MANAGEMENT

Project on

Submitted to: Miss Beenish Chauhdary

Submitted by:

Fizzah Khalid Butt 3242

Naila Azam Joiya 3259

Lahore College for Women University

 Nishat Group:
Nishat Group is one of the leading and most diversified business groups in South East Asia.
With assets over PRs.300 billion, it ranks amongst the top five business houses of Pakistan.
The group has strong presence in three most important business sectors of the region namely
Textiles, Cement and Financial Services. In addition, the Group has also interest in Insurance,
Power Generation, Paper products and Aviation. It also has the distinction of being one of the
largest players in each sector. The Group is considered at par with multinationals operating
locally in terms of its quality of products & services and management skills

Mian Mohammad Mansha, the chairman of Nishat Group continues the spirit of
entrepreneurship and has led the Group successfully to make it the premier business group of
the region. The group has become a multidimensional corporation and has played an important
role in the industrial development of the country. In recognition of his unparallel contribution,
the Government of Pakistan has also conferred him with Sitara-e-Imtiaz, one of the most
prestigious civil awards of the country.

The Textile business is further subdivided into 2 textile divisions: Nishat Faisalabad and Nishat
Chunian divisions. The textile capacity of the group is the largest in the country. An addition of
20,000 new spindles, 100 new air jet looms and new dyeing plant has increased the existing
capacity of 242,000 spindles, 740 looms and dyeing and finishing capacity of 5 millions
meters. The group is the largest exporter of textile products from Pakistan for more than a
decade.

Nishat provides quality piece dyed fabrics in heavy twills to some of the world's leading brand
names like GAP, Old Navy, Banana Republic, DKNY, Tommy Hilfiger, Chaps and Sears.

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Nishat Group has also been a pioneer in power generation in the private sector of the country.
Nishat setup the first power generation unit in the private sector in 1995.

In 1991, Nishat Group ventured into the financial sector through the acquisition of Bank. MCB
Bank Ltd. has grown ever since and is now the largest bank in the private sector. MCB has a
network of over 1200 branches employing over 12,000 people.

Our vision of tomorrow is a better quality of life for the people of Pakistan

Nishat Chunian Limited:

Nishat (Chunian) Limited was incorporated in 1990 as a public limited company with an equity
investment of Rupees 100 million. A spinning mill having a capacity of 14,400

spindles was established at Bhai Pheru, Tehsil Chunian. It started commercial production on 10
March 1991. The capacity was enhanced to 19,200 spindles in 1998. In 1998, the Company
diversified its business interest by venturing into a weaving project with the installation of 99
air jet looms.

A new state of art spinning unit started

production in November 2000, increasing
the total spinning capacity to about 40,872
spindles. Subsequently weaving capacity
was increased to 212 air jet looms while the
spinning capacity was increased to 50,952
spindles. During the period ended 30 June
2005, the Company enhanced its spinning
capacity substantially by acquiring the
operating assets of Umer Fabrics Limited
comprising of 38,544 spindles and by
addition of a new spinning unit with 40,128
spindles. In 2006, the Company also
diversified into Home Textile Business. The
Company is currently operating with
142,196 spindles, 293 looms, a modern
dyeing and finishing plant having capacity
of 71,000 meters per day and captive power
plants with a total capacity of 33MW.

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Economic Environment
The year under review is from July 2006 to June 2007. During the year, country's economy
remained stable. However, Year 2006-07 was one of the most difficult years for Pakistan’s
textile industry. Higher cotton prices, higher wages and severe price competition reduced the
profitability margins across the whole textile industry. Cotton prices were higher by around 7%
whereas prices of yarn remained stagnant resulting into losses for the spinning industry. Higher
fuel prices and gas load shedding disrupting the operations of the power generation, resulted
into higher fuel charges. Tightening of monetary policy further increased the already high
interest rates.

The year under review is from July 2006 to June 2007. During the year, country's economy
remained stable. However, Year 2006-07 was one of the most difficult years for Pakistan’s
textile industry. Higher cotton prices, higher wages and severe price competition reduced the
profitability margins across the whole textile industry. Cotton prices were higher by around 7%
whereas prices of yarn remained stagnant resulting into losses for the spinning industry. Higher
fuel prices and gas load shedding disrupting the operations of the power generation, resulted
into higher fuel charges. Tightening of monetary policy further increased the already high
interest rates.

Performance of the Company

During the year under review, the Company's profitability is at its lowest in last ten years. Sales
during the year are highest ever at Rs. 7,678 million as compared to Rs. 6,551 million during
the last year. This shows an annual increase in sales of around 17.20%. However, the
Company's profit before tax has sharply declined to Rs. 111.16 million as compared to Rs.
340.80 million last year. Profit after tax is Rs. 10.16 million because of the tax provision of Rs.
101 million as the Company is under presumptive tax regime. Higher cost of production and
increased price competition has reduced the profitability margins substantially. The Company's
gross profit margin dropped to 12.47% from last year's 17.84%. Further increase in the
financial charges also reduced the profitability. Financial charges are Rs. 648 million showing
an increase of Rs. 154 million over the last year. Earning per share (EPS) is Rs. 0.14 as
compared to Rs. 3.34 last year.

The reduced profitability of the company is attributable to a number of factors. This was the
first year our Home Textiles Plant came into production and initially capacity utilization
remained below break even level. During the year we had a partial shutdown in one of our
spinning units for shifting of machinery for change in the product mix. Higher cotton prices
and partial shutdown of the spinning unit resulted into a loss of around Rs. 150 million in our
spinning division during the year. Currently our Home Textiles Division is operating at more
than 80% capacity. Moreover after changing the product mix of the spinning units, our
spinning division is operating at above breakeven level. Keeping in view the present scenario
we are hopeful to have a higher profitability in next year.

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Investments

During the year under review, the Company made no substantial investment in the plant and
machinery. Presently we are operating with 142,196 spindles, 293 air jet looms, 1 Dyeing &
Stitching plant and captive power plants with the combined capacity of 33 MW.

Financial Structure
A conservative financial structure has been employed in view of the seasonality and cyclicality
of the textile industry. We have identified the targeted levels of the critical financial ratios and
decisions for future investments are made subject to the constraints of these financial ratios.

During the year under review, financial charges have increased by 31%. This is mainly due to
the general hike in the interest rates in the country. The illustration shows the last five years'
financial charges as a percentage of sales.

Business Strategy
Aggressive marketing has been the major factor in our consistent profitability over the past
years. Our strategy is to remain at the cutting edge in terms of exploring new markets and new
products. The focus is on niche marketing with specialized products. We have differentiated
our business through consistent quality, reliable delivery and proactive handling of customer's
needs.

Investment in state of the art technology and top quality human resources has been key element
of our business strategy. The organizational structure is lean with very little hierarchy and
bureaucracy compared to other organizations of similar size. This gives us the flexibility to
respond quickly to the changes in the market situation.

Corporate Profile of Nishat Chunnian:

Nishat stands up to its social responsibilities both in terms of environment and Welfare. The
company covers housing and medical expenses for its employees and also provides schooling
for their children. A high school has been opened for the children of the employees and general
public of the area. A hospital has been constructed in the vicinity of the plant. The company
also provides recreational and sports facilities for the resident employees at the production
premises. NCL has also established a school and hospital under the Mian Mohammad Yahya
Trust, at a cost of around US$ 700,000. The trust is sponsored by NCL and members of the
sponsors family. The high school opened in 2000 for the children of the employees and general
public of the area; has a staff of around 40 teachers and offers education to 400 students. The
hospital has also been constructed in the vicinity of the plant; enabling local population to get
immediate medical attention instead of traveling to the nearest city. Around 80 patients are
treated daily in the hospital by a staff of 30 people which includes 6 qualified doctors

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Units of Nishat Chunian:
It comprises of 3 units:

Spinning

Weaving

Home Textiles

Spinning:
The spinning facility of Nishat Chunian consists of five units with a capacity of 150,000
spindles, producing 90 million pounds of yarn per annum. To maintain a consistent product
quality, stringent measures are taken not only in the sophisticated in-house labs, but throughout
the production process

Spinning Products:

YARN TYPES COUNT RANGE COMPOSITION END USE

CARDED Ne 6/1 – 20/1 100% Cotton Denim Fabrics and

COTTON Hosiery
YARNS
COMBED Pakistani, Australian, Extra-Long- Circular Knitted,
COTTON Ne 14/1 – 100/1 Staple CIS, Brazilian, PIMA and Hosiery Fabrics,
YARNS Egyptian Cottons Upholstery and
Denim.
CORESPUN Ne 7/1 – 40/1 Stretch Lycra accredited by Dupont Stretch Fabrics for
STRETCH Also available in unbranded Denim and other
YARNS Spandex. Woven Fabrics
BLENDED Ne 10/1 – 80/1 Polyester, Acrylic, Viscose- Sportswear, Active
YARNS Rayon, CoolMax ®, eVAP ®, wear, Sweaters,
Modal ®, Tencel Lyocell ® , Upholstery and
Amicore, Bamboo fiber, soyabean Industrial Fabrics
fiber and Metallic Fibers are
available, pure as well as in
various Cotton blends
SLUB YARNS Ne 4.5/1 – 20/1 100% Cotton Denim, Upholstery
Ne 6/1 – 40/1 Polyester and Viscose-Rayon in and Sweaters
Blended various blends
COMPACT Ne 40/1 – 100/1 100% Cotton with properties of High thread count

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YARNS low hairiness, improved sheeting and fine
evenness, strength and elongation shirting
PLIED YARNS 2, 3, and 4 ply Our entire count range is also Knitted as well as
available in 2, 3 and 4 ply, auto- Woven Fabrics
spliced and knotless

Weaving:
The weaving mill consists of state of the art Picanol Omni, Omni Plus and Toyota air jet looms
in various widths ranging from 110 – 150 inches, providing greater flexibility in catering to
customer needs. The renowned European company Benninger-Zell manufactures the Sizing
and Warping machinery.

Products of Weaving:

Fabric Count
Design Description Composition Width
Category Range
Twills
Drills 100% Cotton , blends
Broken of Cotton with
Shirting:
Twills Shirting fabrics Polyester, Viscose,
Ne 40/1 –
Bedford with a weight range Linen, Nylon, Lycra,
120/1
Cords of 50-150 GSM Elaspan and 72
APPAREL
Ottomans and Bottoms with a Spandex; Cotton inches
Bottoms:
Canvases weight range of Slub, PC Slub and
Ne 5/1 –
Herringbone 200-450 GSM. Slub lycra; Spun
30/1
Matts Poly and Poly
Panamas Filament.
Ribstops
100% Cotton, blends
Sheeting fabrics of
of Cotton with
upto 1000 thread
Percales Polyester, Cool
SHEETING count with single
Satins Max®, T-400™,
AND ply yarn. Ne 40/1 – 141
Striped eVAP®, Modal,
UPHOLSTER 120/1 inches
Sateens Tencel, Bamboo
Y Upholstery fabrics
Poplins Fiber, Soyabean
made with plied
Fiber, Milk Fiber and
yarns
Amicor.
Dobby fabrics 100% Cotton and
FANCY Ne 20/1–Ne 128
Dobby Items made using up to blends of Polyester
ITEMS 80/1 inches
14 frames. and Cotton.
STRETCH One way Sheeting and Cotton blended with Ne 10/1 to
and two way apparel fabrics lycra or spandex Ne 60/1

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 stretch
fabrics
Warp slub,
weft slub Upholstery and 100% cotton and PC Ne 6/1 tp Ne
SLUB
and cross apparel fabrics slubs 40/1
hatch

Home Textiles:
The dyeing and finishing plant has a monthly capacity of 3.0 million yards per month with an
equivalent stitching capacity. These plants are equipped with state of the art machinery
specially designed to cater to high thread count fabric.

During the dyeing, finishing and stitching processes, several measures are taken to ensure
timely delivery of high quality fabric. This includes special care in fabric handling, full width
rail stitching, PVA based size recovery, various devices to avoid creases and band mark
variation, special unwinding devices, efficient squeezers, a computerized dye dispensing
system and an on-line measurement and storage of data at every machine.

Home Textile Products:

The dyed and finished Sheeting and Upholstery range comprises of high density fabrics with
widths up to 340 cm and yarn count range of Ne 40/1 – 100/1. This includes Percales up to 350
thread count and Sateens up to 800 thread count. We also produce high thread count sheeting
fabric of unmatched quality with 1000 thread count. Other products in this range include fabric
with upto 6 pick insertions, dobby fabric with intricate designs using 12-14 frames and fabrics
made using plied, slub, dyed and fancy yarns. In addition to 100% cotton, a number of fibers in
various blends are used including Polyester, Viscose, Modal, Tencel, Bamboo, Soyabean and
Milk Fiber. We also use Lycra, Cool Max®, eVAP, T-400™ and Amicor

Dyes and Finishes:

NCL offer a wide range of dyes and finishes which can be adapted in accordance with
customer requirements. The various dyeing options include Pigment, Vat, Reactive, Sulphur
and Disperse. Some of the various finishes NCL can do are Water Resistant/Repellant, Soil and
Stain Resistant, Wrinkle Resistant, Anti-microbial, Ultra Soft Hand Feel, and Fire Resistant.
We have also developed antimicrobial, frangrant and ultra fast color finishes.

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Bed Linen:

Products in this category include Bed Sheet Sets, Valance Sheets, Bed Skirts, Quilt covers and
Comforter Shells.

Curtains:

The product range also includes Curtains, Pelmets, Cushions, Tie Backs, 5 pieces Drapery Set,
and Rod Percillia, which are offered to customers as separate items, as well as complete
Curtain Sets. We also offer Tier Swag Sets for kitchen windows and Shower Curtains

Table Linen:

NCL produce Tablecloth, Table Runner, Napkins and Ruffles Round.

Nishat Chunian Power limited:

Keeping in view the energy crisis in the country, NCL has also ventured into the power
business. With a capacity of 200 MW an Independent Power Plant (IPP) is being set up at 66
km Lahore Multan Road. The power plant costing US$ 235 million has an operational deadline
of March 2010. Wartsila Finland is the EPC contractor for the project. The Fuel Supply
Agreement has been finalized with Shell Pakistan; the first such supply agreement in the
history of Shell Pakistan. The plant has been set up under a 25-year ‘take or pay’ agreement
with WAPDA, who is bound to make capacity payments – which are backed by the Sovereign
Guarantee of the Government of Pakistan.

Hierarchy Chart:
A hierarchy is an arrangement of objects, people, elements, values, grades, orders, classes, etc.

A hierarcy chart shows that what comes after what.

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 BOARD of DIRECTORS

CHIEF EXECUTIVE

Accounts,
Marketing- Marketing- Marketing audit,
Site Purchase Admin Home Fabric -Yarn secretarial Finance
Textile works

Director Director Director

Technical Manager Manager General Director
USA Europe Yarn
Director Purchase Admin & Manager Finance
Marketing Marketing Marketing
and GM personnel
Hierarchy Chart of Nishat Chunian Ltd

Manager Manager
Audit
and it shows that who reports to whom and clear the confusions.

Accounts
and Tax

Technical GM Technical
Technical General GM
Director spinning Director
director Manager stitching
Spinning 1, 2 Processing
4, 5 Sinning 3 Weaving
A hierarchy chart of an organization shows the formal structute of an organization’s positions

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Swot Analysis :
SWOT analysis is a simple framework for generating strategic alternatives from a situation
analysis. It is applicable to either the corporate level or the business unit level and frequently
appears in marketing plans. SWOT (sometimes referred to as TOWS) stands for Strengths,
Weaknesses, Opportunities, and Threats.

A scan of the internal and external environment is an important part of the strategic planning
process.

Environmental factors internal to the firm usually can be classified as

Strengths (S)

Weaknesses (W),

And those external to the firm can be classified as

Opportunities (O)

Threats (T).

Such an analysis of the strategic environment is referred to as a SWOT analysis.

The outcome from a SWOT Analysis enables organizations to focus on strengths, minimize
weaknesses, address threats, and take the greatest possible advantage of opportunities
available.

The SWOT Matrix

A firm should not necessarily pursue the more lucrative opportunities. Rather, it may have a
better chance at developing a competitive advantage by identifying a fit between the firm's
strengths and upcoming opportunities. In some cases, the firm can overcome a weakness in
order to prepare itself to pursue a compelling opportunity.

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:

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S-O strategies pursue opportunities that are a good fit to the company's strengths.

W-O strategies overcome weaknesses to pursue opportunities.

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 ANALYSIS OF NISHAT CHUNIAN:

Strengths:
NCL’s strengths are its resources and capabilities that can be used as a basis for
developing a competitive advantage.

Nishat Group is the largest group in Pakistan in terms of sales, which were
approximately Rs.16 billion (US$ 400 million equivalent) last year.

NCL is in businesses namely power generation and textile.

Our textile division, Nishat Chunian has a spinning capacity of 144,803 spindles
located in 5 units.

Due to having setups at difference locations, we have a benefit of utilizing

infrastructure like roads, electricity load, BMR etc)

The product range is 100% cotton yarn, ranging from 6/1 to 30/1 in carded yarns and
from 12/1 to 100/1 in combed yarns.

In addition to the above we are also in core spun stretch yarns of 2 and 3 ply yarns and
slub yarns. The total capacity is 59 million lbs of yarn per annum

The weaving capacity is 293 air jet looms wider width.

The fabric is being exported to various companies in Hong Kong, Japan, Korea, USA,
South Africa, India and Europe.

The company believes in product innovation and has successfully leveraged its strength
in yarn manufacturing to make a variety of fabrics.

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 NCL timely adds value to its product like addition of dying facility and home textile
manufacturing (mention the year of operations)

Sales comprises more than 80% as export which saves in taxation

Internal cost controls

Most optimum cost of financing and exploration of for-ex transactions like hedging and
forward booking

NCL Textile Industry is an Independent & Self-Reliant industry.

Availability of abundant Raw Material helps to control costs and reduces the lead-time
across the operation.

Availability of Low Cost and Skilled Manpower provides competitive advantage.

Large varieties of cotton fiber are available and have a fast growing synthetic fiber
industry.

NCL has large and diversified segments that provide wide variety of products.

Growing Economy and Potential Domestic and International Market.

NCL has Manufacturing Flexibility that helps to increase the productivity.

Qualified and skilled management

Health working environment

Produces greige fabric for apparel, sheeting, home furnishing and fancy items in 100% Cotton,
Polyester Cotton (PC) and Chief Value Cotton (CVC).

Fabric for apparel has been consistently catering to the demands of the export markets
as well as the local garment industry.

In sheeting we have successfully made sheeting fabric with counts up to 400 threads
using Ne 100/1. This high-count fabric is one of its kind and of unmatched quality.

With rising demand for fancy items, NCL has also ventured into producing items like
slub yarn fabric and stretch fabric.

NCL now ranks among the first rate stretch fabric producers in the national and the
international markets.

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 Now installing 200MW power plant, which gives electricity to WAPDA network worth
approx US$ 235 million, which will give, guaranteed substantial returns to the shareholders

Weaknesses
The absence of certain strengths may be viewed as a weakness. For example, each of
the following may be considered weaknesses:

NCL Textile Industry is highly Fragmented Industry.

NCL Textile Industry is highly dependent on Cotton.

Lower Productivity in various segments.

There is Declining in Mill Segment.

Lack of Technological Development that affect the productivity and other activities in

whole value chain.

Infrastructural Bottlenecks and Efficiency such as, Transaction Time at Ports and
transportation Time.

Unfavorable labor Laws.

Lack of Trade membership, that restrict to tap other potential market.

Lacking to generate Economies of Scale.

NCL has to pay Higher Indirect Taxes, Power and Interest Rates.

Opportunities
The external environmental analysis may reveal certain new opportunities for profit and
growth. Some examples of such opportunities include:

Growth rate of Domestic Textile Industry is 6-8% per annum.

NCL has a Large, Potential Domestic and International Market.

Product development and Diversification to cater global needs.

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 Elimination of Quota Restriction leads to greater Market Development.

Market is gradually shifting towards Branded Readymade Garment.

Increased Disposable Income and Purchasing Power of Customer opens New Market
Development.

Emerging Retail Industry and Malls provide huge opportunities for the Apparel,
Handicraft and other segments of the industry.

In NCL greater Investment and FDI opportunities are available.

Threats
Changes in the external environmental also may present threats to the firm. Some
examples of such threats include:

Competition from other developing countries, especially China.

Continuous Quality Improvement is need of the hour as there are different demand
patterns all over the world.

Elimination of Quota system will lead to fluctuations in Export Demand.

Threat for Traditional Market for Power loom and Handloom Products and forcing
them for product diversification.

Geographical Disadvantages.

International labor and Environmental Laws.

To balance the demand and supply.

To make balance between price and quality

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CENTRALIZATION AND DECENTRALISATION:
Centralization:

Centralization is the process by which the activities of an organization, particularly those

regarding decision-making, become concentrated within a particular location and/or group
mostly the top management of organization.

In a centralized organization, the decisions are made by top executives or on the basis of pre-
set policies. These decisions or policies are then enforced through several tiers of the
organization after gradually broadening the span of control until it reaches the bottom tier

Decentaralization:

Decentralization also called departmentalization is the policy of delegating decision-making

authority down to the lower levels in an organization, relatively away from and lower in a
central authority. A decentralized organization shows fewer tiers in the organizational
structure, wider span of control, and a bottom-to-top flow of decision-making and flow of
ideas.

Decision Making System Of Nishat Chunian:

The decision making system of NISHAT CHUNIAN LIMITED is in between the centralized
and decentralized. In past it was fully centralized but as time is passing and the organization is
expanding and getting larger day-by-day the decision making system is getting decentralized.
Right now some of its policies are made by only top management and in some lower
management is also included so the system is not purely centralized not decentralized.

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