Professional Documents
Culture Documents
Session
Table of Content
PAGE No.
1 1.1 1.2 1.3 1.4 2 2.1 2.2 3 3.1 4 4.1 4.2 4.3 4.4 4.5 5 6 7
COMPANY INTRODUCTION INCORPORATION /COMMENCEMENT BUSINESS OPERATIONS SOWT ANALYSIS RESOURSES FIRM ANALYSIS COMMON SIZE ANALYSIS RATIO ANALYSIS PERFORMA STATMENT.
BASIS OF ANALYSIS.
PRACTICES OF FIRM ACQUASATION OF CAPITAL FINANCIAL FORCASTING INVESTMENT AVENUES WORKING CAPITAL MANAGEMENT DIVIDEND POLICY EVELUATION VISIT REPORT CONCLUSIONS
1 Introduction of Company
The company was initially established in 1990 by Mr. Sajjad Nazir in Pakistan. Later on, as an expansion project, Umer Apparels was established in Pakistan nearly two
Umer Apparels has never hesitated in adapting the latest manufacturing technologies. The engineering and sampling department is equipped with latest, Gerber Garment Technology (GGT) Accumark, designing, grading and marking system.Garments designed at Umer Apparels are engineered to perfection. Being the backbone of the entire manufacturing facility the pattern making and sampling department at Umer Apparels take great pride in creating unmatchable quality garments.
Vision Statement A leading producer of textile products by producing the highest quality of products ad services to its customers. To strive for excellence through commitment, integrity, honesty and team work.
COMPANY INTRODUCTION
MR. SHAHID NAZIR CH. MUHAMMAD AMIN CH. MUNIR AHMAD MR. FAZAL ELAHI MR. NASEER AHMASHAH MR. MUHAMMADARSHAD MR. MUAMMAD NAWAZ MR. MUHAMMADFAROOQ MR. BINYAMIN
RATING OF SBP
Riaz Ahmed & Co.is at A11 no.by SBP
BANKERS:
HABIB BANK LIMITED UNITED BANK LIMITED MCB LIMITED THE BANK OF PUNJAB HABIB BANK A.G. ZURICH
REGISTERED OFFICE:
MILLS:
2 Business operations Business operations of Umar Apperal Limited include following areas
Umar Apperal Limited produces high quality yarn according to the demand of the market. 80 to 90% yarn is exported rest of the yarn is used is in Umar Apperal Limited . Single knit Flat knit Strippers Textures Double knit Jacquards
(2) Knitted Fabric: One of the largest Fabric facility in Pakistan having the capability to produce all kinds of knitted fabrics in 100% cotton & blends. Following are types of fabric Jersey Pique Inter Lock Rib Waffle Min Thermal o Fleece Garments: Umar Apperal Limited is a leading apparel company in Garments Pakistan having expertise & machinery capable of transforming customer ideas into superior quality garments, which are taken as the most famous brands in the world. These includes the
o Malaysia
Customer profile
Umar Apperal Limited has also proud of work with world best Labels like
JC Penney (Stafford, Arizona, St. Johns Bay) War Naco (Chaps Ralph Lauren, Calvin Klein) Indus (Vantage, Champs, Tom Taller)
Departments;
General Manager
Middle Management
Manager
Senior Officer
Deputy Manager
Assistant Manager
Officer
Supervisor
Helpers
Foreman
Operators
STRENGTHS
1. ISO 9002 Certification. 2. WRAP Certified 3. Vertically integrated. 4. High quality products. 5. Excellent market image in the local and international market. 6. Highly qualified management. 7. Adequate financial resources. 8. Competitive advantage. 9. Adopting information technology. 10. Recruitment on merit. 11. Loyal customers. 12. Skilled Labor. 13. Broad and motivational vision.
WEAKNESSES
1. Increased employee turnover 2. Centralized management system 3. High cost of production. 4. Low production capacity. 5. De-motivated Staff. 6. Non-Corporative culture. 7. Insufficient benefits for the employees. 8. Stereotype machinery for processing. 9. Communicational gap among different departments. 10. High percentage of debts
OPPORTUNITIES
THREATS
1. Can expand its division such as entering in weaving sector also. 2. Can introduce its own label in domestic as well in international market 3. Can capture new market segment. 4. Full potential entertaining the local market. of
1.
Entry of new competitors just like China & India or local companies Kamal Spinning Mills Fsd.
2. Buyer need and demand changes. 3. Political instability. 4. Changing geopolitical situation. 5. Change of government policies. 6. Low price offered by competitor 7. Globalization. 8. Increase in inflation
5. Can reduce the cost by proper utilization of resources. 6. End of quota restrictions by the end of year 2004. 7. Can hire well-educated and experienced staff.
1.4 RESOURCES PHYSICAL RESOURCE Umar Apperal Limited is leaders in creating, developing and manufacturing of knitted apparel products right from basic to highly fashioned garments thus responding to emerging trends in the industry. They have spinning, knitting, and processing and apparel divisions. In this apparel division they have these sections. Umar Apperal Limited. is the largest vertical integrated setup in Pakistan in knitwear industry. We have our own Spinning, Knitting, Dyeing, Processing, cutting and sewing facilities. Our capacities are as follows: - 300 yarn bags per day - Plus 50 Ton fabric production per day - 5 Million Pieces Cutting Capacity per month - 4.50 to 5 Million Pieces export per month
Cutting:
Cutting units working under the supervision of skilled unit managers, these cutting units are well equipped with latest machinery including Gerber Plotter, Spreader etc.
Machine Quantity
Gerber cutter Max. Cutable height 7.2cm, Max Cutable width 68 Max. Cutable height 7.2cm, Max Cutable width 78 Max. Cutable height 7.2cm, Max Cutable width 94 3 1 1
2 2
22
Stitching: With over 1,749 stitching machines, manned with the most skilled and expert operators, Masood is capable of producing about 120,000 dozens per month versatile garments ranging from basic to high fashion, mens, womens and kids with maximum flexibility in size and color assortments. Stitching Units Apparel Apparel III Apparel IV Apparel II Warehouse Quantity 1168 188 289 227
Finishing:
Our Finishing Capacity in kg : 66,000 / Day : 2,046,000 / Month : 22,552,000 / Year lbs : 145,502 / 24Hrs : 4,510,562 / Month : 54,126,744 / Year
HUMAN RESOURCES
No. of Employees
Usually there are three types of financial analysis in which one analysis the financial statements of the company mostly Balance Sheet Analysis and Income Statement Analysis. Following are the three types of analysis:
Horizontal analysis
Notes
SALES 22 0 87.9 COST OF SALES 23 9 81.0 GROSS PROFIT DISTRIBUTION COST ADMINISTRATIVE EXPENSES OTHER OPERATING EXPENSES 24 25 26 0 140.1 7 56.9 4 216.0 3 122.1 0 58.3 2 63.7 OTHER OPERATING INCOME PROFIT FROM OPERATIONS 27 0 58.3 7 10.4 FINANCE COST PROFIT BEFORE TAXATION PROVISION FOR TAXATION PROFIT AFTER TAXATION 29 28 5 121.6 7 93.2 9 127.9 8 75.6 EARNINGS PER SHARE - BASIC 30 5 55.2 - DILUTED 30 3 6) 1 (10.4 0 4 17.6 0 100.0 2 35.3 0 100.0 3 32.5 0 100.0 6 34.8 0 100.0 1 33.5 0 100.0 0 34.1 0 100.0 4 31.0 0 100.0 2 34.1 0 100.0 7 61.5 0 100.0 7 138.0 0 100.0 3 14.6 0 100.0 7 73.7 0 100.0 8 43.8 0 100.0 2010% 86.7 3 37.6 0 100.0 2009% 38.8 0 100.0 2008% 100.0
DSECRIPTION SALES COST OF SALES GROSS PROFIT DISTRIBUTION COST ADMINISTRATIVE EXPENSES OTHER OPERATING EXPENSES
2010 % 100 82.10 17.90 5.68 1.49 0.64 7.81 10.09 0.10 10.19 4.04 6.14 0.98 5.17
2009 % 100 80.86 19.14 5.53 1.46 0.65 7.64 11.50 0.10 11.60 6.58 5.03 0.90 4.13
2008% 100 81.53 18.47 4.42 1.77 0.38 6.57 11.90 0.11 12.01 6.84 5.17 0.94 4.23
OTHER OPERATING INCOME PROFIT FROM OPERATIONS FINANCE COST PROFIT BEFORE TAXATION PROVISION FOR TAXATION PROFIT AFTER TAXATION
Sales Sale of the company increases 86% as compared to last two years the increase in sale is due to increase in export sales that are result of better management of operations Cost of goods sold
Issued, subscribed and paid up share capital Reserves Total equity Surplus on revaluation of operating fixed assets Deferred income on sale and lease back of operating fixed assets NON-CURRENT LIABILITIES Long term financing Liabilities against assets subject to finance lease Deferred liability for gratuity
3 4
35.9 18.1
CURRENT LIABILITIES Trade and other payables Accrued mark-up Short term borrowings Current portion of non-current liabilities Provision for taxation TOTAL LIABILITIES CONTINGENCIES AND COMMITMENTS TOTAL EQUITY AND LIABILITIES 12 49.3 16.8 100 8 9 10 11 101.1 61.4 64.8 69.5 93.3 73.9 42.8 32.6 132.0 25.3 45.0 32.5 30.7 17.6 100 100 100 100 100 100 100
ASSETS
Nots NON-CURRENT ASSETS Property, plant and equipment Long term advances Long term security deposits 13 14
2010%
2009%
2008%
CURRENT ASSETS Stores, spare parts and loose tools Stock in trade Trade debts Loans and advances Short term deposits and prepayments Other receivables Cash and bank balances TOTAL ASSETS 15 16 17 18 19 20 21 32.15 51.70 82.99 23.98 49.08 2.84 251.23 60.85 49.34 17.88 (6.03) 65.36 (11.65) 8.58 (22.28) 133.89 24.46 16.85 100 100 100 100 100 100 100 100 100
5.29
6.76
4.86
Issued, subscribed and paid up share capital Reserves Total equity Surplus on revaluation of operating fixed assets Deferred income on sale and lease back of operating fixed assets NON-CURRENT LIABILITIES Long term financing Liabilities against assets subject to finance lease Deferred liability for gratuity
0.00
0.03
0.06
CURRENT LIABILITIES Trade and other payables Accrued mark-up Short term borrowings Current portion of non-current liabilities Provision for taxation TOTAL LIABILITIES CONTINGENCIES AND COMMITMENTS TOTAL EQUITY AND LIABILITIES 100 100 100 14.82 1.11 35.13 3.51 1.17 55.75 70.12 12.49 2.05 34.14 3.84 1.02 53.54 73.81 11.00 1.03 31.84 3.10 0.90 47.87 73.34
0.0 7
0.0
0.0 Long term security deposits 7 32.1 6 CURRENT ASSETS 3.9 Stores, spare parts and loose tools Stock in trade Trade debts Loans and advances Short term deposits and prepayments Other receivables Cash and bank balances 4 22.6 8 28.7 8 1.6 7 2.0 2 4.8 3 3.9 2 67.8 4 9 4 7 8 2 4 6 9 1 3
0.1 0 32.9 1
0.2 37.0
TOTAL ASSETS
100
100
100
Equity Total equity of company increases over year from 18.1% to 81.9% the increase in equity is through increase in the reserves of the company from its profit Equity as a percentage of total equity and liability increases over the year from 22.23% to 26.79% this increase is due to increase in reserves that is 17.51% over the year but issued capital decrease from 9.35% to 9.28% reserves are 136.2% increase over year Noncurrent liabilities Liabilities of the company decrease over the year from 7% to 15.7% major decrease is due to decrease in the long term financing 17.3% and liabilities against asset
837,370
(966,607)
(370,513)
(415,39 7)
290,285
(78,537)
1,458,8 32
161048
183771
61687
Interpretation Analysis of cash flow shows that over the year companys cash generated from operations increases and this cash is utlize in fixed assets cash flow from financing activity increases as compared to last year it is mainly from short term borrowing and equity company generating its finance from debts
Liquidity ratios Activity ratios Coverage ratios Profitability ratios Solvency ratios
No. Descriptions Liquidity ratio 1. Current Ratio% 2. Acid Test Ratio 3. Cash Ratio% 4. 5. 6. 7. 8. 9. 10 11. 12. 13 14. 15 16. Working Capital(In Thousands) Activity Ratio Days Sales In Receiveables(days) A/R Turnover(Times) A/R Turnover In Days(Times) Days Sales In Inventroy(Days) Inventory Turnover(Times) Inventory Turnover In Days. (Days) Operating Cycle(Days) Net sale/fixed asset Cash Cycle(Days) Labor Cost % Coverage Ratios
1487135 1303484 1244555 87 4.37 84 85 5.35 68 152 0.96 118 13.33 107 4.27 85 71 4.96 74 159 1.14 127 12.92 90 4.08 89 104 3.5 104 193 0.96 142 12.19
5.17 1.32 4.15 30.09 6.94 6.82 10.19 1.34 15.4 13.65
4.13 1.23 3.55 19.17 5.06 5.08 11.60 1.33 13.7 15.43
4.23 0.96 2.61 17.92 4.05 4.06 12.01 1.15 13.8 13.81
Relationship Between Profitability Ratios 32. Return on Total Assets Variation% 33. G.P Margin% Solvency ratios 17.90 19.14 18.47 12.37 13.12 10.60
34. Solvency Ratio% 35. Debt Ratio% 36. Debt/Equity Ratio% 37. Debt To Tangible Net Worth% Interpretation Liquidity ratio:
4.11 70.12
9.86 73.81
9.27 73.34
261.75 188
332
133
333 148
The liquidity ratio measured by the current assets over current liabilities. The company performance to meet their current obligation forms their current assets. The company has decreasing trend in current ratio in 2010 as compared to 2008 due to increase in trade payable and short term liabilities.
Activity ratio. Inventory turnover ratio is increasing, which shows the high speed of inventory converting into cost of goods sold. The days to sell the average inventory are decreasing. The receivable turnover rate is also increasing. Days to collect average accounts receivable are decreasing as compared to previous years. All activity Fixed assets utilization ratio shows the net sale in relation to fixed assets. Ratio shows the decreasing trend in 2010 as compared to 2009 which shows that company not utilizing its fixed assets properly ratios show favorable trends. Coverage ratio The interest coverage ratio shows the increasing trend to meet the financial charges. Because company repay loans so its annual interest expenses is decreasing as compared to their profitability.
Profitability ratio.
Total current liabilities Long term liabilities Long term finance Liabilities against asset subject to finance leas Defferd liability for gratuity Total long term liabilities
842767 3
equity Surplus on revaluation of fixed assets Reserves Retained earnings TOTAL ASSETS 153427 82 TOTAL LIABILITIES & EQUITY
4 corporate Practices
Following is an analysis of corporate practices 4.1 Acquisition of capital In routine practices company acquire capital from 5 sources share capital that include ordinary and preferred shares . reserves of the company that include genral reserves for working capital need and capital reserves for meeting specific functions long term loans for meeting long term need and short term loans for working capital need but sometimes company use long term loans to meat working capital needs company also go for financial lease 4.2 capital budgeting in routine practices company use all four techniques for analysis but give preference to pay back period .all these techniques mostly used for paper work in real scenario company do not go for proper analysis for capital budgeting plans they just invest in those projects where they see potential of growth 4.3 Financial forecasting While preparing forecasting Company use previous year averages, trends and also consider orders in hand for the next year their capacity of production .they also consider economic conditions in market availability of resources 4.4 Investment avenues Umar Apperal Limited dont go for any long term and short term investment 4.5 Working capital/Inventory management system The requirement of working capital and inventory increase over the time due to increase in sales and increase in prices company meat its working capital requirement from short term loans and soma time from long term loans company manage its inventory according to orders company has well established internally linked inventory management system 4.6 Dividend policy In last two years Umar Apperal Limited declare dividend @15% the company consider following matters while deciding dividend amount Attraction of new share holders To maintain existing share holders To maintain market value of share Future investment As the company is debt based and mostly fulfill financial requirement through debts so companys main focus is on maintenance of existing share holders and market value of share
5 Evaluation
According to our evaluation we give following suggestions and recommendations for Umar Apperal Limited SUGGESTIONS & RECOMMENDATIONS
There is no doubt Umar Apperal Limited is very organized textile mills. Still there is always room for improvements and following are some measures we suggest for improving the performance of the company. i) Decisions making should be decentralized. Middle and lower level management should have participation in decision making. ii) iii) iv) v) vi) vii) Company should have separate organized marketing department. Company should introduce products with its own brand name. Company should capture Middle East markets. Company should start its own Apparel Stores Chain. Promotions, increments and other benefits should be performance based in the company. The company should build a dispensary for workers in the premises. viii) Company shouldnt depend upon large customers it should also try to capture small ones. ix) x) Company should try to develop over all thinking in employees, not only departmental thinking. Company should try to create interdepartmental coordination and harmony.
6 Visit report
We conducted two visits of Umar apparel division at Sargodha road Faisalabad during our visit we conduct interview of Mr. shahid naveed and discuss issues related to our project and get useful information
7 CONCLUSION:
Umar Apperal is a big name in knitted garments. Its working environment is simply the best in Faisalabad. The company has fully equipped cutting, stitching and packing units. Its quality assurance system is one of the best in Pakistan. It wins Best supplier awards 200102 from JC Penny the World Wide stores chain. The companys 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 garments. Customer portfolio of the company is very broad. World leaders in Apparel are working with . Umar Apperal Company has no separate marketing department. CEO and Marketing Manager of the company perform marketing functions individually. Company is engaged in merchandising and its merchandising department is very efficient for taking orders and fulfilling them accordingly. Companys 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.