departments to make right decisions based on online data.
Major Areas of Functionality MIS
MIS department is divided into following areas of functionality due to diversity of area of skills and competency.
Hardware and Networks Enterprise Resource Planning (ERP) Production Management Systems Human Resource Management Ware House Management System System Automation 4.8 Organizational Development Department
An Introduction What is O D “Organizational development is an effort panned ,organization –wide ,and managed from top to .to increase organization effectiveness and health through planned interventions in the organization‟s process ,using behavior –science knowledge.‟ Beck hard, “organizational development strategies and models “Reading, MA Addison-Wesley, 1969, P.9
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The OD vision
“Organization Development …..Attempt to influence every contributor of interloop to expand their candidness …..And to take greater responsibilities for their own actions …… Assumption behind this vision is that “When people pursue both of these objectives simultaneously, they are likely to discover new ways of working together that they experiences as more effective for achievement their own and their shared (organizational) goals….
Challenges
New department (we are just one year Old_) Growth (transition From middle sized to a large sized organization) Upcoming change ( interloop is going lean)
JOB Evaluation
Performance Management System The process of managing performance all year long to support high performing Employees - clear Objectives - Focus on behavior - Incremental progress - planning &goals setting -two-way Communication Corporate Balance score Card The balacned scorecard is a stratgic palanning and manageamnetsystem that is SUBMITTED TO
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used extensivly in the business and industry ,govermet,and nonoprofit orgaztions worldwide to aling business activites to thevison and stratergy of orgaination ,improve interanl and externalcommunications ,an dmonitor orgaiztion performacne againststratgic goals
4.9 Introduction of Production Planning & control (PPC) & Production Development (PD) PPC is the back bone of entire Organization. PPC coordinates with merchandizing for assimilating information about the sample socks then ,manufacturing the same, keeping for assimilating information about the sample socks then manufacturing the same, keeping all customers requirement in view. After the approval of sample, upon the recipes of formal orders, PPC manage to plan the same in operation and arrange Raw Material and other perquisite in coordination with Supplies. During Planning process all required resources and bottlenecks are identified and planned. Once all customers’ Information & specifications along with Raw Material are Available, PPC provides instructions in writing (in shape of work Orders) to operations for executions the orders. During this process it coordination directly with Merchandizing , operations , Supplies ,I&E,I&E departments.
Main Functions
Product Development
Master Panning Of Resources
Material Requirement Planning
% Inventory control
Order Execution And Production Control
Objectives Product Development Cater maximum No. of development from our customers .Up to 300 development? Month Plus sales samples & Testing samples. SUBMITTED TO
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First Time Through sampling, 90% of the developments. Development of new designs and CAD’s by Designing Team, Up to 100 Master Planning Of resources Effective Utilizing of fast React Tools. Order scheduling in FR- knitting (30 Plan Groups ) ,100% orders will be scheduled for knitting in FR Order scheduling O Orders in FR within CB working hours of theirs receipts in FR. Optimum Utilization o knitting machines. Material Requirement Planning & Inventory Control Increases in inventory Turns (RM) Reduction Machine down time due to RM unavailable by using Fast React MRP tool To Monitor & minimum FG stocks Complete MRP consolidating g data from Fast React & ERP
Order Execution &control To ensure on time shipments
Project based material consumption analysis of non stock specialized yarns ( RCA) Ensure execution of all schedule activities in fast react for on time order completion
4.10 P&S Department Introduction of Department
Before 2006, the purchasing activities were scattered, looked after by stores & the departments themselves with only three individuals looking after mainly yarn procurement.
The team was reinforced late 2006, adding purchasing experts & establishing a sourcing wing comprising of textile graduates.
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In 2007, the integration process went on along with establishment of departmental procedures &restructuring of hierarchy to its current form.
Main Functions „ There are three major sections with in P&S – Sourcing – Procurement – Planning
Workflow of Activities --- Sourcing „ The responsibility of sourcing section is mainly divided into two groups
Raw materials development for new customer requirements as well as for innovative product/process improvement solutions.
Vendor development and induction, involving material approvals as well as site evaluations.
Troubleshooting quality issues in raw materials as well as other operations if required.
Workflow of Activities --- Procurement „ Procurement section is divided into two teams based on the major areas handled i.e. local &imports. „ The main procurement activities include, – Receipt of Requisition – Request for Quotes – Prepare Comparison Sheet
Workflow of Activities --- Planning „ A new induction in Supplies department inline with the modern Supply Chain concepts. „ Core responsibility of this section would be to improve procurement efficiency using concepts as Vendor Managed Inventory,
Objectives
The core objective of the departments to arrange timely supplies of quality Raw materials at the most competitive Price.
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Achievements Centralization of procurement activities in a year’s time. First to complete ERP implementation. Major shift of advance payments to credit terms. Erection of major projects like HD-II UNIT-III & ILDH with no additional human resource. Process efficiency improved with introduction of alternate materials like Dope Dyed Nylon and Polyesters. Major cost savings by relocation of sources to more competitive ones. Adding variety to offered raw materials by sourcing Mohair, Wool, Angora and other such fibers.
4.11 Productivity Improvement Department Interloop also have a dedicated PI department which is engage in the productivity improvement in this regard the department is working on the followings”
1. Total Quality Improvement 2. 5-S Techniques 3. Ergonomics • • • • • • •
PMO (Project Management Office) Forum 5S Training & Implementation Value Stream Maps Identification of potential Kaizens through VSM Kaizen Events PDCA Lean Enabling Information Flow System (synthis)
ERGONOMICS Company is working to minimize the hazard of muscular Skelton diseases to employees In continuation to these efforts; following steps have been taken to minimize the repetitive motions and awkward postures leading to MSD: Provision of Low Height Table for carton filling and provision of stoles to Packers SUBMITTED TO
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Provision of Conveyer for loading socks in dryers Provision of Spring loaded trolley Provision of Toe Truck for transportation of material trolleys
Chapter 5
Export Performance of Interloop Limited
5.1 Introduction to Export Department Handles all logistical arrangements and finance transactions relevant to inflow of production inputs and outflow of our products In this rereads we coordinates with customers ,suppliers, Government Offices and service Proviso such as shipping lines ,forwards ,transport companies and bancs ,to execute and follow up on myriad activates such inbound and outbound shipments, documentation and payment.
5.2 Objectives: To ensure the timely delivery of all export shipments under cost effective arrangements and complying the customer’s SOP , Government Rules / Regulations & benefits with minimum transit times and maintaining their receivables at lowest level To ensure the delicacy of all inbound consignments at factory as per agreed terms / conditions under Government Rules /Regulations & benefits and L/c opening , Payables monitoring and payments to Suppliers are carried out per due requirements .
5.3 Achievements: Successful executions of DTS shipments For Nike & JCP by carrying out the shipments Forms US warehouse. 2. NIKE e-Po Trade; Staring of paper free EDI documentations with NIKE and receipts of payments without printing a single Paper. Receipt of 100% claims under R&D scheme of Government o Pakistan (2005-2010) Exporting out DDU, DDP, CIF, shipments and import shipments on ExWorks and FOB basis saved substantial revenue for the company. Importation under Governmental benefits. SUBMITTED TO
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5.4 EXPORT DOCUMENTATION I found export documentation department as the major department which gives concrete visibility to the deals and operational flow of the organization in the form of the documentation. This is the way through which every process and deal gets the proper track and proof through the relevant documents. This is how the documentation process gets the legal value. For me export documentation is a;
Dealing track.
Legal performance proof of a business entity.
Provocation of sequential communication circles.
EXPORT DOCUMENTS Documents essentially required by the buyer in every deal: 1. Bill of exchange. 2. Invoice. 3. Bill of lading. 4. Packing
1. DOCUMENT PREPARATION SEQUENCE 1.1 BANK/ PARTY DOCUMENTS: 1. Sales contract / LC. 2. Commercial invoice. 3. Form E 4. Bill of lading. 5. Packing list. 6. Stacking list. SUBMITTED TO
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7. Form M (in case of admission paid to any one). 8. Quota documents (required only when exports are made to quota countries). 9. Certificate of Origin from Chamber of Commerce and Industry (if required in the importer’s country). 10. Other certificates as required in importer’s country.
2. SHIPPING COMPANY DOCUMENTS: 1. Performa Bill of lading. 2. Bill of lading (requested after giving Performa Bill of lading). 3. Shipping bill. 4. Shipment invoice (intimation to customer clearance department). 5. Air freight Performa.
3. CUSTOM CLEARANCE DOCUMENTS: 1. Commercial invoice. 2. Packing list. 3. Form E. 4. Shipping Bill.
4. COLLECTION DOCUMENTS: 1. Advance payment (T.T payment). 2. D/P (Documents against Payments). 3. D/A (Documents against Payments in days).
5 NEGOTIATION DOCUMENT: 1.
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5.5 Company as a Proud Manufacturer of Prestigious Brands Customers
Customer Portfolio with destination: We proudly produce prestigious brands. List of brands we are currently producing, clearly defines the highest quality standards and service Interloop Limited is capable of offering to its clients.
United State of America
1. GOLD TOE BRANDS Destination: United state of America New York City 2. K-MART Destination: Kmart's world headquarters was located in Troy, Michigan, but since the merger with Sears has been relocated to Hoffman Estates, Illinois. Kmart also exists in Australia and New Zealand 3. RENFRO CORPORATION Destination: 661 Linville Road Post Office Box 908 Mount Airy, NC 27030-0908 4. CANDOR HOSIERY Destination: Candor Hosiery Mills makes and distributes men's, women's, and children's leg wear. The company specializes in athletic socks and supplies Wal-Mart stores through its four factories in North Carolina. Address: 13128 Hwy 24-27 West Robbins, NC 27325-0249 SUBMITTED TO
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Phone: 910-948-3600 Fax: 910-948-2142 5. CHARLESTON HOSIERY Destination: 3398 WINN AVE NE FORT PAYNE, AL 35967-3870 United States 6. CRESCENT HOSIERY Destination: 527 E Willson St Niota, TN 37826 527 E Willson St Niota, TN 37826 7. INTERNATIONAL LEQ WEAR GROUP (ILG) Destination: International leg wear is a group how deals in different categories in united state 8. HOPE HOSIERY Destination: Hope Hosiery manufactures and markets socks for distribution primarily in the US. The company was founded in 1903 and has been under current ownership since 1983. 205 Washington Street Denver, PA 17517 Phone: 717-336-4545 Fax: 717-336-4662
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9. ABC HOSIERY Destination: 426 S Cross Street Youngsville, NC 27596-8708 Phone: (919) 556-5630 10. NEW CENTURY HOSIERY Destination: 1615 S Main Street Los Angeles, CA 90015-3607 Phone:
12. ISACO Destination: United state of America New York City
11. JCPENNEY Destination: Salt Lake City, Utah 12. HANES BRANDS INTERNATIONAL Destination: United state of America New York City
13. NIKE Destination: United state of America New York City
EUROPE UK
1. WOOLWORTHS, UK (Thru Zivtex) SUBMITTED TO
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Destination: Stores in Britain Woolworths started out in the UK in 1909 as F.W Woolworth & Co, part of the American company that was established in 1879. The first store was on Church Street in Liverpool and sold children's clothing, stationery and toys from the very beginning. 2. TESCO STORES – UK Destination: Cheshunt, Broxbourne, Hertfordshire, England, United Kingdom
FRANCE 1. BENJAMIN SA FRANCE
2. PRO ACT FRANCE 3. GROUP CASINO – FRANCE Destination: Dhaka Liaison Office: Landview Commercial Centre (6th Floor) 28, Gulshan North Avenue Gulshan 2, Dhaka-1212, Bangladesh. (880-2) 883 3169-70 Ext.233 880-2) 883 3168 SUBMITTED TO
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4. GROUP VIVARTE – FRANCE
Other European Customers 1. ALBER ITALY 2. FILA, EEC Destination: South Korea 3. DUNNES STORE IRELAND (Thru ZIVTEX) Destination: Duplin,IRELAND 4. DIA SPAIN Destination: Las Rozas, Spain Area served Spain, France, Portugal, Greece, Turkey, Argentina, Brazil, China 5. PUMA, EEC (DOBOTEX) Destination: Duplin, IRELAND 6. FRIENDS TEXTILE, ESTONIA 10117 Tallinn Estonia
7. OBERNDORFER BEINMODEN- AUSTRIA Destination: Negrellistrasse 38, Wels, Oberoesterreich, Austria SUBMITTED TO
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City/Town: Wels Province/State: Oberoesterreich Country/Region: Austria Zip/Postal Code: 4600 8. SERGIOTACCHINI Destination: Bellinzago Novarese Novara, Italy. 9. COTEM KID Destination: SPAIN
CANADA
1. LAMOUR HOSIERY Destination: Address: 200-55 Rue De Louvain O, Montréal QC, H2N 1A4 2. MCGREGOR INC
AUSTRALIA SLAZENGER, RIO (HOLEPROOF AUSTRALIA
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5.6 Volume of Export Export of the Company Capacity
Million Dozens
Knitting per month Dyeing per month Packing per month Minimum order qty Minimum Lead time
2.8 Million dozens 2.8 Million dozens 3 Million dozens 2,500 dozens( variable as per terms) 45-60 days after approvals Short lead time possible for repeats
Years Wise Dozens Exports Year
2006
2007
2008
2009
2010
2011
Dozens Export 12,245,561 15,375,158 20,000,000 21,000,000 25,000,000 30000000 13%
Growth
26%
30%
5%
20%
80%
Dozens 40000000 35000000 30000000 25000000 20000000 15000000 10000000 5000000 0
Dozens
2005
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5.7 Measures of Company Export Performance Best Export Performance Trophies Sr. # Financial Year FPCCI Trophy # 1 2001 - 2002 26th
Category Special Merit Trophy
Receiving Date 29-Aug-2003
2
2002 - 2003
27th
Special Merit Trophy, Best Export Performance Trophy
29-Aug-2003
3
2003 - 2004
27th
Best Export Performance Trophy
07-Dec-2004
4
2004 - 2005
29th
Best Export Performance Trophy
04-May-2006
5
2005 - 2006
30th
Best Export Performance Trophy
27-Dec-2006
6
2006 - 2007
31st
Best Export Performance Trophy
01-Dec-2007
7
2007 - 2008
32nd
Best Export Performance Trophy
22-Dec-2008
7th Best Export Performance Trophy for Interloop Limited Every year, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) hold a Best Export Performance Awards ceremony to recognize the biggest exporters in the country across several industries. By the grace of God Almighty, this was Interloop's 7th time winning a Best Export Performance Trophy. The ceremony was held in Karachi on the 22nd of December, 2008. It was a moment of pride for all of us when the Prime Minister of Pakistan, Mr. Yousaf Raza Gilani, awarded the trophy to our CEO, Mr. Musadaq Zulqarnain. This achievement is a reflection of the vision and commitment of our top management as well as the dedication of Interloop's entire workforce SUBMITTED TO
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5.8 Conclusion Many congratulations and thanks must go out to all the Interloop team; our management, executives and labor force. Their competence and commitment in every aspect of the business, from the efficient use of resources to the meticulous customer service we strive for, has endowed Interloop with such successes. We humbly thank God Almighty and pray for continued success in the future. It is enough to say that the company has best performance of Export as; Interloop is consistent winner of best exporter’s trophy for last 6 years
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PART –II FINANCE DEPARTMENT OVERVIEW
Message From director Finance:
The director finance gives a comprehensive message to al the interloop Limited family interloop in house Interloop Limited Newsletter “In the Loop” “I want to convey my thanks to the „in the loop “team for providing me with an ideal opporuity to address our present concerns. It is through our in-house magazine that we regularly share the company‟s progress with its stakeholders. The world has undergone a great recession since 2008. As a result of which businesses have faced multiple issues and although the economies of various countries are slowly improving, a full recovery is yet to occur. Similarly the industrial sector of our country, particularly the textile industry, has faced a series of dire challenges. In addition to world – wide economic crunch. Problems such as power shortages, insecurity, inflation and other socio-economic issues have plagued Pakistan over the past few years. In additions to all these factors the sudden increase in cotton/yarn prices s during the years 2009 and 2010 was no less than a disaster for the value-added textile industry. It was b=next to impossible for the exporters cute the previously committed orders. However by the Grace of Almighty Allah and with proper planning courtesy of the interloop team .besides achieving record sales we have shown outstanding results as regards the financial index. I can‟t precede a future with out acknowledging the contribution of our spinning division. Keeping in view the increased demand for our products, our Board of directors has approved an Expansion plan for our hosiery business. The cost will amount to PKR 1400 million and this unit will be completed by the end of the first quarter of the year 2011. In addition, our other projects are also in the pipeline. A factory and land for Interloop Bangla Limited have been procured in the Bangladesh. Hopefully this unit will commence operations by the end of the first quarter of SUBMITTED TO
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2011. As far as our business diversifation efforts are concerned, we have incorporated a nascent company, Interloop Dairies Limited .In Pakistan for which the land selection is in its final stages. This unit will have reached completion by 2011. Interloop, always realized its corporate social responsibility and has generously contributed each year for the social welfare. As part of its latest efforts, interloop singed an MOU with “The Citizens Foundation “for the establishment of primary/ high school for providing quality education to poor people. Two secondary schools have been established and three pieces of land have been purchased at different locations for building more schools. We also provide complete capital expenditure and running expenses for these schools. As everybody knows this year our nation was hit by the worst floods in its entire history. Millions of houses got destroyed in the process. Around fifteen million victims were left dispossessed. Our government .with its limited resources. Is making every possible effort to help .it is high time that every citizen should realized his .her responsibility and contribution towards rehabilitation of affected people .towards this end , Interloop Limited has set up a Flood Relief Fund. Under this fund, food and other necessities of life are being provided to the affected people in various areas. Our prayers are with those affected by this catastrophe. We will leave no stone unturned in helping them get back on their feet again.
CHAPTER 1
Finance Department
2.1.1 DEFINING FINANCE
Finance is Science and Art of managing money.
Finance is the study which shows that how people allocate their resources over a time period.
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Introduction to finance Department Finance department is of paramount importance for the success of any organization. The same is playing a prime and decisive role in the development, expansion and prosperity of Interloop Limited under the Guidance of our worthy Director Finance The finance department at interloop plays an important role in providing assurance about the state of the business to its stakeholders. It presents consistent financial information, risk management and control that enable the company to drive performance improvement, evaluate capital investment and meet external reporting obligations. The finance performed various function ranging from cash flow management to financial reporting. Recording, classifying and summering business transactions into consolidated financial statements, so that fulfill the information need of our diverse shareholders, is an important activity carried out be the departments. Furthermore we are successfully managing our ever-increasing debt portfolio by minimizing our financial costs through negotiation of better terms with our lenders. The financial department is also responsible for meeting Interloop’s daily cash flow requirements, as well as for arranging funds for new capital investment.
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2.1.2 Organizational Structure
2.1.3 Objective The department To put in place and operate systems and procedures which safeguard the assets of the company and which process transactions effectively and cost efficiently. The followings are the main objectives of the finance department are;
Direct, control and administer the financial activities of the organization, and provide the Chief Executive and the Board with financial assessments and information which will ensure planning and budgeting activities meet corporate goals.
Specific accountabilities
In consultation with other senior management, make recommendations and devise financial policy approach, and strategy.
Establish and direct the organisation's financial administrative activities and operational procedures to ensure the organisation's profits are protected.
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Plan the financial operations of the organisation.
Provide financial information and interpretations to other management.
Co-ordinate the development, implementation and monitoring of financial accounting and related systems.
Direct the collection of financial and accounting information and the preparation of budgets, reports, forecasts, and consolidated profit and loss reports.
Co-ordinate the design, implementation and monitoring of up-to-date or computerised accounting and administrative systems.
Direct and co-ordinate economic research, major feasibility studies involving detailed financial analysis, and estimates of future returns on proposed investment.
Evaluate the financial aspects of proposed acquisitions, investments, mergers, or the sale of assets or businesses.
Give assessments of proposals involving financial expenditure and of the financial status of operational projects.
Control activities such as taxation, credit policy, cash flow and investment policy, costing and expense control, preparation of tenders, audits administration of contracts, insurance arrangements and property administration.
Represent the organisation in dealings with the organisation's bankers, legal advisers, major clients and others as required.
Make policy decisions and accept responsibility for operations, performance of staff, achievement of targets and adherence to budgets, standards and procedures.
Control the selection and training of finance staff, establish lines of control and delegate responsibilities to subordinate staff.
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2.1.4 Strength of Finance Department Total Strength of Finance Department = 38
2.1.5 Department operation/ Function of Finance Department 1. ACCOUNTS SECTION OF FINANCE DEPARTMENT This section consists of 4 major sub-sections
General Ledger Accounts Payable Accounts Receivable Fixed Asset SUBMITTED TO
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FUNCTIONS OF GENERAL LEDGER The General Ledger is central to the entire financial system. The few salient functions of General Ledger are summarized below: Posting of General entries & Provisioning of expenses Importing data from sub modules and making reconciliations Preparation of Trial Balance Preparing individual financial statements of different divisions (Hosiery, Spinning, Energy, Yarn Dyeing) Consolidating Individual financial statements Ratio analysis & Variance Analysis
FUNCTIONS OF ACCOUNTS PAYABLE To provide timely, accurate and efficient control of processing invoices for payment of bills and analyzing expenses to improve cash flows, while maintaining close relationship with suppliers. • Entry of indirect foreign & local invoices through Goods Receipt Note • Entry of Direct Invoices • Prepayment of Foreign & Local Vendors • Preparing Invoices for Payments of Foreign & Local Vendors • Matching of Standard & Prepayment Invoices • Reconciliation with Party Accounts • Aging analysis
FUNCTIONS OF ACCOUNTS RECEIVABLE Main objective of Accounts Receivable Modules is to ensure recording of sales transaction (Receivables & Receipts) for goods & services delivered/rendered by the company. Receivable module performs the following functions:
Recording of Sales & Receipts Transaction of • Export, Local and Internal sales of Socks, • Yarn Sales • Waste Sales of all kinds • Reconciliation with party accounts • Aging analysis
FUNCTIONS OF FIXED ASSETS CELL Primary objective is to maintain an accurate inventory of capital items used by the company and to provide guidelines to follow in recording these capital items. This objective is performed in accordance with the company's capitalization policy on what determines Fixed Assets. Functions of Fixed Asset: • Preparation of purchase requisition and generation of F.A code SUBMITTED TO
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• Location wise recording of fixed asses in the system • Reconciliation of CWIP • Periodic physical verification of Fixed Asset • Capital Budgeting
2. FUNCTIONS OF FINANCE SECTION (BANKING &TREASURY) Finance (Banking & Treasury) section is performing the following functions. LOAN & MARKUPS: • Availing, rollover and renewal of short term loans. • Availing and renewal of long term loans • Provisioning of mark ups on monthly basis • Arrangement of necessary documents for new financing facilities & renewal of existing financing facilities • Arranging new and / or renewal of existing bank guarantees • Preparing consolidated repayment schedule of Long Term Loans • Liaison with banks for their routine requirements relating to financing facilities
FUND FLOWS: • Preparing daily fund position • Evaluating cash financing against pledge, availing and arranging their respective adjustments • Daily fund planning for mark up payments, import payments, leased payments keeping in view daily fund position and projected receipts etc. • Maintaining daily currency rates in ERP module • Preparing bank reconciliations • Arrangements of funds and follow ups for payment of long term loan installments within due dates • Monitoring export proceed transactions on daily basis and updating the same in ERP • Preparation of monthly consolidated fund flow statement and comparison of actual results to observe the variance
GENERAL FUNCTIONS: • Preparation of feasibility studies for different capital investment projects • Coordination with MIS department for improvements in ERP Loan Management Module and to make amendments in other ERP modules • Entering costs of yarn counts being produced, in ERP module and calculation of profit/loss of spinning division on daily basis. • Any other assignment as per the directions of management SUBMITTED TO
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ENTERPRISE RESOURCE PLANNING (ERP)
Enterprise Resource Planning (Software) . Software used to plan and manage the basic commercial functions of their business, such as budgeting, accounting, human resources, material flows, etc
LIST OF IMPLEMENTED MODULES OF ERP „ FINANCIAL -Oracle General Ledger -Oracle Payables -Oracle Receivables -Oracle Cash Management -Oracle assets -Loan Management Module „ INVENTORY MANAGEMENT -Oracle Inventory -Oracle Cost Management „ PROCUREMENT -Oracle Purchasing „ HRMS -Payroll „ Future Plans -Taxation Module -Oracle Order Management SUBMITTED TO
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-Oracle Business Intelligence -Oracle Manufacturing -Supply chain Management
3. FUNCTIONS OF TAXATION Taxation section takes care of all tax matters of the company which Includes:
EOBI Sale tax Social security Income tax Excise Duty
Procedures of Finance Department The procedure that is followed by this department is as under;
Finance/Account section deals with all financial transactions i.e. bank dealings, payments including OEBI & social security returns etc. Vouchers are prepared for each accounting transaction, compiled with required receipt and presented to GM for signing (salary transfer is also included in this vouching). Accounts statement, balance sheet, profit & lose and stocks reconciliation is also the responsibility of this section. Inventory payable is prepared for purchase orders through inventory section. In auditing, all transactions are dually checked by audit staff. Sales tax returns, income tax exemption (company returns) and etc are performed through taxation section. All related data is operated by a database and reports are generated through the system.
FINAL WORD The inclination of the management towards creativity and streamlining the functioning of the department makes every day, for the personnel, full of learning. In short Finance section of Interloop Limited is a place where anew joiner can enormously enhance his analytical skills and creativity
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CHAPTER 2
Participating Banks Interloop has the best relation with its banks, the daily and monthly traction has been done with banks and other relations are also built, the following are the corporative banks of the company; 1. Atlas Bank limited
2. summit Bank
3. National bank of Pakistan
4. THE STATE BANK OF PAKISTAN
. 5. THE STANDARD CHARTERED BANK
6. HIBIB BANK LIMITED
7. BANK OF PANJAB
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8. FAYSAL BANK LIMITED
6. BANK ALFALAH LIMITED
7. ALLIED BANK LIMITED
8. SILK BANK
9. UINTED BANK LIMITED
10. MCB BANK LIMITED
11. Meezan Bank Limited
12. NIB Bank limited
13. KASB Bank Limited
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14. Bank AL- Habib limited
15. Barclays Bank PLC
16. Habib metropolitian Bank Limited
Suggestions Interloop is a vertical unit, who believe in continuous improvement, the following are some main suggestion to finance department.
Administratively, the building of finance department should be separate and valued suited, so the working of employees becomes easy.
The strength of the employees is low as compare to the working and job responsibilities, that way the most of the time, officers not available for each other which Is good for the health of the employees, the strength should be increase
The sub division of department is no doubt good, but there still need to formulate
The company is moving toward the 5S- techniques, but finance department is to slow to manage and implement the 5s- techniques. My suggestion is to increase the strength or delegate and make responsibility of every officer to update and mange its working place as per 5S- techniques.
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Technically the division of work is good but the person handing to these has no training to reduce the job related stress.
Ergonomics is one key to keep the worker health good, but there is environment which is not comfortable so the my opinion is to introduce the techniques of Ergonomics
The business world is fast moving and improving world so the department has a cell how inform the upcoming techniques and procedure to enhancement.
There is no display of foreign exchange and connectivity with the Stock Exchange. Which is a key, to finance improvement of every business my opinion is to make the department arrangement and then have display showing index number and other detail of the foreign Exchange and stock Exchange.
The combination of department is two and profession, so my opinion is to introduce communication skill improvement techniques and training.
Record keeping is not suitable and fit for audit concern and the audit team always faces difficulty while collecting the data to be audited.
The software is in good and competitive but the hardware is not up-to-date, my opinion to introduce the LCD listed of monitor.
What's Happening? Interloop is not only the largest Socks Manufacturer in South Asia, it is also the one which delivers the highest quality. We are in continuous pursuit of excellence. In order to retain and consolidate our position as an important global player, we are enhancing our capacities, investing to improve our efficiency and adding backward integration.
A Yarn Dyeing Plant of 7.5 Ton daily capacity is now in operation.
BMR Project in Spinning Division has enhanced its capacity by 8000 lbs/day.
Interloop has added equipment to increase its capacity of infant socks to3,000,000 dozen pair/day.
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Four frames on SLUB YARN in Spinning.
A new Yarn Warehouse has been added in Hosiery Division – I with Pallet Racking System.
Production Unit – III, Hosiery Division – II is now in operation.
QA Lab has been certified against ISO 17025.
Hot Water Chiller Plant and Heat Recovery Boiler have been installed in Energy Division.
TPM Project has been started.
Project CARE Continues
Continues Improvement
Employees Training
Safety Day
World Water Day
CSR Activities
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Part III Theoretical and practical concepts
PART 1-CRITAICAL ANANLYSIS
CAHPTER 1 FINANCIAL STATMENT
1.1 Definition “A financial statement (or financial report) is a formal record of the financial activities of a business, person, or other entity.” In British English—including United Kingdom company law—a financial statement is often referred to as and account, although the term financial statement is also used, particularly by accountants. “A written report which quantitatively describes the financial health of a company. This includes an income statement and a balance sheet, and often also includes a cash flow statement. Financial statements are usually compiled on a quarterly and annual basis. SUBMITTED TO
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2.1.1. Vertical and horizontal analysis of consolidated income statement Common-size Analysis (vertical and horizontal) Interloop Limited For the Years Vertical common size
2011 percentage 2229.87 225.76 -
2010 percentage 172.92 166.98 -
2009 percentage 140.8 138.2 -
2008 percentage 100 100 -
Distribution costs Administrative expenses Other operating expenses Finance cost Total operating Expenses
387.73 324.57 844.55
340.47 256.36 379.75
252.43 192.18 147.44
100 100 100
157.14 -
122.04 -
153.54 -
100 -
Other operating income Profit before Taxation Taxation Profit for the year Earning per share
270 204.65 212.70 203.45 7.19
230.79 172.21 158.49 174.26 6.16
236.29 104.81 122.75 102.12 3.61
100 100 100 100 3.54
Sales- net Cost of sale Gross profit Operating Expenses
100 78.95 -
100 77.62 -
100 78.91 -
100 80.38 -
Distribution costs Administrative expenses Other operating
4.85 3.47 1.61
5.66 3.64 0.96
5.15 3.35 0.46
2.88 2.45 0.44
Sales- net Cost of sale Gross profit Operating Expenses
Horizontal common Size
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expenses Finance cost Total operating Expenses Other operating income Profit before Taxation Taxation Profit for the year Earning per share Interpretation
3.85
3.97
6.13
5.63
0.16 7.43 1.01 3.43 7.19
0.17 8.31 0.99 7.31
0.22 6.21 0.94 5.26 3.61
0.13 8.34 1.08 7.26 3.54
6.16
2. Vertical and horizontal analysis of consolidated Balance sheet Liabilities side Common-size Analysis (vertical and horizontal) Interloop Limited
For the years
Vertical common size LIBILITIES PARTICULAR EQUITY AND LIBLIITES SHARE CAPITAL AND RESERVE Share capital unappropriate profit TOTAL NON CURRENT LIBILITES Long term financing Liabilities against assets subject to financial lease Long term deposits Deferred Liabilities
2011 percentage
2010 percentage
2009 percentage
2008 percentage
100.1 142.4 -
100.1 1994.4 -
100.15 131.75 -
100 100 -
344.2 11.07
89.3 14.79
114.33 66.80
100 100
350 -
100 266
136 173.81
100 100
CURRENT LIABILITES SUBMITTED TO
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Trade and other payables Accrued mark up Short term borings Current portion of noncurrent liabilities; -long term financing -liabilities against assets subject to finance lease
155 167 178.9 65.93
79.2 167.08 130.4 100
118.44 192 137.9 -
100 100 100 -
-
-
112.2 109.4
100 100
Tex and duties payable Provisions for taxation
94.63 -
100 -
37.40
100
2011 percentage
2010 percentage
2009 percentage
2008 percentage
9.37 21.30 -
13.30 21.73
14.11 15.271
1.69 13.91
23.71 0.45
8.95 0.88
11.8 4.129
12.47 7.41
1.97 5.47
2.17 2.17
0.071 1.475
0.063 1.01
5.47 1.047 34.27 2.25
7.93 0.89 36.3 7.28
6.30 1.071 39.85 -
6.38 0.66 34.68 -
CONTINGENCIES AND COMMITMENTS
Horizontal common size LIBILITIES PARTICULAR EQUITY AND LIBLIITES SHARE CAPITAL AND RESERVE Share capital unappropriate profit TOTAL NON CURRENT LIBILITES Long term financing Liabilities against assets subject to financial lease Long term deposits Deferred Liabilities
CURRENT LIABILITES Trade and other payables Accrued mark up Short term borings Current portion of noncurrent liabilities; SUBMITTED TO
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-long term financing -liabilities against assets subject to finance lease
-
-
3.39 2.34
3.63 2.57
Tex and duties payable Provisions for taxation
0.125 -
0.193 -
0.08
0.26
CONTINGENCIES AND COMMITMENTS
2. Vertical and horizontal analysis of Balance sheet Common size analysis (vertical and horizontal) Assets Side Interloop Limited For the years Vertical common size ASSETS PARTICULAR NON CURRENT ASSETS Property, plant ,and equipment Intangible assets Long term investment Long term loan Long term loan and advances Long term deposits CURRENT ASSETS Store and trade Stock in trade Trade debts Loans and advances Deposits and prepayments SUBMITTED TO
2011 percentage
2010 percentage
2009 percentage
2008 percentage
190.8
112.7
110.22
100
164.8 8127 153
175.3 325 147.7
100 119.8 100 -
100 100 100 100
115.5
32.17
100.6
100
217.1 135.7 203.7 144.5 107.1
177.5 123.6 155.9 77 471.5
144.2 143.5 139.1 62.7 49.7
100 100 100 100 100
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Other receivable Cash and bank balance Horizontal common size ASSETS PARTICULAR NON CURRENT ASSETS Property, plant ,and equipment Intangible assets Long term investment Long term loan Long term loan and advances Long term deposits CURRENT ASSETS Store and trade Stock in trade Trade debts Loans and advances Deposits and prepayments Other receivable Cash and bank balance
239.0 342.7
64.93 1153.2
109.1 203.9
100 100
2011 percentage
2010 percentage
2009 percentage
2008 percentage
52.6
4.28
44.29
49.6
0.159 2.04 0.096
2.46 0.045 0.13
0.145 1.18 0.094 -
0.045 0.13 -
0.29
1.187
3.65
0.113
2.67 19.01 2.73 0.28 0.13
31.8 25.16 17.91 2.11 0.88
2.67 30.32 16.58 1.78 0.096
2.23 25.35 14.30 3.41 0.233
4.01 0.46
2.66 2.29
1.64 0.42
3.042 0.247
CHAPTER 3
Analysis of Accounting Ratio Ratio analysis: It is used to analysis to plan, to control, and to identify weakness within the firm. Creditors use the analysis to establish the ability of the borrower to pay interest and retire debt. Ratios may be computed and interpreted from two perspective 1. Time-series analysis 2. Cross-sectional analysis SUBMITTED TO
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TIME-SERIES ANALYSIS: Time –series is an analysis of the firm over a period of time. CROSS-SECTIONAL ANALYSIS: An analysis of several firms in the same industry at a point in time. We are going to use time series analysis of a firm using different ratios.
1. ANALYSIS OF SHORT-TERM FINANCIAL POSTION OR TEST OF LIQUIDITY LIQUIDITY RATIO A comparison of current assets with current liabilities gives an indication of the short-term debt-paying ability of the entity. Several comparisons can be made to determine this ability; 1.1. Working capital: The working capital of businesses is an indication of the short-run solvency of the business. Working capital = current assets – current liabilities Particulars
2011 Rupee 6088,966,750
2010 Rupee 5030,350,319
2009 Rupee 4,787,539,711
2008 Rupee 3,638,056,616
- Current Liabilities
5824,256,681
4884,160,797
4744,357,735
3591,232,588
Working Capital
2647710069
146189522
43181976
46824028
Current Assets
Interpretation The inventory as reported may be much less than its replacement cost, the difference between the reported inventory amount and the replacement amount is normally material. The current working capital amounts are always compared with past amount to determine if working capital is reasonable.
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Comments Working capital increased which shows that there is an increase in current assets, which is good indication. 1.2 Current Ratio Another indicator, the current ratio, determine short-term debts –paying ability, Current Ratio =
Particulars
current Assets Current liabilities
/ Current Liabilities
2011 Rupee 6088,966,750 5824,256,681
2010 Rupee 5030,350,319 4884,160,797
2009 Rupee 4,787,539,711 4744,357,735
2008 Rupee 3,638,056,616 3591,232,588
Current Ratio
1.045
1.029
1.009
0.102
Current Assets
Interpretation A comparison with industry average should be made to determine the typical current ration for similar firm’s .in some industries, a current ratio substantially below 2.00 is adequate .in general, the shorter the operating cycle, the lower the current ratio wise versa.
Comments Higher the ratio greater the ability to pay current liabilities which shows good liquidity position. 1.3 Liquidity, Acid-Test / Quick Ratio: The current ratio evaluates an enterprise’s overall liquidity position considering current assets and current liabilities .At times ,it is describe to access a more immediate position than that indicated by the current ratio, the acid –test ( or Quick ) ratio relates the most liquid assts to current liabilities . SUBMITTED TO
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Acid-Test Ratio = current Assets – Inventory (QUICK ASSETS) Current Liabilities Particulars
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
current Assets – Inventory (W:1)
3,163,202,431
2,400,239,994
1,836,029,491
1582906580
/Current Liabilities
5824,256,681
4884,160,797
4744,357,735
3591,232,588
0.54
0.49
0.38
0.44
W:1 current Assets – Inventory Particulars 2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
Current Assets – Inventory
6088,966,750 2,925,764,319
5030,350,319 2,630,110,325
4,787,539,711 2951510220
3,638,056,616 2055150036
current Assets – Inventory
3,163,202,431 2,400,239,994 1,836,029,491 1582906580
Acid-Test Ratio
Inventory Particulars
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
+ sock in trade
360,963,570 2,564,800,749
295,033,986 2,335,076,339
239,669,499 2,711,840,721
166,201,392 1,888,948,644
Total inventory
2,925,764,319 2,630,110,325 2951510220
Store and spares
2055150036
Interpretation As it eliminate inventory and prepaid expenses for matching against current liabilities there fore it is a more rigorous test of liquidity as compared to current ratio. When used along with current ratio it gives a clearer picture of business’s liquidity postions.The ability to meet liabilities is influence by such factors as 1. Rate at which cash flows into the firm. 2. Time at which bills become due. SUBMITTED TO
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3. Relationship between the company and its creditors. 4. Firm’s ability to raise capital. Comments Rule of thumb for acid test ratio is 1:1 i.e. if the business liquid assets are 100 percent of its current liabilities it is considered to be having fairly good current financial position. 1.4 Absolute liquid ratio: Absolute liquid ratio extends the logic further and eliminates accounts receivables (sundry debtors as bills receivables) also. though receivable are more liquid as compare to inventory but still there may be doubts considering there time and amount of realizations therefore ,absolute liquidity ratio relate s cash ,bank and marketable securities to the current liabilities . Absolute liquid ratio = Absolute liquid assets Current liabilities Where absolute liquid assets = cash + Bank + (` marketable securities) Particulars 2011 2010 2009 2008 Rupee Rupee Rupee Rupee Absolute liquid assets 63,274,737 5824,256,681 /Current Liabilities
212,885,489 4884,160,797
37,651,299 4744,357,735
18,463,222 3591,232,588
Absolute liquid ratio
0.04
0.007
0.005
0.01
Interpretation Absolute liquid ratio lays down very strict and exacting standard of liquidity; therefore, acceptable norm of this ratio is 50 percent. It means absolute liquid assets worth one half of value the current liabilities are sufficient for satisfactory liquid positions of a business. Comments The absolute ratio in this case is 0.075 which is better as compared to rule of thumb standards which is 0.50.
Other liquidity consideration: Another ratio that is useful is the sale to working capital ratio; in addition, there may be l8iquidity considering that is not on the face of the statements. SUBMITTED TO
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Sale to Working capital (working Capital Turnover ratio): Relating sales to working capital gives an indication o the turnover in working capital per year. Sales to working Capital = Sales /Average working Capital Particulars
2011
2010
2009
2008
Rupee
Rupee
Rupee
Rupee
14,114,654,216
10618085875
8647,863,371
614.0220,989
Working Capital
264,471,0069
14,618,522
431,81976
468,824,028
Sales to working Capital Ratio
53.32%
72.63%
200.26%
131.13%
Net Sale
Interpretation A low working capital turnover ratio tentatively indicates an unprofitable use of working capital. In other words, sales re not adequate relation to the available working capital. A high ratio tentatively indicate that the firm is undercapitalized (overtrading) Comments The above ration indicates a good trend o the company.
PROFITABILITY MEASURES /RATIO: Profitability is the ability of the firm to generate earning s. Analysis of profit is of vital concern to stockholders since they derive revenue in the form is of dividends. further ,increased profits can causes a rise in market price ,leading to capital gains .profit are also important to creditors because profit are one source of funds for debt coverage. Management use profit as a performance measure. The income statement contains several figures that might be used in profitability analysis. In general, the primary financial analyses of profit ratios are include only the types of income arising from the normal operations of the business. This excludes the following: 1. Discontinued operations 2. Extraordinary items 3. Cumulative effect of changes in accounting principles 2.1 Gross Profit Margin: Gross profit equals the difference between net sales revenue and the cost of goods sold. SUBMITTED TO
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Gross Profit Margin =
Gross Profit Net sales
Particulars
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
Gross Profit
2,971,531,255 14,114,654,216
10,618,085,875 2,376,092,846
1,824,014,304 8,647,863,371
1,204,369,955 6,140,220,980
0.21%
4.46%
0.21%
0.196%
Net sales Gross Profit Margin
Interpretation Gross profit margin helps us a number of weys, our manager manage budget gross profit level into their predications of profitability. Gross profit margin is used in cost control. Comments Company gross profit ratio is better instead of 2010 the overall ratio is good and manageable. 2.2 Net Profit Ratio A commonly used profit measure is return on sales, other termed profit margin. If company reports that it earned 6% last year, this usually mean that its profit was 6% of sales. Net Profit Margin=
Net Profit after Interest and Tax × 100 Net Sale
Particulars
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
Net Profit after Tax /Net Sale *Net Profit Margin
907,069,959
776,931,104
455,308,176
445,845,171
14,114,654,216
10,618,085,875
8,647,863,371
6,140,220,980
6.42%
7.31%
5.26%
7.26%
* After multiplication with 100 Interpretation SUBMITTED TO
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This ratio gives a measure of net income Rupees generated by each Rupee of sales. While it is desirable for this ratio to be high, competitive forces within an industry ,economic conditions ,use of debt financing ,and operating characteristic such as high fixed costs will cause the net profit margin to vary between and whining industries. Comments
Profit is increasing with increase in total revenue, which shows that the profitability of company is increasing, which is good sign. Share of profit in total revenue is increasing, showing the favorable trend. 2.3 –Total Asset Turnover Ratio: Total asset turnover measure the activity of the assets and the ability of the firm to generate sales through the use of the assets. Total Assets Turnover= Net Sales Average Total Assets
Particulars
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
Net Sale
14,114,654,216
10,618,085,875
8,647,863,371
/Average Total Assets (W:1)
6143323122
3,150,334,395
8,196,675,749
− −
Total Assets Turnover
2.29%
3.37%
1.050%
−
Particulars
2011 Rupee
2010 Rupee
2009 Rupee
Opening Total Assets
5457693696
5457693696
8942975093
W: 1 Average Total Asset
SUBMITTED TO
2008 Rupee
−
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6828952548
8942975093
7450376404
Total
1.2286646×10¹º
6300668789
1.63933515×10¹º
Total /2
6143323122
3,150,334,395
8,196,675,749
− − −
Comments
The company is using the assets not more then 4 percent and not less then 1% which shows that company have good command on its assets management regarding use as generating sales. 2.4 Return on Assets: Return on assts measure the firm’s ability to utilize its assets to create profit by comparing profits with the assets that generate the profit. Return on Assets = Net profit before Interest and tax Average Total Assets Particulars
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
Net profit before Interest and tax / Average Total Assets
1,049,000,245
882,693,096
537,218,077
−
6143323122
3,150,334,395
8,196,675,749
−
Return on Assets
0.17%
0.28%
0.06%
−
Comments The ability of the interloop to generate the profit through using assets is good and the company is keeping it very not more then 1%, but company should use increase the percentage.
2.5 Operating Assets Turnover Ratio: The ratio measures the ability of operating assets to generate sales. Operating Assets Turnover= SUBMITTED TO
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Average Operating Assets Particulars
2011 Rupee
2010 Rupee
2009 Rupee
Net Sale
/Average Operating
14,114,654,216 5608776284
10,618,085,875 2047687135
8,647,863,371 3,859,357,624
Assets(w:1) Operating Assets Turnover
2.516%
5.185%
2.240%
W: 1
2008 Rupee − − −
Average Operating Assets
Operating Assets= property, plant and Equipment Particulars
2011 Rupee
2010 Rupee
2009 Rupee
Opening operating Assets +Closing operating Assets Total
4,167,029,358
4,023719,183
3,694,996,065
−
7,050,523,210
4,167,029,358
4,023,719,183
−
1.12175257×1 4,569,401,276 0¹º 5608,766,284 2284700638
771,871,5248
−
7718715248
−
Total /2
2008 Rupee
Comments
The company is using not more then 6% and not less then 1% of operating assets as compare with the sales, the company policy against is good. 2.6 Sales to Fixed Assts This ratio measure the firm’s ability to make productive use of its property plant and equipment by generating sales this ratio may not be meaningful because of old fixed assts or a labor-intensive industry. In these cases, the ratio is substantially higher because of the low fixed assts base. SUBMITTED TO
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Sales to Fixed Assts = Net Sales Average Net Fixed Assets Particulars
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
14,114,654,21 6 5608,766,284
10,618,085,87 5 2284700638
8,647,863,371
6,140,220,980
7718715248
−
0.253%
4.65%
1.121%
−
W1: Average Net Fixed Assets Particulars 2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
4,023719,183 4,167,029,358 4,569,401,276
3,694,996,065 4,023,719,183 771,871,5248
− − −
2284700638
7718715248
−
Net Sales
/Average Net Fixed Assets (W1) Sales to Fixed Assts ratio
Opening Fixed Assets 4,167,029,358 +Closing Fixed Assets 7,050,523,210 Total 1.12175257×1 0¹º Total /2 5608,766,284
Comments The company is exercising sale to fixed assets ratio similarly as operating assets ratio. 2.7 Return on Total Equity: Return on total equity measure the return to both common and preferred shareholders. Return on total Equity = Net Profit before Tax Average of Total Equity Particulars Net Profit before Tax /Average of Total Equity (W1) Return on total Equity SUBMITTED TO
2011 1,049,000,245 3708264406
2010 882,693,096 2,953,603,874
2009 537,218,077 2,462,584,234
0.283%
0.299%
0.219%
2008 512,573,084 − −
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W1: Average of Total Equity Particulars 2011 Opening Capital 3,278,969,426 +Closing Capital 4,137,559,385 Total Capital 7,416,528,811 Total capital /2 3708264406 Average of Total 3708264406 Equity
2010 2,628,238,322 3,278,969,426 3,278,969,426 2,953,603,874 2,953,603,874
2009 2008 2,296,30,146 − 2,462,584,234 − 2,628,238,322 − 2,462,584,234 − 2,462,584,234 −
Comments The average of total equity of the firm is good and not more then 3% 2.8 Operating profit Ratio: This ratio helps in determining the ability of the management in running the business. Operating profit Ratio = Operating profit ×100 Net Sales Operating profit = Gross profit –operating Exp. Particulars 2011 2010 Operating profit (W1) 1027022877 -127092156 (W1) / Net Sales 14,114,654,21 10,618,085,87 6 5 Operating profit Ratio 0.072 -0.011 W1: Operating profit = Gross profit –operating Exp. Particulars 2011 2010 Gross profit 2,971,531,255 2,376,092,846 1,512,185,002 ― Operating Expenses 1,944,508,387 Operating profit 1027022877 -127092156
2009 517984843
2008 504433485
8,647,863,371
6,140,220,980
0.059
0.082
2009 1,824,014,304
2008 1,204,369,955
1,306,029,461
699,936,470
517984843
504433485
Comments The ratio id related to the company profit with the comparison of the net sales which show the positive trend in the t above analysis. 2.9 operating Ratio: This ratio determine by comparing the cost of the goods sold and other operating expenses with net sales. SUBMITTED TO
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Operating Ratio = cost of goods sold + operating Expenses ×100
Particulars
cost of goods sold + operating Expenses TOTAL / Net Sales Operating Ratio
Net Sales 2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
11,143,122,96 8,241,993,029 1 1,944,508,378 1,512,185,002 1.308763134× 9754178031 10¹º
6,823,849,067
4,935,851,025
1,306,029,461 8129878528
699,936,470 563578795
14,114,654,216 107.84%
8,647,863,371 94.01&
6,140,220,980 91.78%
10,618,085,875 91.86%
Interpretation The ratio is a test of the efficiency of the management is their business operation. It is a mean of operating efficiency. Comments In normal conditions, the operating ratio should be low enough so as to leave portion of the sale s sufficing to give a fair return to the investors. Lower the operating ratio, the better is the positions because greater is the profitability and management efficiency of the concern. The higher the ratio, the less favorable is the situations, because there will be smaller margin of profit available for the purchase of payment of dividend and creation of reserves. 2.10 Expense ratio: Expense ratios are calculated to ascertain the relationship that exits between operating expenses and volume of sales. 1. Distribution cost Distribution cost ratio = Distribution cost ×100 Net Sale Particulars
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
Distribution cost
684,101,629
601,343,211
445,836,513
176,616,643
/ Net Sales
14,114,654,216
10,618,085,875
8,647,863,371
6,140,220,980
Distribution cost RATIO
4.84%
5.66%
5.15%
2.87%
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2. Administration Expenses: Administration Expenses ratio = Administration Expenses×100 Net Sale Particulars 2011 2010 2009 Rupee Rupee Rupee
2008 Rupee
Administration Expenses
489,640,831
386,747,323
289,933,227
150,857,718
/ Net Sales
14,114,654,216
10,618,085,875
8,647,863,371
6,140,220,980
Working Capital
3.46%
3.64%
3.35%
2.45%
3. Finance Cost Finance Cost ratio = Net sale Particulars
Finance Cost
×100
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
542,907,391
421,645,086
530,481,698
345,484,578
/ Net Sales
14,114,654,216
10,618,085,875
8,647,863,371
6,140,220,980
Finance Cost ratio
0.38%
3.97%
6.13%
5.62%
Finance Cost
3. TEST OF LONG –TERM SOLVENCY Long Term Solvency or Leverage Ratios 3.1 Debt- Equity Ratios:
(Also known as debt to net worth ratio) .the relationship between borrowed funds and internal owner’s funds is measure by DebtEquity ratio. Debt Equity Ratio = Total long term debts Shareholder’s funds
Where long-term debts total excludes current liability Shareholder’s Finds includes Ordinary share capital SUBMITTED TO
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Credit balance of profit and loss account and free reserves etc; Particulars
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
Total long term (W:1)debts /Shareholder’s funds
3,199,352,182
830,672,445
119,4635,765
100,533,0509
1,264,000,000
1,262,000,000
1,262,000,000
1,260,000,000
Working Capital
2.53%
0.65%
0.946%
0.797%
Particulars
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
Long term Financing
3,199,352,182 830,672,445 − 3,199,352,182 830,672,445
1062,660,834 131,974,931 119,4635,765
929,404,033 100,533,0509 100,533,0509
W: 1 Total long term debts
Long term deposits
Total long term debts
Comments The company is not much more depend on its shareholders equity, the ratio is not more then 1% instead of 2011 3.2 Debt to total funds or solvency Ratio: Solvency is the term which is used to describe the financial position of any business which is capable to meet outside obligations in full out of its own assets. So this ratio establishes relationship between total liabilities and total assets.
Solvency Ratio =
Total Liabilities Total assets
Particulars Total Liabilities(W:1)
2011 5824256681
SUBMITTED TO
2010 4884160797
2009, 6344736771
2008 5153446258
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9,351,223,163
5,998,524,270
1,3488,782,54 8
92,776,936,96
1.05% Solvency Ratio Working: Total Liabilities
0.81%
0.47%
0.55%
Particulars Non- Current Liabilities
+ Current Liabilities
2011 3526966482 5,8242,56,681
2010 1114363473 4884160797
2009 1570379036 4744357755
2008 1562213670 3591232588
Total Liabilities
5824256681
4884160797
6344736771
5153446258
Total assets
Comments The company solvency is in its good condition in only 2009 it increased other wise the company exercising normally and in good solvency condition. 3.3 Reserve to capital Ratio:
This ratio establishes relationship between reserves and capital. Higher proportion of reserves shows financial soundness (i) unit shall be able to meet future losses as and when suufered, (ii) unit can grow, expand, diversify as it may desire. Reserve to capital Ratio = Reserve Capital Particulars Reserve /Capital
2011 Rupee 2,873,559,385 1,264,000,000
2010 Rupee 2,016,969,426 1,262,000,000
2009 Rupee 1,366,238,322 1,262,000,000
2008 Rupee 1,036,930,146 1,260,000,000
Reserve to capital Ratio
2.27%
1.598%
1.082%
0.822%
Comments The company reverse to capital ratio is not more the 3% which is indication that the reveres are kept while considering the future change in money value. 3.5 Proprietary Ratio: Proprietary ratio (also known s equity Ratio of net worth to total assets or shareholders equity to total equity) Establishes relations between proprietor’s funds to total resources of the unit. Where proprietor’s funds refer to Equity share capital and Reserves, surplus and total resources refer to total assets. SUBMITTED TO
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Proprietary Ratio = Total Equity Total assets
W: 1 Total Equity Particulars Share Capital
2011 1264,000,000 + Unappropriate profit 2,873,559,385 Total 4137559385
2010 1262,000,000 2,016969,426
2009 1262,000,000 1,366,238,322
2008 1260.000,000 1,036930146
3278969426
2628238322
2296930146
W: 2 Total Assets Particulars Share Capital
2011 2010 2009 2008 1264,000,000 1262,000,000 1262,000,000 1260.000,000 + Unappropriate profit 2,873,559,385 2,016969,426 1,366,238,322 1,036930146 Total 4137559385 3278969426 2628238322 2296930146 Comments This relationship highlights the fact as to what is the proportion of proprietors and outsides in financing the total businesses. 3.6 Debt /Equity Ratio: The debt /equity ratio is another computation that determines the entity’s long-term debt –paying ability. Debt /Equity Ratio = Total Liabilities Shareholders’ Equity Particulars 2011 2010 2009 2008 Rupee Rupee Rupee Rupee
Total Liabilities /Shareholders’ Equity Debt /Equity Ratio
9351,223,163 1.264.000,000 7.40%
5,998,524,270 6344736771 1,262,000,000 1,262,000,000 4.760% 5.01%
5153446258 1,260,000,000 4.08%
Comments This computation compares the total debt with the total shareholders‟ equity. The debt/equity ratio also helps determine how well creditors are protected in case of insolvency. From the prospect of long-term debt-paying ability, the lower this ratio, the better the company‟ debt positions as in case of the interloop Limited. SUBMITTED TO
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3.7 Debt to Tangible Net Worth ratio: The debt to tangible net worth ratio also determines the entity’s long term debt-paying ability. This ratio also indicates how well creditors are protected in case of the firm’s insolvency Debt to Tangible Net Worth ratio = Total liabilities Shareholders’ Equity – intangible Assets
Particulars
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
Total Liabilities
6344736771 1242517559
5153446258 1239145748
9351,223,163 1248968871
5,998,524,270 −
0.51%
4.15%
7.48%
W: 1 Shareholders’ Equity – intangible Assets Particulars 2011 2010 Rupee Rupee
2009 Rupee
Shareholders’ Equity – intangible Assets Total
1.262.000,000 13,031,129 1248968871
/(Shareholders’ Equity – intangible Assets) (W:1)
Debt to Tangible Net Worth ratio
1,264,000,000 21,482,441 1242517559
1,262,000,000 22,854,252 1239145748
−
2008 Rupee
Comments The debt to tangible net worth ratio is a more conservative ratio than either the debt ratio or the debt/ equity ratio. It eliminates intangible assets such as goodwill, trademarks, etc. so the ratio should be more authentic; in 2009 company have sum ratio more then 5%. 3.8
FIXED Assets Ratio: This ratio established the relationship between long term funds and fixed assets. Since financial manger advocates that fixed assets should be parched out of long –term funds only. FIXED Assets Ratio = Net Fixed Assets Long term funds
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Particulars
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
Net fixed assets 7,050,523,210 /Long term funds(W:1) 327810147 FIXED Assets Ratio 21.50%
4,167,029,358 57459767 72.50%
4,023,7191,83 118685070 33.90%
3694,996,056 117323723 31.49%
W: 1 Long term funds Particulars 2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
Long term Investment +Long term Loans +Long term Deposits Total Long term Funds
11,023,996 12,503,750 33,932,021 57459767
4,065,000 8,460,000 106,160,070 118685070
3,391,000 8,460,000 105,472,723 117323723
275,588,398 13,012,252 39,209,497 327810147
4. Investor Analysis: 4.1 Earning per share: Earnings per share – the amount of income earned on a share of common stock during an accounting period –applies only to common stock and to corporate income statements. Nonpublic companies, because of cost-benefits considerations, do not have to report earning per share. Fortunately, we do not need to compute erasing per share. The Company is required to present it at the bottom of the income statement. Earning per share =
Net profit After Tax for the year No. of ordinary share
Particulars
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
Net profit After Tax for the
907,069,959
776,931,104
455,308,176
445,845,171
No. of ordinary share
126,202,192
126,000,000
126,039,452
126,000,000
Earning per share
7.19
6.16
3.61
3.54
year
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4.2 Percentage of Earnings Retained: Percentage of Earnings Retained = Net income – All Dividends Net Income Interpretation The percentage of earnings retained is better for trend analysis if nonrecurring items are removed. These indicators what is being retained of recurring earnings. Particulars
2011 Rupee
2010 Rupee
2009 Rupee
Net income – All Dividends (W:1)
856,589,959
650,731,104
329,308,176
−
/Net Income Percentage of Earnings Retained
907,069,959 0.94%
776,931,104 0.83%
455,308,176 0.723%
− −
2010 Rupee
2009 Rupee
776,931,104 126,200,000 650,731,104
455,308,176 126,000,000 329,308,176
W:1 Net income – All Dividends Particulars 2011 Rupee Net Income – All Dividends Answer
907,069,959 50480,000 856,589,959
2008 Rupee
2008 Rupee − − −
4.3 Book Value per Share: A figure frequently publish din annual reports is book value per share which indicates the amount of stockholders‟ equity that relates to each share of outstanding common stock.
Book value per Share/ Break up value =
Equity Number of share
Particulars Total stockholders’ SUBMITTED TO
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
1,264,000,000
1,262,000,000
1,262,000,000
1,260,000,000
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Equity
/Number of share
126,202,192
126,000,000
126,039,452
126,000,000
Book value per Share
10.01
10.01
10.1
10.1
4.4 Income / Expense ratio Income / Expense Particulars
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
Income /Expenses
907,069,959 1944508378
776,931,104 1512183002
455,308,176 1306029461
445,845,171 699936470
Income / Expense ratio
0.46%
0.51%
0.34%
0.63%
4.5 Net advances / Deposit ratio= Advances Deposit Particulars
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
368,258,912
196,177,943
159,761,321
254,771,373
/ Deposit
18,641,340
82,063,218
8,660,108
17,403,788
Net advances / Deposit ratio
19.75%
2.39%
18.447%
14.63%
Advances
Comments The investor of the company are limited so the analysis show that there are few ratio mange in this categories ,overall analysis results are positive and good condition o f share capital.
5. Activity Ratios: 5.1 Inventory/stock turnover ratio: The Inventory turnover is a measure of the number of times inventory is sold or used in a time period such as a year. The equation for inventory SUBMITTED TO
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turnover equals the cost of goods sold divided by the average inventory. Inventory turnover is also known as inventory turns, stock turn, stock turns, turns, and stock turnover.
Particulars
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
Cost of Good sold
11,143,122,96 1 327998778
8,241,993,029
6,823,849,067
4,935,851,025
267351742.5
202936945.5
−
33.97%
3.07%
33.62%
−
2008 Rupee
/Average inventory (W:1) Inventory Turn over ratio
W: 1 Average inventory particulars
2011 Rupee
2010 Rupee
2009 Rupee
Opening inventory(W:2) +Opening inventory Total Total/2 W: 2 Inventories
295,033,986
239,669,499
166,204392
−
360,963,570 655997556 327998778
295,033,986 534703485 267351742.5
239,669,499 405873891 202936945.5
− − −
particulars
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
Store and Spare + Stock In Trade Total
360,963,570 2,564,800,749 615764319
295,033,986 2,335,076,521 26301110507
239,669,499 2,711,840,721 2951510220
166,204392 1,888,948,644 2055153036
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Inventory Conversion period: Fro better understanding it is of interest to know that on an average how many days were taken to dispose off average inventory? It is known as inventory conversion period. Inventory Conversion period = particulars
Days in the year
/inventory turnover ratio Inventory conversion Period Comments
Days in the year Inventory turnover ratio 2011 2010 2009 Rupee Rupee Rupee
2008 Rupee
365 33.97%
365 3.07%
365 33.62%
− −
10days
118days
10 days
−
A low turnover rate may point to overstocking obsolescence, or deficiencies in the product line or marketing effort. However, in some instances a low rate may be appropriate, such as where higher inventory levels occur in anticipation of rapidly rising prices or shortages. A high turnover rate may indicate inadequate inventory levels, which may lead to a loss in business. 5.2 Debtors / Receivables turnover ratio: Receivables / Debtors turnover ratio is one of the key turnover ratios used to analyze the performance of a business. This ratio throws light on effectiveness of the business in utilizing its working capital blocked in debtors. It also indicates the frequency of conversion of receivables into cash in a given financial year. So, fundamentally, it comments on the liquidity of the receivables of the business. Formula for Debtor / Receivable Turnover Ratio: Receivable Turnover Ratio = Annual credit (net) sales Average accounts Receivable Where accounts Receivable = Average Debtors + Average Bills Receivables SUBMITTED TO
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particulars
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
Net Sales
14,114,654,216
10,618,085,875
8,647,863,371
6,140,220,980
/
1995393424
3341782487
1574451343
−
7.07%
3.17%
5.49%
−
Average accounts Receivable(W:1)
Receivable Turnover Ratio
W: 1 Average accounts Receivable particulars
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
Average Trade Deters (W:2) Average Other Receivable(W:3)
1916447181
3144495049
1274179591
789246243
197287438
300,271,751.5
−
Average accounts Receivable
1995393424
3341782487
1574451343
−
W: 2 Average Trades Deters particulars
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
Opening Trade Debts +Closing Trade Debts Total /2
1661,726,339 2,171,168,022 1916447181
1482,768,710 1661,726,339 3144495049
1065,590472 1482,768,710 1274179591
3,638,056,616 3591,232,588 46824028
2008 Rupee
W: 3 Average Other Receivable particulars
2011 Rupee
2010 Rupee
2009 Rupee
Opening other Bills receivable +Opening other Bills
247,386,823
147,188,053
226,677,725
−
541,859,420
247,386,823
147,188,053
−
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receivable Total /2
789246243
197287438
300,271,751.5
−
Receivables turnover ratio has another variant i.e. Average Collection Period which gives a time period in which debtors are converted into cash. Both the ratios indicate same thing but in different terms. The former is expresses no. of times debtors are converted into cash in a financial year whereas the latter gives no. of days or months in which the debtors are converted into cash. Formula for Average Collection Period: 365 days or 12 Months Average Collection Period = Debtor / Receivable Turnover Ratio 2010 2009 Rupee Rupee
particulars
2011 Rupee
2008 Rupee
Days In a year Receivable Turnover Ratio Average collection period
365 7.07%
365 3.17%
365 5.49%
− −
51 days
115 days
66days
−
Interpretation: Receivables turnover ratio is an absolute figure normally between 2 to 6. A receivable turnover ratio of 2 would give an average collection period of 6 Months (12 Months / 2) and similarly 6 would give 2 Months (12 Months / 6). Meaning is quite clear. A ratio of 2 suggests that the debtor whom credit is extended today, the money is realized in cash after 2 months. Similarly, in case of 6, the money is realized after long 6 months. For better trade credit management, it is obviously desirable to realize the money as soon as possible because the money which is blocked in the debtors has a cost of interest attached to it whose driver is „Time‟. If time to realize the money from debtors is more, the cost is also higher and vice versa. Low debtor‟s turnover ratio directly insists on higher working capital requirements and therefore higher interest cost which decreases profits of the firm. Comments SUBMITTED TO
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What is desirable - A higher or a lower receivable turnover ratio? The general rule of life i.e. „balance‟ is even applicable here. Neither too high, nor too low of this ratio is advisable. Let‟s see the implications of both the ends. Very Low Receivable / Debtor’s Turnover Ratio: This is easy to understand. Low receivable turnover ratio means higher collection period. It gives an impression of wrong choice of debtors or insufficient efforts to collect the cash. Very High Receivable / Debtor’s Turnover Ratio: It would seems little contradictory to say that even very high receivable turnover ratio is not good. Very high ratio hints of the very tight credit policy of the firm. 5.3 Working capital turnover ratio: Working capital turnover ratio indicates the velocity of the utilization of net working capital. This ratio represents the number of times the working capital is turned over in the course of year and is calculated as follows: Working Capital Turnover Ratio = Cost of Sales / Average Net Working Capital particulars
Cost of Sales /Average Net Working Capital
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
11,143,122,961
8,241,993,029
6,823,849,067
−
1396949796
94685749
45003002
−
7.97%
87.04%
151.63%
−
(W:1)
Working Capital
W: 1 Average Net Working capital particulars 2011 2010 Rupee Rupee
2009 Rupee
2008 Rupee
Opening Net Working capital
146189522
43181976
46824028
−
+Closing Net Working
2647710069
146189522
43181976
−
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Total Total/2
2793899591 1396949796
189371498 94685749
90006004 45003002
−
Interpretation The two components of the ratio are cost of sales and the net working capital. If the information about cost of sales is not available the figure of sales may be taken as the numerator. Net working capital is found by deduction from the total of the current assets the total of the current liabilities. Comments The working capital turnover ratio measures the efficiency with which the working capital is being used by a firm. A high ratio indicates efficient utilization of working capital and a low ratio indicates otherwise. But a very high working capital turnover ratio may also mean lack of sufficient working capital which is not a good situation. 5.4 Fixed assets turnover ratio: A financial ratio of net sales to fixed assets. The fixed-asset turnover ratio measures a company'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 company has been more effective in using the investment in fixed assets to generate revenues. The fixed-asset turnover ratio is calculated as:
particulars
2011 Rupee
2010 Rupee
2009 Rupee
2008 Rupee
Net Sales Net fixed assets
14,114,654,216 7,050,523,210
10,618,085,875 4,167,029,358
8,647,863,371 4,023,7191,83
6,140,220,980 3694,996,056
Fixed Assets Turnover ratio
2%
2.5%
2.14%
1.66%
Comments
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This ratio is often used as a measure in manufacturing industries, where major purchases are made for PP&E to help increase output. When companies make these large purchases, prudent investors watch this ratio in following years to see how effective the investment in the fixed assets was.
PART 2 ANALYSIS OF MANAGEMENT PATTERNS
SWOT Analysis SWOT analysis (alternately SLOT analysis) is a strategic planning method used to evaluate the Strengths, Weaknesses/Limitations, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective. The technique is credited to Albert Humphrey, who led a convention at Stanford University in the 1960s and 1970s using data from Fortune 500 companies. Aim of SWOT Analysis In general The aim of any SWOT analysis is to identify the key internal and external factors that are important to achieving the objective. These come from within the company's unique value chain. SWOT analysis groups key pieces of information into two main categories:
Internal factors – The strengths and weaknesses internal to the organization.
External factors – The opportunities and threats presented by the external environment to the organization.
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The internal factors may be viewed as strengths or weaknesses depending upon their impact on the organization's objectives. What may represent strengths with respect to one objective may be weaknesses for another objective. The factors may include all of the 4Ps; as well as personnel, finance, manufacturing capabilities, and so on. The external factors may include macroeconomic matters, technological change, legislation, and socio-cultural changes, as well as changes in the marketplace or competitive position. The results are often presented in the form of a matrix. How a SWOT analysis fits into a strategic situation analysis? The following diagram shows how a SWOT analysis fits into a strategic situation analysis.
SWOT Analysis Framework
Environmental Scan / Internal Analysis /\ Strengths Weaknesses
\ External Analysis /\ Opportunities Threats
| SWOT Matrix
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SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. SWOT Analysis of INTERLOOP LIMITED
Strength: A firm's strengths are its resources and capabilities that can be used as a basis for developing a competitive advantage.
The strength of the company is;
Your specialist marketing expertise.
A new, innovative product or service
Location of your business
Quality processes and procedures
Any other aspect of your business that adds value to your product or service.
patents
strong brand names
good reputation among customers
cost advantages from proprietary know-how
exclusive access to high grade natural resources
favorable access to distribution networks
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W
eaknesses
The absence of certain strengths may be viewed as a weakness
Lack of marketing expertise
Undifferentiated products and service (i.e. In relation to your competitors)
Location of your business
Poor quality goods or services
Damaged reputation
lack of patent protection
a weak brand name
poor reputation among customers
high cost structure
lack of access to the best natural resources
lack of access to key distribution channels
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O
pportunities
Opportunities and threats are external factors the external environmental analysis may reveal certain new opportunities for profit and growth.
A developing market such as the Internet.
Mergers, joint ventures or strategic alliances
Moving into new market segments that offer improved profits
A new international market
A market vacated by an ineffective competitor
an unfulfilled customer need
arrival of new technologies
loosening of regulations
removal of international trade barriers
T
hreats
Changes in the external environmental also may present threats to the firm.
shifts in consumer tastes away from the firm's products
emergence of substitute products
new regulations
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increased trade barriers
A new competitor in your home market
Price wars with competitors
A competitor has a new, innovative product or service
Competitors have superior access to channels of distribution
Taxation is introduced on your product or service
The SWOT Matrix To develop strategies that take into account the SWOT profile, a matrix of these factors can be constructed. The SWOT matrix (also known as a TOWS Matrix) is shown below: SWOT / TOWS Matrix Strengths
Weaknesses
Opportunities S-O strategies W-O strategies
Threats
S-T strategies W-T strategies
S-O strategies pursue opportunities that are a good fit to the company's strengths.
W-O strategies overcome weaknesses to pursue opportunities.
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S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats.
W-T strategies establish a defensive plan to prevent the firm's weaknesses from making it highly susceptible to external threats.
SWOT Profile A SWOT profile can be generated and used as the basis of goal setting, strategy formulation, and implementation. The completed SWOT profile sometimes is given as follows: Strengths
1. 1. ISO 9002 Certification.
Weaknesses
1.
1.
2. WRAP Certified 3. Vertically integrated.
turnover 2. Centralized management system
4. High quality products. 5. Excellent market image in the local and international
3. High cost of production. 4. Low production capacity.
market. 6. Highly qualified management. SUBMITTED TO
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5. De-motivated Staff.
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7. Adequate financial resources.
6. Non-Corporative culture.
8. Competitive advantage.
7. Insufficient benefits for the employees.
9. Adopting information technology.
8. Stereotype machinery for processing.
10. Recruitment on merit. 11. Loyal customers.
Communicational gap among different departments.
12. Skilled Labor. 13. Broad and motivational vision. 14. Back Track System Opportunities 1. 1. Can expand its division such as
Threats 1. 1. Entry of new competitors
entering in weaving sector also. 2. Can introduce its own label in domestic as well in international market SUBMITTED TO
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3. Can capture new market segment. 4. Full potential of entertaining the local market. 5. Can reduce the cost by proper
changes. 3. Political instability. 4. Changing geopolitical situation.
utilization of resources. 6. End of quota restrictions by the end of year 2004. Can hire well-educated and experienced staff
5. Change of government policies. 6. Low price offered by competitor 7. Globalization.
When formulating strategy, the interaction of the quadrants in the SWOT profile becomes important.
PEST analysis PEST analysis stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macro-environmental factors used in the environmental scanning component of strategic management. Some analysts added Legal and rearranged the mnemonic to SLEPT;[1] inserting Environmental factors expanded it to PESTEL or PESTLE, which is SUBMITTED TO
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popular in the United Kingdom.[2] The model has recently been further extended to STEEPLE and STEEPLED, adding Ethics and demographic factors. It is a part of the external analysis when conducting a strategic analysis or doing market research, and gives an overview of the different macro environmental factors that the company has to take into consideration. It is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. The growing importance of environmental or ecological factors in the first decade of the 21st century have given rise to green business and encouraged widespread use of an updated version of the PEST framework. STEER analysis systematically considers Socio-cultural, Technological, Economic, Ecological, and Regulatory factors.
Factor of PEST analysis A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors: Political Economic Social Technological The acronym PEST (or sometimes rearranged as "STEP") is used to
Environmental Scan / \ External Analysis /
Internal Analysis \
Microenvironment Microenvironment | P.E.S.T.
describe a framework for the analysis of these macro environmental factors. A PEST analysis fits into an overall environmental scan as shown in the following diagram:
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P
olitical Factors:
Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses, Interloop Limited is not much more affected by the political factors but following are the political factors which are direct or indirectly influence the productivity and efficiency on the firms are as follows;
Employment laws
Environmental regulations
Trade restrictions and tariffs
Political stability
Environmental regulations and protection
Tax policies
International trade regulations
restrictions Contract enforcement law
Consumer protection Employment laws
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Safety regulations
Competition regulation Government organization / attitude
Following measures are to consider also; 1. How stable is the political environment? 2. Will government policy influence laws that regulate or tax your business? 3. What is the government's position on marketing ethics? 4. What is the government's policy on the economy? 5. Does the government have a view on culture and religion? 6. Is the government involved in trading agreements such as EU, NAFTA, ASEAN, or others? The political situation of Pakistan is not satisfactory and unstable. Rapid change in the Govt. and the change of the policies of the previous govt. by the new govt. abruptly effect the Pakistan’s political situation. Due to these entire factors the foreign investor hesitates to invest in Pakistan. Govt. should device such policies that are beneficial for the local exporter as well as for the investors.
E
conomic Factors:
Economic factors affect the purchasing power of potential customers and the Interloop Limited’s cost of capital. Marketers need to consider the state of a trading economy in the short and long-terms. This is especially true when planning for international marketing. Followings are the key Economic Factors for the firm; SUBMITTED TO
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Economic growth Interest rates Exchange rates Inflation rate The level of inflation Employment level per capita. .Long-term prospects for the economy Gross Domestic Product (GDP) per capita, and so on. Economic growth Interest rates & monetary policies Government spending Unemployment policy Taxation Exchange rates Inflation rates Stage of the business cycle Consumer confidence Interest rates The level of inflation Employment level per capita Long-term prospects for the economy Gross Domestic Product (GDP) per capita, and so on
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The economic condition of Pakistan is not suitable for investment. Market growth rate is very low and new investors hesitate to invest. Increasing inflation rate due to heavy loan make the business environment strict. Actually increase in inflation rate leads to high cost of production so our country products sell out at a high price but with low margin.
S
ocial Factors
Social factors include the demographic and cultural aspects of the external macro environment. These factors affect customer needs and the size of potential markets. The social and cultural influences on business vary from country to country. It is very important that such factors are considered. In case of Interloop flowing factors could be consider – Health consciousness – Population growth rate – Age distribution – Career attitudes – Emphasis on safety – Income distribution Demographics – Population growth rates – Age distribution Labor – Social mobility – Lifestyle changes Work – Career and leisure attitudes – Entrepreneurial spirit Education – Fashion, hypes Health consciousness & welfare, feelings on safety – Living conditions (Changes in) Mobile Technology SUBMITTED TO
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Followings measures are to taken; – .What is the dominant religion? – What are attitudes to foreign products and services? – Does language impact upon the diffusion of products onto markets? – How much time do consumers have for leisure? – What are the roles of men and women within society? – How long are the population living? Are the older generations wealthy? – Does the population have a strong/weak opinion on green issues? The change in the lifestyle of the people affects the growing demand of the Interloop products. The change in the lifestyle and needs in different demographics also affect the demand of the customers. Due to all these changes Interloop is performing excellent for the excellence of organization as well as for the customer.
T
ECHNOLOGICAL FACTORS:
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Technology is vital for competitive advantage, and is a major driver of globalization. Technological factors can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. Some technological factors for the interloop Limited include:
R&D activity
Automation
Technology incentives
Rate of technological change
(Changes in) Internet hangs
(Changes in)Mobile Technology
Information Technology
Energy use and costs Life cycle and Speed of technological obsolescence
Rate of technology transfer new inventions and development industry focus on technological effort Government research spending.
Following question are important for the technology measures of Interloop Limited
Does technology allow for products and services to be made more cheaply and to a better standard of quality?
Do the technologies offer consumers and businesses more innovative products and services such as Internet banking, new generation mobile telephones, etc?
How is distribution changed by new technologies e.g. books via the Internet, flight tickets, auctions, etc?
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Does technology offer companies a new way to communicate with consumers e.g. banners, Customer Relationship Management (CRM), etc?
Technological advancement in all the sectors of the country has changed the entire socioeconomic environment. Especially textile sector has incorporated technological development and advancement in their organizations. PEST factors play an important role in the value creation opportunities of a strategy. However they are usually beyond the control of the corporation and must normally be considered as either threats or opportunities. Remember macroeconomical factors can differ per continent, country or even region, so normally a PEST analysis should be performed per country. Now the PEST analysis is moving and known as PESTEL analysis.
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Part IV summing up FINDINGS & RECOMMENDATIONS
Interloop Limited never compromise on quality, and always provide in time delivery, due to this production is increase day by day, production is not increased in quantity, but also with quality. In Interloop Limited right person is at right place. Every person respect each other senior respect his juniors. There is cooperative environment. No doubt Interloop Limited is employee oriented organization and its values are to share and care its human capital in every perspective. Nothing is perfect in this universe and opportunity of improvement always exists. At last I give some suggestions to Interloop Limited’s staff of different department with the hoping that these suggestions also give major contribution in the development of this organization. EHS & PI DEPARTMENT Both the departments are working as should they, but following are some recommendations are 1. EHS department should arrange the seminar inside the organizations to give awareness to the employees about hoe they can manage there health inside and out side the organization, because the worker spend more time in there home then factory. 2. PI department works on ergonomics, but the work force is not aware of term what does it mean, so the training of the employees is very necessary. 3. EHS department should give SOP’s of all the relevant safety instruction of the job and jobs relater hazardous in all deportments to reduce the safety risks.
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4. The condition of the ambulance is very b pity and not fit for the emergency conditions, should be replaced with good soon as possible. 5. ergonomics ,safety and health are alternatives of each other should be first focus of the departments
HR & D Hr dept is the backbone of any organization. It plays role like strategic business partner and define future human capital dimension in order to meet company strategic objective. 1. I was surprised to see that all work is done in Excel sheet and there is no system which tells us about how many applications have applied and from which university. 2. We hire candidate who have rich experience in their field, but we offer not attractive designation, so because many executive are not comfortable with current designation, my idea is to offer proper designation. 3. Staffing staff is busy to search required CV’s manually and there is no proper record. 4. We should appoint right person with relevant education, but in company practice people are hired who have bit knowledge about this field.
5. When people apply against any vacancy, after CV’s collecting HR-dept sent all these CV’s to concerned dept for short listing, it is not fair, actually that dept add their own CV’s and only those people are short listed for whom concerned dept categorized. In this regard Hr dept should short listed CV’s after screening on defined criteria. 6. There is influence from every dept directly/indirectly about their concerned person either he/she has been short listed or not. We should minimize their influence. 7. After orientation phase, there is no follow up and we should arrange meeting with new joiner to discuss his issues during orientation tenure and take report during defined period. 8. There is no training and development policy, company should develop.
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9. All form like OD, Leave application form, shift change and others related form are scattered in time office. My idea is to place all form in racks and mention on rack about these forms, in this way every body will take form easily and time of time keeper will be saved. 10. All executive are busy in there day to day matters and go out door for company official visit. They have short time to check there absent status, in this regard my idea is to add duty of timekeeper to inform every executive about his absentee before the month end on telephone, in this way we will add our services by offering this services. 11. Our HR Management is busy to perform day to day matters involved in every matter at low level by wasting their precious time, in this sense my idea is to delegate authority and check their performance.
A D M IN D EP A R T MEN T 1. Mess menu is very crispy and there is no Varity in mess menu, my suggestion is to review and add new dishes and add more vegetable with salad. 2. Near executive basin there is no liquid soap only piece of soap is available, this creates negative impression, and my idea is to place liquid soap. 3. On our mess we should add pictures with message say name of Allah before taking meal. 4. In company buss, staff is busy to discuss political matters and disturb others, in this regard we admin dept should deliver clear instruction not to discuss political matters inside buss. 5. After taking lunch, we throw bone and others dust on table or on floor, my idea is to place dust bin near each table, in this way table will be clean and everybody would like to place bone inside dust bin. 6. There should be table tennis table, news paper and color TV inside mess premises, in this way employee will feel healthy and will raise cooperation and remove hesitation among top to bottom staff. 7. On upcoming on stairs, my idea is to add ALLAH -HO-Akbar and Subhan ALLAH poster, in this way employee will remember ALLAH and get feelings. SUBMITTED TO
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8. When any visitor comes in mill for some official purpose, there is no sign board inside mill which indicate in which dimension he has to move, my idea is to place sign board on which there is no clear indication about mills, offices and others area. 9. When people comes to take test, there is no clear indication about Interloop Limited on road, although we have placed sign board on road, but most of the time there is rush on road and truck are placed on road near sign board, 10. My suggestion is to place separate board with red color which indicate clear dimension. 11. My idea is to place Interloop Limited logo on our new corporate building. 12. There is no similarity between mess menu and services as compared to other division, we should prepare same menu and same dishes by coordinating, and in this way we can save company cost and add value. 13. There is rich culture of tea in mills, we should create awareness session that tea is not healthy for health and arrange doctor session for sugar test and awareness. 14. Worker uniform is nice, but we cannot distinguish who is that person and belong from which dept, my idea is to print dept name on front or back of uniform. 15. Employees wear there employment card on different side on their front side, some have placed on button, collar, etc and create very odd impression, my idea is to introduce ribbon with Interloop Limited logo and name, in this way there will be similarity among employee.
Merchandising Merchandiser should follow up the order from beginning to end and physically check the order status at every stage. Merchandiser also checks the work order that it is according to the customer order sheet.
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PPC PPC should be very careful in making work order, because work order is backbone of order status In case of repeat order customer order sheet should check before making the work order.
Toe Closing Supervisor should carefully check the stitching process, not only depend on aster, in this way quality will be improved.
Processing Processing department should be very careful in shade, more qualified person should be appointed in processing. If processing department control the shade variation problem quality will be improved and time can be save in packing and pressing department, which is waste due to shade variation.
Packing
1. Target We can get more production if we give the target to packers, in this way production will be increased with quality not only with quantity.
2. Incentive Incentive should be given to those packers who complete the target at time.
P&S DEPARTMENT Implementing and managing strategic relationship with key supplier, ensuring performance to schedule of all bought out material and services and achieving cost saving target. Conference & seminars Vacation training & Development E- Learning SUBMITTED TO
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Confident communication Profit price and cost Analysis
FINANCE DEPARTMENT 1) Our aim to make Interloop Limited world class organization and doing lot of things to achieve, but office environment specially computer in front of whole team create image like clerk, my suggestion is to introduce LCD at some level in this way we can change existing IT structure. 2) Salary oriented staff in increasing and there performance is not up to mark. 3) Most of our staff is performing clerical duties and there is no innovation and process improvement. 4) Company should provide training to its staff so that they can meet their job duties more efficiently and effectively. 5) There is no vision and mission statement, I was astonished, for this purpose we should design all these things and Job Description of whole mills and update in system. 6) Executive staffing office creates image like government office, where files are scattered and there is no arrangement of files, documents and there is no attractive thing in office where new comer take positive impression on hi face. For this purpose we should re arrange office internal environment and make cabin for file arrangement. 7) There is no defined Job Description of any body what to do, all job description should be online and add/delete task after some defined period. 8) Finance office presents image like WAPDA house, where file are scattered and there is need to arrange file in proper form. OD DEPARTMENT Being a leading department it should play a role to enhance the internal and external environment and aspect to generating the environment. For this purpose OD department should to issue the employees ideas book every year to get new ideas in different departs and jobs, so and motivations of the employees and improvement of the company become possible.
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CONCLUSION Interloop Limited is no doubt a miracle in the hosiery concerns special working environment, is simply the best in Faisalabad. Interloop Limited is a complete vertical unit with all processes ranging from yarn-spinning to packaging and it employs a centralized computerized system which handles all aspects of operations. The company ensures quickest possible turnaround of shipments with strict compliance to their customers’ specifications. In pursuance of their goal to achieve and maintain good quality, Interloop Limited has now set up a high-tech spinning unit that will ensure finest quality yarn made from the best available natural cotton they also add Hosiery Division –III for the quantity enhancement . This project will enhance the value of money for our customers by offering rates that are even more competitive to our clients. The company’s infrastructure is good. Offices are fully furnished. The company is centrally air-conditioned. The company is working in “Papers less” environment. Computerized bar coding and back tracking system are there. Company has good warehousing capacity for fabrics and Scoks. Customer portfolio of the company is very broad. World leaders in sports socks are working with Interloop Limited. Company has separate marketing department. CEO and Marketing Manager of the company perform marketing functions collectively. Company is engaged in merchandising and its merchandising department is very efficient for taking orders and fulfilling them accordingly. Company’s decision making is centralized. All major decisions are made by higher management and implemented by lower management. Now Company is giving preference to its personals separate personnel department is established and a ladies wing is also incorporated. Financially the company is performing well. Its sales are increasing and its profits are rapidly growing Simply we can say that Interloop Hosiery Division is performing well.
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Bibliography References BOOKS M. Arif, Sohail Afzal, Accounting: an intuitive approach, Pakistan: Lahore M.A Ghani, Advance Accounts, New Fine printing Press, Lahore: Pakistan, January, 1971(1996) Javed Akhter, Fundamental & Financial Accounting, 10-Railway Road: Lahore, 2009 Robeert F. Meigs,Jan R. Williams,Susan F. Haka and Mark S: Bettner. Accounting: the basic for the business Decisions. United States of America: New York, 1962. Charles H. Gibson, Financial Statement Analysis: using Financial Accounting Information. The University of TOLEDO: 7th EDITION. Courtland L. Bovee,Johan V. Thill, Marian Burk Wood And George p. Dovel, Management. International Edition James C. Van Horne, John M. Wachowicz,and JR , fundamentals of Financial Management :First Indian Reprint,2001 Robert N. Lussier,Minas Poulos, Organisational Behavior: A skill- building approach 4 Barcoo Street, Roseville NSW 2069: Australia, 2001 PETER M. BERGEVIN, Financial Statement Analysis: an Integrated Approach, (Upper Saddle River, NJ: Prentice Hall, 2002, pp. xxiv, 598)
ARTICLES Robert Follett Introduction to How to Keep Score in Business: Accounting and Financial Analysis for the NonAccountant, Balmer, John M. T"Corporate Branding and Connoisseurship.'" Journal of General Management 21, no. I (autumn 1995): 24-27 The Beginner's Guide to Understanding, Analyzing, & Reading Financial Statements By Joshua Kennon, SUBMITTED TO
References
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Davis, L., "Rights Replacing Needs" in Hauritz, M., Justice for People with Disabilities, Sydney: Federation Press, 1998
THE INTERNET SOURCES “Human resources”, http:// www.interloop.com.pk (collected 20/01/2012) “Our clients”‟ http:// www.interloop.com.pk (collected 25/01/2012) “Plant tour “http:// www.interloop.com.pk (collected 29/01/2012) “Product showroom” http:// www.interloop.com.pk (collected 23/01/2012) “Contact us „http:// www.interloop.com.pk (collected 22/02/2012) “CSR
„http:// www.interloop.com.pk (collected 13/09/2011)
“awards_and_honours‟ http:// www.interloop.com.pk (collected 17/10/2011) „Competitors list „ “Indian industry socks “
http:/ www.usafishinc.com (collected 17/10/2011) www .mumbai socks.com
„business volume” http:// www.interloop.com.pk (collected 20/02/2012) “Company profile” http:// www.interloop.com.pk (collected 20/02/2012)
Newsletters
“CEO message “In the Loop: Ausgest /September, page n0.3 “Interloop flood relief activities-rehabilitation phase” In The loop: July /august2011, page n0.7 “OHSE award 2010”, in the loop: July /august, page 2011 n0.8 “Acquisition of Kohinoor Hosiery”, in the loop: July /august2011, page n0.9 “Introduction of Barin ULmann ILNA”, in the loop: July /august2011page n0.11 “The sixth Business planning Workshop 2011”, in the loop: Jan. /Feb.2011, page n0.4 “In the spotlight finaicne department” In The loop: Jan. /Feb.2011, page n0.18 “Message from Director Finance interlop” In The loop: November2010, page n0.3 SUBMITTED TO
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