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‘‘In the name of Allah most merciful and beneficent’’ “I rise in degree of rank

whom so ever I pleased; and my every pressure of knowledge is one, most knowing”
.
(Al-Quran)
I am very thankful to ALLAH Almighty who gave me the opportunity, courag
e and confidence to explore more knowledge to complete this report and for His (
ALLAH) blessings that have brightened every part of my life, and my parents whos
e prayers always supported me in every task of my life. While working on this re
port, I was guided by my experience, knowledge and interest in this report. Beyo
nd of all the material available I am very thankful to my respected and honorabl
e resource person “Mr. Azhar Farooq” for giving me such knowledge about the subj
ect that makes this report a very motivating. This becomes possible only due to
his very unique style of conveying the knowledge and through his motivational be
havior I am able to complete this complex task.
Besides this I would like to thank other officials who showed their kind
concern towards the completion of this report.

S/N DESCRIPTION PAGE NO.


1 Acknowledgement 01
2 Executive Summary 03
3 Introduction 04
4 Brief History Of The Company 05
5 Nature Of The Organization 06
6 Unique Feature Of The Company 07
7 Business Volume 08
8 Organizational Structure 09
9 Departments Student Worked More 12
10 Application Of Class Room Learning 23
11 Internee’s Learning In Organization 24
12 Financial Analysis 25
13 SWOT Analysis 37
14 PEST Analysis 42
15 Suggestions For The Organization 45
16 Conclusion 46
17 References 47
EXECUTIVE SUMMARY
The Fatima Enterprises Ltd (FEL) is one of the largest and well reputed organiza
tions in Textile industry and is working under the supervision of Mian Sheikh Ni
shat Ahmad. Fatima Enterprises Ltd was incorporated in 13 Nov, 1976, as a public
limited company nationalized but with the great effort of Sheikh Fazal Rehman i
t was repurchased form the Govt. Fatima Enterprises Limited has taken ISO 9001 a
s a first step towards total quality management and its implementation has been
executed in all plants. Currently the spinning unit has been installed the capac
ity of 40,000 spindles.
Fatima Enterprises Ltd is producing three type of yarn; Cotton Yarn, PC Yarn an
d Woolen Yarn.
The main departments of Fatima Enterprises Ltd are as follows.
Purchase Department
Accounts Department
Finance Department
Marketing Department
Export Department
Sales Tax Department
Fatima Enterprises exports its products in the following countries;
Bahrain, Dubai, Hong Kong, United States of America, Turkey, Spain, Korea, Italy
and Singapore etc. They export the Cotton Yarn, PC Yarn and Woolen Yarn to the
above mentioned countries. There future plan is to maintain a stable level of pr
ofit by increasing value to the customers and modernizing the equipments.

1. INTRODUCTION
• TEXTILE INDUSTRY IN PAKISTAN: -
Over the years, Pakistan is said to be the single crop economy i.e. cotton and t
extile that claims the lion’s share in terms of the contribution in the national
economy of Pakistan. Despite efforts to bring in diversification in country’s o
verall economic get-up, the textile sector continues to be the most important se
gment of the national economy. Its share in the economy, in term of GDP, exports
, employment, foreign exchange earnings, investment and revenue generation altog
ether placed the textile industry as the single largest determinant of the econo
mic growth of the country.
Increase in the cotton production and expansion of textile industry has
been impressive in Pakistan since 1947. Cotton – bales increase from 1.1 million
bales in 1947 to ten million bales by 2000. Number of mills increased from 3 to
600 and spindles from about 177,000 to 805 million similarly looms and finishin
g units increased but not in the same proportion. It employs 50% of industrial l
abor force and earns 65% foreign exchange of total exports. Pakistan’s textile i
ndustry experts feel that Pakistan has fairly large size textile industry and 60
-70% of machines need replacement for the economic and quality production of pro
ducts for a highly competitive market. But unfortunately it does not have any fa
cility for manufacturing of textile machinery of balancing modernization and rep
lacement in the textile mills which need to think about joint ventures for the p
roduction of complete spinning units with china, Italy and production of shuttle
less looms with Korea, Taiwan and Italy.
The first textile commission, which was constituted by the first material law go
vernment in 1960 had, inter-alia, recommended that an economic size textile unit
should preferably have 25,000 spindles and 500 looms. No new mill with only 12,
500 spindles and without looms should be sanctioned. However, no need was paid t
o the advice by the sanctioning authorities with the result that an excess capac
ity had tented to build up in the spinning sector.
In 1992, a foreign consultant form was hired by the government to look into the
stagnating conditions in the local textile industry. One of the observations of
the foreign consultant was “Pakistan has failed to make real progress in the int
ernational market and is being over taken by many of the neighboring competitor
countries. The spinning sector, traditionally the core of the industry, is alrea
dy in the crisis with many spindles lying idle and mills being forced to close.
Worse still, this sector will be hit by the projected decline of its major marke
ts in Japan and Hong Kong in the coming years.”
Cotton textile industry has been premier industry in Pakistan and a majo
r source of export earning and employment. It also helps in value addition to th
e manufacturing sector of the economy. During the six years between 1993 and 199
8, production of yarn (in quantity terms) registered a steady annual growth rate
of 302% in Bangladesh and 405% in India. On the contrary, Pakistan registered a
growth rate of 101% per annum in yarn production although it ranked third after
China and India in the global yarn production during the same six years.
The rise in export of value-added products from Pakistan was another poi
nt of encouragement for the textile sector. “The export of value-added products
rose to 57.4% from 53.9% last year-a clear sign that we are moving in the right
direction, “said the Chairman of all Pakistan textile mills association.
Pakistan’s textile sector is getting rid of old impediments and gearing
itself up for the new opportunities in the new trade regime

.
• BRIEF HISTORYOF THE COMPANY
The Fatima Enterprises Ltd (FEL) is one of the largest and well reputed organiza
tions in Textile industry and is working under the supervision of Mian Sheikh Ni
shat Ahmad. Fatima Enterprises Ltd was nationalized in 1972 but with the great e
ffort of Sheikh Fazal Rehman it was repurchased form the Govt. and incorporate
d in 13 Nov, 1976, as a public limited company. Fatima Enterprises Ltd has taken
ISO 9001 in 1998 as a first step towards total quality management and its imple
mentation has been executed in all plants. Currently the spinning unit has been
installed the capacity of 60,000 spindles.
At initial stage, when the company was taken over, it was very small company, ha
ving authorized capital of 700000 shares @ Rs. 10 each in 1977 with issued capit
al of 50000 shares @ Rs 10 each. But now, it has gotten progress and reached at
top level. At present, Fatima Enterprises Ltd. is well known enterprise, having
authorized capital of 25000000 shares @ Rs 10 each and issued and subscribed cap
ital of 14231052 shares @ Rs. 10 each.
Since well before the1950s, Fatima Enterprises has graduated from raw c
otton ginning to spinning and finally into weaving. They now operate 3 ginning f
actories, 2 Spinning Units and 1 weaving Unit.
Fatima Enterprises has built a reputation of excellence in quality and
commitment to leadership since its establishment. In just a matter of a few year
s they have established their selves as one of the leading manufacturers and exp
orters of superior quality cotton yarns in Pakistan. As manufacturers of ‘A’ gra
de knitting/weaving cotton yarn, Fatima weather it is a dream to be the best or
commitment of company with textile sector Fatima did achieve its deserving statu
s where it stood up as one of the major exporter of Pakistan. It got its place-p
aved ways for further developments with ever improving quality and never looked
back. YES it did it!!!!!!!
• NATURE OF THE ORGANIZATION
There are two types of the business
Manufacturing Business
Merchandising Business
Fatima Enterprises Limited is a manufacturing concern firm which is prod
ucing cotton yarn, woolen yarn and PC yarn which is exported to different countr
ies. Fatima Enterprises Limited is manufacturing products in Okara, Multan, Muz
zafar Ghar and Rahim Yar Khan. Cotton yarn is producing in Okara and Woolen and
PC Yarn is producing in Muzzafar Ghar.
• UNIQUE FEATURES OF THE COMPANY: -
One of the leading manufacturers and exporters of superior quality cotto
n yarns in Pakistan.
Fatima Enterprises has built a reputation of excellence in quality and c
ommitment to leadership in the year 1991.
Over the years they have built a reputation of being one of the leading
manufactures and exporters of ‘A’ grade knitting/weaving cotton yarn while maint
aining USTER top 5% results from Pakistan.
Their present spinning unit, located in the industrial city of Muzaffar
Garh, comprises of 36,000 operational spindles and they hope to expand by progre
ssing towards spinning in the near future.
Strict Quality Management has helped them in making their final products
superior and competitive granting them the edge needed to compete in global mar
kets.
Fatima Enterprises received ISO certification in 1998.
All the units ever growing enterprise are ISO certified.
They also have started workout for ISO 14000 Social Program.
They have Cotton testing equip. HVI Spectrum for fiber length, cotton fi
neness, color grading, trash etc….
They have Yarn testing equip. Uster Tester 3 & 4 for checking irregulari
ty, imperfection & hairiness of yarn etc…..
• BUSINESS VOLUME: -
The Fatima Enterprises Ltd (FEL) is one of the largest organizations in
Textile industry at initial stage, when the company was taken over, it was very
small company. At present, Fatima Enterprises Ltd. Is well known enterprise sub
scribed capital of 14231052 shares @ Rs. 10 each? Having authorized capital of 2
5000000 shares @ Rs 10 each and issued and subscribed capital of 14231052 shares
@ Rs. 10 each.
They now operate 3 ginning factories, 2 Spinning Units and 1 weaving Unit.
1) Fatima Textile Unit #2 Okara
2) Solvent Plant Extraction Plant 487-A Vehari Road Multan
3) Fatima Textile Unit #1 Muzaffar Garh,
4) Ginning Section &oil Mill Bahawalpur Road Multan
5) Ghee Unit#1 Nasir Abad Bahawalpur Road Multan
6) Ginning Section & oil mill Industrial Area Raheem Yar Khan
7) Ginning Section &oil Mill Dera Budoo Bwp road Multan
8) Fatima Sugar Mill Muzafar Garh
At present they are one of the leading manufacturers and exporters of su
perior quality cotton yarns in Pakistan. Fatima Enterprises exports its products
in Bahrain, Dubai, Hong Kong, United States of America, Turkey, Spain, Korea, I
taly, and Singapore etc. They export the Cotton Yarn, PC Yarn and Woolen Yarn to
the above mentioned countries. There future plan is to maintain a stable level
of profit by increasing value to the customers and modernizing the equipments.

2. ORGANIZATIONAL CHART

3. ORGANIZATION UNITS

4. DEPARTMENTAL STRUCTURE
5. INTRODUCTION OF THE DEPARTMENT
During my internship mostly I have worked in the following departments.
• Finance Department
This is the major department of the company. This is located in Fatima E
nterprises Ltd head office Multan. It prepares different kinds of financial repo
rts and gives information to management for decision making purpose.
Finance department prepares the Income Statement, Balance Sheet, Trial Balance,
Cash Flow, Production report for the whole month, stock taking report, yield com
parison report etc. these all reports are useful for the management to make prod
uction plan, financing decision and other important matters. The head of this de
partment is Finance Manager.
Objectives: -
Following are the main objective of finance department:
To prepare monthly and half yearly reports
To keep the record of inventory and stock
To maintain a liquid position
To maintain adequate cash to run the operations of business
To reconcile the bank statements
To make payments to the suppliers
To deal with sale tax and income tax departments
Preparation of bank payment and bank receipt vouchers
Prepare profit and loss accounts and Balance sheet
Keep record for the payments of salaries

COMPONENTS OF FINANCE DEPARTMENT: -


Finance department are consists on the following sections:
Payable, Contraction
Bank negotiation and reconciliation
Store costing
Excise
PAYABLE, CONTRACTION: -
In this section usually payable is paid to the supplier of all goods including s
tationary, maintenance goods, cement etc. Payable is made according to the contr
act and instruction of the CFO.
BANK NEGOTIATION AND RECONCILIATION: -
This section starts working when documents reach from bank to head office. Docum
ents are recorded in documents receipt register and in bank register. A report i
s given to the CFO on daily basis about the customer and payment date. He makes
decision either to grant discount to him or not.
STORE COSTING: -
Goods receipt note, the store costing section receives the related bills. They a
re checked against purchase order and Performa invoice in terms of quantity, spe
cification, price etc. After this, a bank payment voucher is prepared and sent t
o this section, which issue the checks to the related parties and posts in the l
edger.
EXCISE: -
Excise section deals with the outgoing products for issuance of Gate pass. This
working of excise section starts after sale, when loading program is received fr
om export sale and local sale processing. According to this program Gate pass is
prepared and issued to the go-down keeper. After issuing a Gate pass, its detai
ls are recorded in the register and then sale invoice is prepared in which actua
l value and sale tax value is mentioned.

• Export Department
Export means the exchange of goods or products from inside country to any foreig
n country with any currency equal to the value of product or goods. There is the
demand of Fatima Enterprises finished products all over the world. They try to
meet the demands of the world. They also try to compete with Quality and on time
delivery in any environment according to its respondents. Fatima Enterprises ex
ports its products in the following countries;
Bahrain, Dubai, Hong Kong, United States of America, Turkey, Spain, Korea, Italy
and Singapore etc.
They export the Cotton Yarn, PC Yarn and Woolen Yarn to the above mentioned coun
tries.
INTRODUCTION: -
Export section has an important value for any type of business. This sec
tion helps to earn maximum for its owner. The company has the manager of export
and import. The Import/export manager Dr. Nafees Iqbal is an asset of Fatima ent
erprises limited. He performs his duty in different manners than others. There i
s a one assistant working under the import/export manager. They perform all the
activities of import and export with the help of top management.
Export Functions: -
The following are the main functions, which an export department performs:
To build good relationship with the buyers.
Co-ordination with the buyers and the production department.
Getting orders from the buyers and try to fulfill them in time.
Improve the quality of the product with the interaction of buyer and the
production department. Prepare and arrange the documents of export.
Prepare the documents for the taxation and excise purpose.

Objectives: -
Following are the objectives of export section:
To survive in the world market.
To earn foreign exchange for the development of the country.
Increase the export to obtaining the optimum profit.
Export for the growth of the company as well as the country.
To avail the opportunities the foreign market.
Export documents contain the following things: -
Exporting of any commodity in the foreign market was very complex and risky in t
he past. But now the export documentation provides the security from different r
isks. When the goods are exported, a number of documents are to be prepared.
Contract
Bill of Exchange
Invoice
Packing list
Bill of lading
Copy of Letter of Credit
Transportation documents
Bill of Lading: -
Bill of Lading is also the important document in export. Fatima Enterprises load
s the products from Port of Karachi. This document also includes the shipper/exp
orter address, Consignee (to the order of bank), port of loading, also port of d
ischarge or place of delivery, container #, detail of product, origin of country
, purpose of export and gross weight etc.

Copy of Letter of Credit: -


Letter of Credit defined as in simple words
“THE TRUST OF PERSON ON OTHER PERSON”
The copy of “Later of Credit” is the most important in the document of Export. L
etter of Credit is the guarantee for Exporter from Importer through bank. Import
er opens the Letter of Credit in the bank and pays negotiable amount for this se
rvice provided by the bank. The Importer pays the negotiable amount to bank betw
een 2% to 4%. He also gives the sum of money to Broker which is also negotiable.
They deal with any party through band to bank.
The importer opens the L/C by giving the terms and conditions which are suitable
for him/her. Now the Exporter sends some amendments to Importer through bank. A
mendment is the change from Exporter in the terms and conditions showed by the I
mporter. Some time the Importer accepts the terms and conditions according to th
e Exporter.
In Fatima Enterprises all the work of Import and Export is properly done. They h
ave well established department separate from other sections.
Types of letter of credit: -
Confirmed or unconfirmed
Fixed or Unfixed or Revolving
Clean or Documentary
Revocable or Irrevocable

• PURCHASE DEPARTMENT
When any demand is raised at the mills, it is signed by the purchase committee.
Similarly head office demand is signed by the head of the department and these a
re sent to the purchase committee for approval. After approval, these are sent t
o the purchase office where these demands are classified in to local and out sta
tion demands.
The outstations demands include out of Multan or out of Pakistan. The demands ou
t of Pakistan are sent to the head office. Big items such as tin plates, chemica
ls are purchased by calling tenders and the lower tender is accepted. Other pur
chases like oil, cotton seeds and chemicals are purchased by collecting the rate
s from different brokers and other related agencies and then concerned item is p
urchased.
When selling party is approved purchase order is sent to that party. When goods
are received at factory, delivery challan book entry is made. Two copies are sen
t to the store in charge at mills. Most of the goods from local markets and out
station are purchased on credit basis.
REJECTION OF PURCHASES: -
All the items purchased are sent to the perspective departments and are checked
by the head of the departments e.g. chemicals, Oils being demanded by the produc
tion department. Then chief chemist checks those chemicals.
If the item is up to standard then it is accepted by preparing the quality repor
t and sent to the commercial department. Similarly all the cash purchases are su
bject to the approval of quality.
If goods like chemicals are out of standard then rejection report is made by the
checking department and sent to the purchase department.

Purchase Procedure

CASH PURCHASES: -
Some goods are purchased on cash basis for the mill needed. In this case bill is
received after making the cash payments and bill is stamped as "CASH PAID".
These purchases include office stationary equipments, and some time repairing it
ems.
BOOKS & REGISTERS WORKING: -
Separate ledgers are maintained for recording all sales and purchases items.
• Store spare parts.
• Electric goods.
• General goods.
• Packing materials.
• Individual party ledger.
The following information is recorded in above registers:-
• The date, name of items and department.
• Demand number.
• Date of purchase.
• Name of party.
• Quantity of items.
• Rates of purchase items.
• ACCOUNT DEPARTMENT
Fatima enterprises has separate account department under the control of chief Ac
countant who is responsible for the financial affairs of the organization and to
keep control on all inflows and outflows of cash and funds. Similarly he is res
ponsible for tax affairs of the corporate affairs which are handed by the secret
ary of the company, Mr.Iqbal. His main assignment is to handle the shareholder a
nd the Board of Director s meetings. He also prepares the Agenda and papers of t
he meeting after this he prepares the minutes of the meetings of the Board of Di
rectors.
Accounts Department: -
• Chief Accountant.
• Accountant.
• Assistant Accountant.
• Computer Operator.
Objectives: -
• To provide a permanent a systematic record of the business transactions.
• The periodically results as to profit and loss should be ready and accur
ate.
• To keep the financial data up to date so that it can be ready to show th
e higher management whenever demanded.
• To provide the media between production and marketing.
• It is useful for the future planning.
• To enable the trader to compare the different items such as sales, purch
ase, opening stock and closing stock of one period with similar items of proceed
ing periods.
• It is useful for preparing arithmetical accuracy of the transaction.
• To provide most reliable information about business.
• To provide correctness of the assets and liabilities.
FUNCTIONS OF ACCOUNTS DEPARTMENT: -
The major functions of accounts department are as under:-
• Maintaining the record of the account receivable.
• Record of payments by bank.
• Record of payments by cash.
• Maintaining the record of raw material purchased.
• Maintaining the record of sale of Yarn, waste etc
• Record of store purchases.
• Record of insurance.
• Record of the expenses i.e., manufacturing and marketing.
• Record of wages and salaries.
• Preparation of financial statements.
VOUCHERS: -
The major vouchers which are prepared in the Fatima Enterprises:-
• Adjusted Journal Voucher.
• Cash Payment Voucher.
• Cash Receipt Voucher.
• Bank Payment Voucher.
BOOKS: -
The following are the Books, which are maintained by the Enterprise:
• Cash Book.
• General Ledger.
• General Journal.
• Local Customer Ledger.
• Bank Book.
CASH BOOK: -
In Cash Book all cash transaction are entered. This book has two sides:-
• Payment Side.
• Receipt Side.

BANK BOOK: -
Most of the business is carried out through banks. So this book is maintained to
record all the transaction occurred in the bank against the mill. It shows the
inflows and outflows of the cash at the bank, in sub ledgers the posting is made
daily. I can see the bank balance of any bank with which I have an account from
the bank book at any time because separate sheets have been allocated for separ
ate banks.
GENERAL JOURNAL: -
All kind of daily transactions occurred at the mill are recorded in this book an
d then transactions are transferred to their concerning ledgers against concerni
ng accounts.
GENERAL LEDGER: -
Following are to be maintained in the general ledger:-
• Allied Bank limited Hussain Agahi.
• Muslim Commercial Bank Hussain Agahi.
• National Bank of Pakistan Mumtazabad.
• Cash Receipt.
• Sonahri Bank Ltd.
• Predential Commercial Bank Ltd.
• Askari Commercial Bank Ltd.
• Platinum Bank Ltd.
• Yarn sale
• Waste sale
• Local sale parties
• Sales tax
• Export sale
• Yarn stock
• Cash payments
• Profit & Loss Account. From disposal of assets.
• Profit & Loss Account. From disposal of stores.
• Financial Charges.

6. APPLICATION OF CLASS ROOM LEARNING: -


During my 8 weeks internship in Fatima Enterprises Limited I have seen t
he application of class room learning in the organization. I have discussed fou
r management functions Planning, Organizing, Leading and controlling in the clas
s room. In Fatima Enterprises Limited I have seen how management practically do
these functions in the organization how they plan their activities, established
strategies to achieve those goals how tasks are grouped how they motivate peopl
es to communicate them to achieve their goals. How they evaluate the preference
of the employees in the organization. I have discussed First Line Manager, Midd
le Manager and Top Manager in the class room. I have seen them in Fatima Enterp
rises Limited how they work in the organization.
Organization culture always affect people working in the organization I
have practically how the culture of the organization affect people in the organi
zation. Environment always affects the performance of the organization I have s
een how the external and internal environment of the organization affect on its
performance. It is always difficult to take decision in uncertain and complex en
vironment. Currently due to the uncertain environment of the Pakistan Top of Fa
tima Enterprises Limited are facing difficulties to take the right decision. I
have discusses in the class room how organization go global and I have seen it i
n Fatima Enterprises Limited because I have worked in import and Export Departme
nt of Fatima Enterprises Limited. I have discussed Management by Objectives in
Fatima Enterprises Limited decision are made at Top level. First line Manager, M
iddle Manager and employees are not invited to participate in making plans to ac
hieve the goals.
In international Finance I have discusses how trading is done between th
e parties at international level and which certain documents are required to do
these trading safely means to hedge the different types of risks which types of
contracts and documents are used. Fatima Enterprises Limited is doing the impor
t and export in textile sector so I have practically seen how they use certain d
ocument like Letter of Credit, Bill of lading, payment Draft, Acceptance Draft,
Bill of Exchange, Air way Bill etc. in their business to hedge the risk how the
organization used open account in international trading how government institute
are providing help to different organization to increase the export of the coun
try.

In the accounts department I have seen how different types of vouchers, Ledger,
Trail Balance, Income Statement, and Balance Sheets are prepared which I have st
udied in the Financial Accounting. How the calculation of markup on Bank loan i
s done and how the bank reconciliation is prepared in the organization I have se
en all these in Fatima Enterprises Limited during my internship.
7. INTERNEE LEARNT IN THE ORGANIZATION
During my 8 weeks internship I have worked in different departments of Fatima En
terprises Limited there I learnt how to work in a team to achieve the goal of th
e organization how to behave in different situation how to follow the culture of
the organization. In the Accounts department I have learnt how to prepare Purc
hase Vouchers, Sales Vouchers, Journal Vouchers, Bank payment Vouchers, Bank Rec
eipt Vouchers, Ledgers and Trail Balance in Visual Basic software.
In the Finance Department I have learnt how to prepare Bank Reconciliation of an
organization and calculation of markup on Bank Loan. In the Sales Tax Departme
nt I have learnt how to calculate and claim the refund on the Sales Tax through
the software of Refund Claim Preparation System on Invoices and how to submit ta
x through online by using the web site of www.fbr.gov.
In the Export Department I have learnt how to use different types of documents t
o hedge the risk in international trading, how to open Letter of Credit, Open Ac
count to do the trading at international level and how to deal with the Brokers,
Carriers, Middle man and Different parties at international level to do the tra
ding.
In the Purchase Department I have learnt how to deal with the different types of
sellers to purchase the Raw Material for the production of the product and how
to set the payment conditions to the creditors and how to make the payments avai
lable at time.

8. FINANCIAL ANALYSIS
The figures in financial statements, do not tell the whole truth. To obtain mean
ingful information relationship between relevant figures must be examined. For
instance:
• Relationships which help to find the liquidity of the business.
• Relationship which reflect the effectiveness of the financial policies a
dopted and the potential fund raising ability.
• Relationships which help to evaluate the effectiveness of operational po
licies.
To achieve the aim, I undertake Ratio Analysis. Ratios provide the means of sho
wing the relationship which exists between figures on the Balance Sheets and Inc
ome Statements. The analysis is undertaken to assess important characteristics
of business like liquidity, solvency and profitability. A study on these aspect
s enables drawing conclusions as to financial requirements and capabilities of b
usiness units.
Ratios may be classified in a number of ways to suit any particular purp
ose. Different kinds of ratios are selected for different types of situations.
Liquidity Ratio
Activity Ratio
Solvency Ratio
Profitability Ratio

Liquidity Ratio
Liquidity ratios are used to measure a firm’s ability & solvency of the
firm to meet short-term obligations. They compare short-term obligations to shor
t-term resources available to meet these obligations. It consists of two ratios
Current & Quick ratio.

Years 2004 2005 2006 2007 2008


CR 0.99 0.96 1 0.9 0.89
QR 0.47 0.34 0.54 0.36 0.27

Current ratio signifies the ability of a firm to cover its current liabi
lities with its current assets. Only in 2006 current ratio of the firm was 1 oth
erwise it is less than 1 which shows that Fatima Enterprises Limited does not ha
s sufficient cash to pay its short term obligations. The Quick ratio signifies t
he ability of a company to meet its current liabilities out of its current asset
s. The quick assets figure includes all current assets except inventories and pr
epayments. The purpose of excluding the inventories is to visualize
whether the company is capable of meeting its liabilities quickly because the in
ventories take much time to be converted into cash. The quick ratio of Fatima En
terprises Limited also showing that firm is not able to pay its short term oblig
ations quickly because only in
2006 it was 0.54 otherwise it is less than 0.54 which shows Fatima Enterprises L
imited un ability pay its short term debts.
Net Working Capital Ratio
Net working Capital measures the financial position of the firm, weather
it is able to pay back other expenses after paying back its current liabilities
. It is measured as current assets - current liabilities.

Years 2004 2005 2006 2007 2008


NWC -2216 -87987 24482 -382935 -625555

It is clear from the table and graph of the net working capital that only in yea
r 2006 the firm has positive net working capital. In year 2006 the firm paid hug
e amount of interest expenses due to which it suffered from loss but its net wor
king capital in year 2006 was positive. In year 2008 Fatima Enterprises Limited
has deficit of more than 600000 from net working capital. From net working capit
al I can conclude that Fatima Enterprises Limited is not performing well from la
st five years because although in year 2006 Fatima
Enterprises Limited had positive net working capital but it was not enough to pa
y its other expenses as well as long term obligations.
Activity Ratio
Activity ratios are also known as Efficiency Ratios or Turnover Ratios o
r Asset Management Ratios. They relate basically to how efficiently a firm is us
ing its assets.

Years 2004 2005 2006 2007 2008


FAT 4.48 2.18 1.9 2.02 2.27
TAT 1.87 0.96 0.77 0.92 0.9
IT 5.65 2.44 2.6 2.61 1.94

The fixed assets turnover ratio measures the efficiency of long term investment.
It is also known as long term (investment) activity ratio. It reflects the le
vel of the sales generated by investment in productive capacity. The level and
trend of this ratio are affected by characteristics of its components.
From my analysis I have concluded that fixed assets turnover of Fatima Enterpris
es Limited is decreasing continuously it means the firm is not using its fixed a
ssets efficiently to generate profit and unable to pay back its long term obliga
tion at time. Total assets turnover is used to find the relation ship of net sa
les to total assets it is also known as capital turnover ratio. Total assets tu
rnover of Fatima Enterprises Limited is also decreasing and inventory turnover h
as decreased from 5.65 to 1.94 which shows the performance of Fatima Enterprises
Limited is decreasing from previous five years.
Solvency Analysis
Leverage ratio signifies how much debt a company has created against its
equity.
In fact the creditors and the lenders are very much concerned about this. Debt r
atio is very much important for the creditors’ point of view. Total debt include
s both current liabilities and long term debt.

Years 2004 2005 2006 2007 2008


D.R 85 77 85 88 88
D/E 57 63.3 117.2 149.3 170.5

Debt ratio measures the percentage of funds provided by the creditors. Creditors
prefer low debt ratios because lower the ratio the greater the chances that the
creditors will not bear the losses in the event of liquidation. Stock holders o
n the other hand may want more leverage because it magnifies expected earnings.
Debt ratio of Fatima Enterprises Limited is very high which is not a goo
d sign for the company because debts ratio is showing that firm is depending upo
n the debts.
Long term debt paying ability of the company basically gives the indica
tion that the company in the long run will be able to fulfill the financial as w
ell as other obligations that are accrued on that. It usually shows the trend an
d direction of operations that the company’s management is responsible for. Also
tells about the capital structure of the organization. Debt ratio and debts to
equity ratio of Fatima Enterprises Limited is showing that firm is unable to us
e optimal capital structure because debt ratio of Fatima Enterprises Limited are
very high and also debt to equity ratio of Fatima Enterprises Limited is increa
sing continuously which shows that firm is depending upon debts and also not usi
ng these debts efficiently which is increasing the burden of Fatima Enterprises
Limited.
Interest Coverage Ratio
Interest Coverage Ratio measure the protection available to creditors as
the expend to which earning available for interest cover interest expenses.

Years 2004 2005 2006 2007 2008


TIER 233 183 75 106 109

Time interest earning ratio of Fatima Enterprises Limited shows that in


2006 it was able to pay its interest expenses to its creditors on time because i
ts liquidity position was good to pay its short term obligations but in 2007,200
8 the efficiency of the firm to pay its interest expenses on its loan to its cre
ditors has decreased again.
Only in year2006 the firm paid its interest expenses in 75 days although
the liquidity position of Fatima Enterprises Limited in previous two years was
not allowing the Fatima Enterprises Limited to pay interest expenses in that yea
r but Fatima Enterprises Limited paid its interest expenses in 2006 on time due
to that the firm suffered from loss in 2006.

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

Profitability Ratio
Profitability ratios show the combined effect of liquidity, asset manage
ment & debt on operating results Profitability Ratios are used to check the firm
’s efficiency in generating profits. These ratios analyze the profitability from
different dimensions and tell that whether the firm is meeting its expenses suc
h as interest and other costs and moreover its generating some profit out of it.
How effectively, the firm is utilizing its assets.
Years 2004 2005 2006 2007 2008
GP 6.68 7.54 6.47 7.98 9.65
OP 4.72 6.17 4.81 6.68 8.32
NP 2.82 2.68 -0.89 0.45 1.52

A company’s net profit must be sufficient enough to meet the requirements of app
ropriations and the disbursement of a handsome amount as dividend. Net profit o
f Fatima Enterprises Limited is decreasing continuously in 2006 Fatima Enterpris
es Limited has suffered from net loss but in 2008 it has improved its performanc
e.
Operating profit of Fatima Enterprises Limited is fluctuating frequently
in previous five years because in 2006 the firm’s operating profit was at the l
owest level so the firm suffered from loss in 2006 but it has improve a lot in n
ext two years.
Gross profit of Fatima Enterprises Limited decreased only in year 2006 b
ecause the over all position of the firm was not good in that year but in later
year it has improve its performance and growth of the firm.
Return on Assets & Return on Equity Ratio
The return on assets compares income with total assets.

Years 2004 2005 2006 2007 2008


ROE 23.5 9.8 -19 1.84 14.6
ROA 3.5 1.2 -1.39 0.001 0.008

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


bility and efficiency in using the firm assets to generate profit. Second it re
ports the total return accruing to all providers of capital independent of the s
ource of capital.
Return on equity compares net profit after taxes to the equity that shar
e holders have invested in the firm. This ratio tells us the earning power on t
he shareholders book value investment and it frequently used in comparing two or
more firms in the industry a
high return on equity reflects the firm acceptance of strong investment and effe
ctive expenses management. If the firm has chosen to employees a level of debts
that is high by industry standards a high ROE might simply be the result of ass
uming excessive financial risk.
Earning Per Share
Earning per Share means how much a firm is earning against each share wh
ich is invested by the shareholders in the firm. Common shareholders are direct
ly consult with the earning per share of the firm.
Years 2004 2005 2006 2007 2008
EPS 6.68 3.08 -5.05 0.5 4.52

Earning per Share is commonly used to measure the performance of any firm. It i
s used to compare operating performance of the firm. It shows that how much a f
irm is earning against each share which is directly related to the shareholders
of the firm because they received dividend on their investment in the firm. Pre
ferred stockholders are not affected by the earning per share of the firm becaus
e they received a fixed percentage of profit regardless of per share profit. Co
mmon stockholders are directly affected by the earning per share of the firm bec
ause they share profit as well as the loss of the firm. Earning per Share of Fa
tima Enterprises Limited has decreased till 2006 but after that it has improve i
ts performance. In 2006 Fatima Enterprises Limited suffered from loss due to th
at its earning per share in that year was negative.
Horizontal Analysis
From horizontal analysis of the Fatima Enterprises Limited I have conclu
ded that over all performance of the firm from previous five years is not very g
ood. Although after suffering from loss in 2006 the firm has improved its perfo
rmance but it is unable to maintain its growth at the standard level. Cost of s
ale of the firm has increased continuously, operating profit has decreased, and
firm is using high debts due to that the interest expenses of the firm to pay th
e creditors are high.
Fatima Enterprises Limited is not using its assets efficiently because f
rom my analysis I have concluded that Fatima Enterprises Limited is unable to ge
nerate enough profit from its fixed assets to pay back its long term liability.
The performance of the fixed is not up to standard that’s why firm is facing di
fficulties from previous five years.
From my analysis I have concluded that although the firm is getting net
profit after suffering from loss in year 2006 but this profit is not sufficient
to pay the enough amount of dividend to its common shareholders and to pay back
the loans to its creditors which is affecting the over all performance of the fi
rm as well as the good will of the firm in the textile industries.
Currently the restriction on the export of textile products from the gov
ernment has affected the performance of Fatima Enterprises Limited because it no
rmally depends upon its exports but due to the restriction from the government i
t is unable to export its products. From the local sale of its product Fatima E
nterprises Limited is unable to produce enough profit to maintain its growth in
the textile industries.
Vertical Analysis
Vertical analysis are very vital for measuring the performance of different indu
stries or different firms in an industry because in the vertical analysis the pe
rcentage are calculated with respect to sale in income statement and total asset
s in balance sheet which eliminate the problem of size of the firms in an indust
ry in different industries. That is why vertical analysis is commonly used for
measuring the performance of any company.
From vertical of Fatima Enterprises Limited I have concluded that the pe
rformance of Fatima Enterprises Limited is not good from previous five years. I
n the vertical analysis I have calculated the values of all items of Balance She
et and income Statement in percentage with respect to the sales and total assets
. From these calculations I come to know that the cost of sale has increased mo
re than the percentage increase in sale.
Fatima Enterprises Limited is depending upon high debts due to that it h
as to pay more interest expenses to the creditors which is reducing the percenta
ge of profit of the firm. Fatima Enterprises Limited is unable to receive its r
eceivable on time due to which it faces shortage of cash time by time and unable
to pay back to its creditors on time. It means its average collection period a
s well as the average payment period of the firm are not good. On the basis of
my conclusion I can say that the overall performance of Fatima Enterprises Limit
ed is not good from previous five years.
Conclusion: -
From Ratio Analysis, Horizontal and Vertical Analysis I have concluded t
hat the overall performance of Fatima Enterprises Limited is not good. Although
Fatima Enterprises Limited after suffering from loss in year 2006 has improved
its performance but it will take time to get back its growth on track.
Cost of sale of a company has increased which has reduced the gross prof
it of the firm. Fatima Enterprises Limited is unable to use its fixed assets ef
ficiently due to that it is unable to generate enough profit from its fixed asse
ts to pay back its long term liability. Fatima Enterprises Limited is mostly de
pending upon high debts which is not a good sign because it has to pay high amou
nt of interest to the creditors on its loan.
Liquidity and profitability analysis shows that firm is unable to pay ba
ck its current liability from pervious five years. Dividend paid by the firm to
its shareholders is not so much attractive to attract the new investors. In ye
ar 2006 the shareholders have to bear net
loss of the firm. Although the firm is improving its performance but it will ta
ke time to get back its lost image.
Recommendations:
Liquidity of the firm is weak due to the availability of cash to the fir
m to pay back its short term obligation which should be improved.
Account Receivable are not received on time which mean average collectio
n period should be improved.
Fatima Enterprises Limited is unable to generate enough profit from its
fixed assets which means either the fixed assets are out dated or the workers ar
e not skilled to use these assets.
Inventory turnover of the firm is very low which shows its sales is not
good which should be improved
Fatima Enterprises Limited is using high debts on which it has to pay hi
gh amount of interest and it is also discouraging for the new investors.
Fatima Enterprises Limited should use optimal capital structure it means
they should be balance between debts and equity finances
Gross profit of the firm can be improved by reducing the cost of goods s
old
Fatima Enterprises Limited should do its operation efficiently to increa
se its operating profit
Net profit of the firm can be increasing by reducing the interest expens
es, Cost of goods sold and Tax

STRENGTHS
There are following strengths of Fatima Enterprises
Fatima enterprises limited is the old company and has goodwill in the ma
rket.
The installed capacity of the textile units is enough and they also exte
nding its capacity by installing 40,000 spindles in the Textile Unit II in Okara
District.
Approximately all the oil of Fatima Enterprises is sold to army of Pakis
tan. Due to one customer they save a lot of expenses in respect of Marketing and
Promotion.
There is qualified and professional staff in all the departments.
Environment is very friendly in the Fatima Enterprises, which creates th
e sense of responsibility among the employees.
Employees have the easy access to the Chief Executive in case of any pro
blem.
The weaving unit of the company started its production at the end of Aug
ust.
FEL has modem machinery to check the quality of yarn.
WEAKNESSES
Machinery is very old in textile as well as in the ghee units. Due to th
is reason the efficiency of Fatima Enterprises in the production department is v
ery poor.
Employees of Fatima enterprises limited are not satisfied to their salar
ies. The salary package is not competent so, the employees seek towards the good
offer in any other organization.
Fatima enterprises limited has most of the units in the urban areas as o
ne unit is situated on Vehari road, Mumtazabad Multan. So, there are no tax holi
days or any concession in the tax.
Even the manager has not free hand in the simple nature matter facing by
the organization or the employee of organization.
Production cost is very high due to the old machinery. So, the profit is
very low due to high cost of goods.
Centralization of authority is the major weakness; the Chief Executive o
f the company is all in all of the organization, even in the simple nature of ma
tter the chief executive takes decision.
There is no participation of employees in decision making for the better
ment of the organization.
The staff is very short than needed, especially in the Import and Export
section.
No proper human resource management.

OPPORTUNITIES
Fatima Enterprises Limited can establish its own weaving department to c
apture local and foreign market as well.
They can boost up their exports and can increase their profitability, be
cause they have the potential to do some thing.
They can install the new units in the tax holiday areas and can earn max
imum in production.
Raw material is easily available in home country due to the export restr
ictions of government and due to good crop of cotton.
They are financially sound companies in Pakistan, So, they can get the d
ifferent advantages from the trust of banks in the matter of Import of the oil,
tallow and chemicals etc.
Due to the trust of banks on the Fatima group they can install the new u
nits with the help of banks.
The markup on loans of banks is very low, so they can avail this opportu
nities.
Fatima Enterprises Ltd. is ISO-9001& 9002 certified company so it has a
chance to increase its exports all over the world.
There will be an increase in its market in year 2005 after launch of fre
e trade by WTO.

THREATS
High cost of production is also the threat of Fatima enterprises limited
.
Foreign investment in textile sector in Sri Lanka, Bangladesh and India
is a danger in future for FEL.
An increase in the China’s textile products is a danger for FEL.
Trading of quota as a commodity has been a great hurdle for exports.
Due to shut down of electricity the production of Fatima enterprises lim
ited is much disturbed.
High competition in the international markets is also the threat for the
Fatima enterprises.

• PEST ANALYSIS

PEST Analysis is very important that an organization considers its environ


ment before beginning the marketing process. In fact, environmental analysis sho
uld be continuous and feed all aspects of planning. The organization s marketing
environment is made up of:
1. The internal environment e.g. staff (or internal customers), office tech
nology, wages and finance, etc.
2. The micro-environment e.g. my external customers, agents and distributor
s, suppliers, my competitors, etc.
3. The macro-environment e.g. Political (and legal) forces, Economic forces
, Sociocultural forces, and Technological forces. These are known as PEST factor
s.

Political Factors: -
The political factor has a huge influence upon the regulation of busines
ses, and the spending poIr of consumers and other businesses. I must consider is
sues such a
1. How stable is the political environment?
2. Will government policy influence laws that regulate or tax ymy business?
3. What is the government s position on marketing ethics?
4. What is the government s policy on the economy?
5. Does the government have a view on culture and religion?
6. Is the government involved in trading agreements such as EU, NAFTA, ASEA
N, or others?

Economic Factors: -
1. Marketers need to consider the state of a trading economy in the short a
nd long-terms.
2. This is especially true when planning for international marketing. You
need to look at:
3. Interest rates.
4. The level of inflation Employment level per capita.
5. Long-term prospects for the economy Gross Domestic Product (GDP) per cap
ita, and so on.
Socio cultural Factors: -
The social and cultural influences on business vary from country to coun
try. It is very important that such factors are considered. Factors include:
1. What is the dominant religion?
2. What are attitudes to foreign products and services?
3. Does language impact upon the diffusion of products onto markets?
4. How much time do consumers have for leisure?
5. What are the roles of men and women within society?
6. How long are the population living? Are the older generations Ialthy?
7. Do the population have a strong/Iak opinion on green issues?
Technological Factors: -
Technology is vital for competitive advantage, and is a major driver of
globalization. Consider the following points:
1. Does technology allow for products and services to be made more cheaply
and to a better standard of quality?
2. Do the technologies offer consumers and businesses more innovative produ
cts and services such as Internet banking, new generation mobile telephones, etc
?

3. How is distribution changed by new technologies e.g. books via the Inter
net, flight tickets, auctions, etc?

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


e.g. banners, Customer Relationship Management (CRM), etc?
• SUGGESTION FOR THE ORGANIZATION: -
After doing internship in Fatima Enterprises Limited as a manager I will suggest
Decision should not be centralized, to achieve the goals and plans manag
ement should be involved in decision making
Ditterent types of incentive should be given to the employees to make th
em efficient
Promotion of the product should be done at local as well as internationa
l level
Team work should be encmyaged
A proper training programe should be introduced to make the employees sk
illed according to the needs
Cost of sale should be reduced to increase the profit
Fatima Enterprises Limited using high amount of debts which should be re
duced to reduce the interest expenses
Fatima Enterprises Limited is using out dated machineries which are not
efficient in the production of the product
New technology should be introduced
Due to the current poIr crises Fatima Enterprises Limited is unable to f
ulfill the orders of the customers, so it need its own poIr plant
Government has restricted the export of the textile products due to that
Fatima Enterprises Limited is facing problems to maintain its growth at interna
tional level so it should be discussed with the Government
Fatima Enterprises Limited is not focusing at local level, it can genera
te profit from local market by promoting their products at local level
Fatima Enterprises Limited mostly do the transcation on credit sale and
unable to collect receivable at time which the cause of shortage of cash. So th
e cash transcation should be done

Average collection period should be reduced because Account Receivable a


re not collected in time
Dividend should be given in time to attract the new shareholders
• CONCLUSION: -
The Fatima Enterprises Ltd (FEL) is one of the largest and well reputed
organizations in Textile industry. Fatima Enterprises exports its products in th
e following countries; Bahrain, Dubai, Hong Kong, United States of America, Turk
ey, Spain, Korea, Italy and Singapore etc. They export the Cotton Yarn, PC Yarn
and Woolen Yarn to the above mentioned countries. One of the leading manufacture
rs and exporters of superior quality cotton yarns in Pakistan. Strict Quality Ma
nagement has helped them in making their final products superior and competitive
granting them the edge needed to compete in global markets over the years they
have built a reputation of being one of the leading manufactures and exporters o
f ‘A’ grade knitting/weaving cotton yarn.
The overall performance of Fatima Enterprises Limited is not good from previous
five years.