Assignment

of

Strategic Management

Topic:

“The Internal Assessment of Fazal Textile Mills Ltd”

Submitted To: Mam Nimra Saqib

Submitted By: Faiez Amin Khan

Roll NO Mcf1601624
Program MBA(3.5) 5th Semester
Session: (2016-2020)

Department of Management Science

University of Education
Multan Campus
 GENERAL OVERVIEW ABOUT TEXTILE
INDUSTRY OF PAKISTAN
In 1947, at the time of independence Pakistan Textile Industry was like a feeble child
with only three cotton mills, a small woolen spinning, whereas weaving, hosiery and
knitwear were features of cottage industry. Now when we have entered into new
millennium, Pakistan’s Textile Industry has become a stalwart fellow, which has
grown in all sections. Now we are not only self-sufficient but are also exporting
surplus products. Today we have over 8.358 million installed spindles, 166,000
installed rotors 20,000 shuttle less looms, 200,000 power looms, 8,000 terry towel
looms, 7620 canvas looms, 157,000 woolen/worsted installed spindles, 15 ,000 woolen
looms, 12,000 knitting machines, over 600 processing units and over 2500 garments
units.
We all know, journey of textiles starts from seed and culminates at ready-to-wear
garments and in present competitive world scenario, it is combination of high
production efficiencies, most appropriate technologies and work methods, together
with trained work force, management and marketing skills which can give an y industry
a successful status.
Textile industry today is the backbone of economy of Pakistan and provides the
largest number i.e. about 40% of total industrial jobs and very vast industrial service
opportunities. It has always been the pillar of Pakistan’s economy contributing
substantially to Govt. revenues. It also has a dual linkage. As a majo r consumer of
domestic cotton, it provides a market for a leading cash crop and thus has a critical
influence on the growth and productivity in agrarian sector. Hence the performance of
the textile industry has a vital impact on the overall growth and development of the
economy. The industry also tops, as an earner of ever -so- scarce foreign exchange and
exported goods worth US $4.9billion last year and this amount is about 60% of the
total national exports. Its share in total GDP is 8.5%. The investment in Textile
Industry is 31% of total investment. The interest that banks and other financial
institutions earn from Textile sector is Rs. 4 billion per annum. The salaries and wages
that Textile sector provides to workers is Rs. 40 billion per annum. Its cont ribution to
R & D is RS.116 million per annum. This very remarkable achievement did not come
easily and is due to the combined and tireless efforts of the Govt. Planners. Currently
total textile industries in Pakistan which are registered with All Pakistan Textile Mills
Association (APTMA) are 442. In which, 345 are spinning units, 53 composite units
and 44 weaving units

PROBLEMS OF TEXTIEL INDUSTRY

 The main problem the industry is confronted with are summarized below:
 Suppl y of raw cotton is uncertain and below the required level.
 The cotton crop grown in Pakistan is mostl y of short and medium length
while long.
 Staple cotton is required for producing of fine qualit y of yarn and cloth.
 There is need to increase production of long staple, cotton to shift textile
industry to the production of:
 Fine products rather than inferior yarn and cloth.
 Scouring lint cotton prices have corded.
 Cheap production like India, China, South Korea and Bangladesh.
 Lack of availabilit y of pol yester staple fibe r (PSF) and man-made fibers
(MMF).
The textile industry is also facing the problems pf closure of mills and financial
constraints. The solution of these problems is under active consideration of the
Government. Economic revival package 1997 and export enhancement
measures are already under implementation, which aimed at the rival of the
sector. The Govt. is accelerating the pace of the implementation of these
reforms. The installed and effective capacit y of the textile industry is
summarized in the table.

TEXTILE INDUSTRY’S ECONOMIC CONTRIBUTION

Description Contributions
Exports 64% of total exports (US$ 4.9 Billion)
Manufacturing 46% of total manufacturing
Employment 38% of total employment
Investment 31% of total investment
Market Capitalization 7% of total market capitalization
Interest Rs. 4 Billion per annum
Salaries and Wages Rs. 40 Billion per annum
Contribution to Research and Development Rs. 116 million per annum
Gross Domestic Product (GDP) 8.5% of total GDP
This sounds a triumph like situation at a glance. There is however much more than it meets
the eyes when you go into details, which carry some failures also to weep on. This industry has
not performed as well as it should have. It is struggling for its survival for the past 7 years.

The textile industry at present is passing through a transition phase. It is sailing smoothly under
the protected cover of the quota system, however it has to face the rough waters of the open
sea when globalization of trade is implemented under WTO agreement in 2004. Three years
have already gone unnoticed. The fast approaching deadline sounding a note of warning for re-
structuring of all the segments of the cotton and textile industries on war footings to enable it
to face the future challenges of fierce competition amongst the low cost Asian manufacturers
to capture share of their higher cost European counter-parts when the gates of the global
economies are open.

Cotton Based

Cotton, the most precious commodity from Pakistan’s economic point of view, has become a
bone of contention between textile industry and the growers, ginners and exporters of raw
cotton. Pakistan, being the fourth largest cotton producing country provides a strong base for
development substance of textile industry in spite of tremendous growth in all the area of textile
industry, including:

 Cotton
 Ginning
 Spinning
 Processing

Because Egypt has been able to develop good quality staple as against the poor quality cotton,
despite the lavish spending on Research and Development, which turns into billion of rupees
every year. However, in Pakistan the major chunk of the funds allocated for research and
development go into salary bills of white elephant hired by the governments on political
considerations in the past. We failed in developing even a single variety of long staple cotton,
which is the major handicap of the textile industry in producing yarn of the fine quality.
Number of units and classification

In the organized section there are232 listed textile companies of which 153 are spinning units,
28 weaving and 51 composite units while the total no of textile units both listed and non-listed
however are 443.

Import of Machinery
The industry imported textile machinery from abroad the detail of which for last few years is
as below, it represents a decline in import of machinery in yearly:

Year Value (million)

1996-97 789.2

1997-98 352.7

1998-1999 294.9

Contribution in Employment
Textile unit constitute 38% of employment generated by the manufacturing sector while textile
being largest industry has got other forward and back ward relation where it must had played
its role in generating employment in related industries for example shipping industry will
definitely by mainly depended upon textile industry.

Share in Value addition

As the table indicates the status of textile industry among other production units, it constitutes
for almost 26% of total value added by the manufacturing sector this value addition for textile
sector was Rs.8596 million in 1985-86. It has increased to Rs.29251 million in 1999.

IMPORTANCE OF COTTON IN THE ECONOMY OF

PAKISTAN
Cotton “the silver fiber” of Pakistan is the backbone of Pakistan’s economy. A simple notion
“one million bales of cotton means to Pakistan, plus or minus one percent gross domestic
products (GDP)” narrates the vital importance of cotton in Pakistan’s economy. Pakistan was
ranked as third largest cotton exporting country in the world in 1991 when its production of
cotton reached its climax (12.82 million bales). The anticlimax began thereafter and in the very
next year cotton production decreased to 9.05 million bales and further to 8.86 million bales in
1993. The major biotic factor responsible for the downfall was the leaf curl disease of cotton
that pervades throughout the Cotton Belt.

The production of cotton during 1998-99 was 1,372,000 metric tons (7.22 million bales), which
is 13.6% less as compared to the previous year. Pakistan exported 2,000 metric tons and
imported 142,000 metric tons of cotton during that year. The quality of Pakistani cotton is not
very good. There is contamination in the cotton and there is not proper grading of cotton in
Pakistan. The average ginning out turn (%), fiber length (mm), fineness and strength (000’ppsi)
is 36.8, 28.2, 4.4, and 94.2 respectively.

It will be interesting to note that the export value of our raw cotton which was $1.03/kg some
45 years ago in 1951-52, while it is still moving around $1.47kg. The value of Egyptian cotton
is more than double of Pakistan cotton in the international market simply because they have
been able to develop good quality staple as against the poor quality cotton produced in the
country despite the lavish spending on R&D which runs into billions of rupee every year. The
major chunk of the funds allocated.

COMPANY PROFILE & INFORMATION

COMPANY NAME:
FAZAL CLOTH MILLS LIMITED:

VANUE MILLS:
FAZAL NAGAR, JHANG ROAD, MUZAFFAR GARH

HEAD OFFICE:
ROOM NO, 102-103, INTERNATIONAL PLAZA, BOHRA
STREET, MULTAN CANTT.

The company was incorporated in 1966 as a public limited company under the company’s
ordinance, 1984.
The mill is situated at a piece of land measuring 368 kanals. Te company does not enjoy tax
Holidays for some period from the date of its company production.
The company has imported most modern spinning unit from different advanced countries,
which is the best combination. Letter of credit for import of machinery was established by the
Muslim commercial bank ltd.

GROUP PROFILE
There are certain other organizations, which are managed by the same group. A list is
as follow: -

1. AHMAD TEXTILE MILLS LTS. RAHIM YAR KHAN

2. FATAMA SUGAR MILLS LTD.

3. RELIANCE TEXTILE MILLS LTD.

4. RELIANCE WEAVING MILLS LTD.

Highlights or History of the company

Yunus Brothers is the flagship company and trading arm of the group which was formed in
1962 by Chairman (Late) Haji Abdul Aziz Tabba. Starting as a small commercial Exporter of
Yarn and Grey Cloth to Far Eastern countries, the company developed rapidly and expanded
its Exports to Europe also. The continuous growth and development of the business launched
the group into Industrial activity in the year 1983. Starting with the very small Weaving facility,
the Yunus Brothers Group today has two most modern Spinning Mills, with 245,000 Spindles,
Weaving Mill with over 750 Looms and has just started most modern vertically integrated
Textile Mills of USD. 30/- Million having 214 Air Jet Looms with state of the art processing
and stitching facilities.

Yunus Brother Group is recognized internationally in the world of Textiles and enjoying a
strong reputation in respect of consistent quality, reliability and superb customer services. The
Yunus Brother Group has been a frequent recipient of various awards and trophies for the
Export Performance by the Government of Pakistan.

Yunus Brothers is actively involved in international trading of various products including

Cotton & Blended Yarn, Cotton & Blended Fabrics, Garments, Rice, Sugar, Fertilizer, Earth
moving equipment, Chemicals, Spare Parts and Automotive Vehicles etc. Yunus Brothers is
one of the largest export houses of the Pakistan exporting mainly to the European, US, Far
Eastern, Middle Eastern and African markets. Yunus Brother’s annual sales turnover exceeds
USD 300/- million with 95% of the sales geared towards the export markets.
Spinning activities of the Yunus Brothers Group is being carried-out under the name of ;

 FAZAL TEXTILE MILLS LTD.

 GADOON TEXTILE MILLS LTD.

Total installed spindles are 245,000 for the production of approximately 150 M/Tones of yarn
every day.

VISION STATEMENT

A leading producer of textile products by producing the highest quality of

products and to develop and extremely motivated and professional trained
work force, which would drive growth through innovation and renovation.

MISSION STATEMENT

FAZAL TEXTILE MILLs Limited through its innovative technology and

effective resource management has maintained ethical and professional
standard. The core value are its commitment, integrity, excellence,
teamwork, transparency and creativity.
Fazal Textile committed to:

 Produce quality and fault free products for its valued customers by
continual improvements by providing proper training and
development programs, upgrading of resources, setting quality
objectives by analyzing customer’s feedback.
 Provide good return and security to its share holders
 Fulfill obligation towards creditors, employees and the society.

Organizations Values

 Trust
 Integrity
 Respect
Customer profile

FAZAL Textile Mills has also proud of work with world best Labels like

 JC Penney (Stafford, Arizona, St. John’s Bay)

 War Naco (Chaps Ralph Lauren, Calvin Klein)
 Indus (Vantage, Champs, Tom Taller)
 Vanity fair Lee, Wrangler
 Perry Ellis
 Levis

Corporate Objectives
1. Maximization of wealth of shareholders.
2. To increase market share
3. To achieve customer satisfaction.
4. Making arrangements towards achieving total quality standards.
5. To get growth through professional management.
6. To growth through professional up to minimum level..
7. To control the atmosphere by installation of lated machinery.
8. To continue to improve/ surpass past achievement.
9. To lead the local manufactures.
10.To attain a good word of month and to make company image.
11.Stronger in the international market
 Management Hierarchy

Chief Executive
Top Management Officer

General Manager

Middle Management
Manager

Senior Deputy Assistant Officer

Officer Manager Manager