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“We aim to achieve Zero faults (7) in yarn clothes and apparel
manufacturing (2,6) by considering cost effective technology (4),
corporate social responsibility issues (8) and horizontal
management system to encourage entrepreneurial ideas (9) in
order to explore sales and market opportunities (5) keeping in
mind customer preferences (1) in global market (3).”
The essential components of Mission statement cater different points which are
as follows:
(4) Technology
Nishat Textile Mill has efficient information system which helps in making
decisions to allocate financial resources in order to cut down the cost of major
operations and enhance the computer based services.
(1) Customers
Nishat textile mill develops customer’s loyalty and trust by fulfilling their needs
and facilitating them with different services.
(3) Market
Nishat Textile Mill is an export oriented company and not only competing globally
but also doing its operations in local market too.
When Pakistan came into being there were only 16 textile companies out of which
only 12 were in operation. It grew to 70 in 1957 as industrial development took
place. Now days there are 596 textile mills out of which 442 are in operation. The
export revenue of textile industry contributes a large share to the GDP of
Pakistan. (Google.com: history of textile mills)
We are doing our project on Nishat textile mills. The brief snapshot of NML is to
manufacture spins, combs, weaves, bleaches, dyes, prints, stitches, buys and
sells textiles. It deals in yarn, linen, cloth and other goods and fabrics made from
raw cotton, synthetic fiber and cloth. The Group's plants are located at
Faisalabad, Sheikhupura, Lahore and Feroze Watwan.
Textile constitutes a major exporting sector for Pakistan, which accounts for about
60% of the country’s total foreign exchange earnings.
The major export items are yarn, gray cloth, finished clothes, towels & bed sheets
& their major customers are USA, EU, Japan & Hong Kong & now UAE also.
Many textile exports take place under quota arrangements with the EU & the
United States. Gray cloth roughly accounts 16-18% of total cloth.
Nishat mills’ Gray cloth exports account for roughly 20% for Pakistan. The firm
has been exporting to USA for many years & has recently started export to EU
countries & Middle Eastern countries.
In Pakistan the cotton crop season runs approximately from August to March.
Prices are generally high from August to September & fall later on as supply
increases.
Board of Directors
Mills:
• Nishatabad, Faisalabad
(Spinning, Weaving, Processing,
Stitching units & Power Plant)
• 12 K.M. Faisalabad Road, Shiekhupura
(Weaving units & Power Plant)
• 21 K.M Ferozepur Road, Lahore.
(Stitching unit)
• 5 K.M. Nishat Avenue off 22 K.M Ferozepur Road,
Lahore (Dyeing & Finishing Unit and Power Plant)
• 20 K.M. Shiekhupura Faisalabad Road, Froze Watwan
(Spinning Unit)
The history of Nishat dates back to 1951, when Mian Mohammad Yahya founded
Nishat Mills. After almost half a century of undaunted success, Nishat Group is
among the leading business houses of the country and ranks among the top 5
groups in terms of assets and sales revenue.
The group has its roots firmly planted into four-core businesses namely.
1. Textiles
2. Power generation
3. Banking
4. Cement
Textile Capacity
NML started out as a weaving unit with 500 semi-automatic looms; later 10000
spindles were added, laying the foundation on nation’s biggest textiles composite
project. Composite project at Nishat mills limited Faisalabad covering 98 acre of
land is providing all production process under one roof i.e. spinning, weaving,
processing, stitching and power generation.
The Founder
A man of vision, courage and integrity, Mian Mohammad Yahya was born in 1918
in Chiniot. In 1947 when he was running a leather business in Calcutta, he
witnessed the momentous that swept the indo-Pak sub-continent and resulted in
the emergence of Pakistan. Like many of his contemporaries, he also migrated to
The Chairman
Today Mian Mohammad Mansha, the chairman of Nishat Group, like his father,
continues the spirit of entrepreneurship and has led the group to become a multi
dimensional corporation, with wide ranging interests.
Nishat has grown from a cotton export house into the premier business group of
the country with 5 listed companies, concentrating on 5 core business, Textiles,
Cement, Banking, and Power Generation & Insurance companies. Today, Nishat
is considered to be a part with multinationals operating locally in terms of its
quality products and management skills.
Nishat continue to strive to be a better group today than what they were
yesterday, for their customers, for their shareholders, for their investors, for the
environment, for the community and for their employees, for it is with them that
Nishat has achieved so much success in last fifty years.
v) Unemployment Trends
High Unemployment in Pakistan and also become a gap while dealing to its
suppliers and others.
vi) Tax rates
The tax rates are high as compared to the other countries but there is a low wage
rate in Pakistan which helps Nishat in making products at a better and
competitive price.
4) Competitive forces
OPPORTUNITIES
1 Opportunity to increase Target market 0.08 2 0.16
2 Quality and Guaranteed Fabrics 0.08 3 0.24
3 Opportunity to expand product line 0.05 3 0.15
4 International Fair Trade Certificate (IFTC) 0.15 4 0.6
Increase demand of Pakistani Cotton Made products in
5 Overseas Market 0.1 4 0.4
THREATS
6 Electric Power Plants 0.2 4 0.8
7 Political Instability 0.1 2 0.2
8 Low Market Share in Overseas Market 0.08 3 0.24
9 Least Advertising 0.05 1 0.05
10 Limited Retailing Outlets 0.11 1 0.11
TOTAL 1 2.95
Nomenclature:
• It is used to evaluate the external opportunities and threats
• Opportunities come before threats.
• Opportunities often receive higher weights than threats.
• The sum of all the weights assigned must lie between 0-1
• Rating should be done w.r.t. their industry (1-4) i-e; excellent to worst.
• Multiply each factor’s weight by its rating to determine a weighted Score
• The weighted score should not be more than 4.0
Nomenclature:
• In this competitive profile matrix a firm identifies its major competitors and
its particular Strengths and weaknesses.
• Multiply the weights with rates of companies and write score in the next
column.
• Assign weights with respect to the importance. As advertising is not much
important for Nishat Textile mills because of their B2B business dealing.
• Take 2-3 competitors against the company like we choose gul ahmed
fabrics and Chenab textile mills.
Introduction
Internal Factors
Internal factors are extracted after deep internal analysis of the company.
Obviously every company has some weak point and strong point that’s the
reasons internal factors are divided into two categories namely strengths and
weakness.
Strengths
Strengths are the strong areas or attribute of the company, which are used to
overcome weakness and capitalize to take advantage of the external
opportunities available in the industry.
Weakness
Weakness are painful for the company means these are the weak factors which
needs to be improve in future otherwise if they exposed to the competitors they
can take the advantage of it.
Rating
Internal weakness are further divided in two categories namely minor weakness
and major weakness same goes of the strengths (minor strength and major
strength)
There are some important points related to rating in IFE matrix.
• Rating is applied to each factor.
• Major weakness is represented by 1.0
Weight
The weight range from 0.0 means not important and 1.0 means important, sum of
all assigned weight to factors must be equal to 1.0 otherwise the calculation
would not be consider correct.
Weighted Score
Weighted score value is the result achieved after multiplying each factor rating
with the weight.
The sum of all weighted score is equal to the total weighted score, final value of
total weighted score should be between range 1.0 (low) to 4.0(high). The average
weighted score for IFE matrix is 2.5 any company total weighted score fall below
2.5 consider as weak. The company total weighted score higher then 2.5 are
considering as strong in position.
• List key internal factors as identified in the internal audit process. Use a
total of from ten to twenty internal factors, including both strengths and
weaknesses. List strengths first and then weaknesses. Be as specific as
possible, using percentages, ratios, and comparative numbers.
• Assign a weight that ranges from 0.0 (not important) to 1.0 (all important)
to each factor. The weight assigned to a given factor indicates the relative
importance of the factor to being successful in the firm’s industry.
Regardless of whether a key factor is an internal strength or weakness,
factors considered to have the greatest effect on organizational
performance should be assigned the highest weights. The sum of all
weights must equal 1.
Discussing the NISHAT MILLS IFE MATRIX the sum of weighted score shows
that company has strong internal position. Now elaborating each strength and
weakness will tell that why and how it has been rated and what the company is
doing that makes it strong internally. The factors are explained below:
STRENGTHS
• Lowest employee turnover is one of the most attractive strength and its
rating is 4 which mean company is having a great policy for this strength.
Nishat mills employee turnover is almost equal to zero this is due to their
good incentives and compensations for their employees. The environment
of the company is very good and this helps the employees grooming
Nishat gives free medical and provide transport to their employees.
WEAKNESSES
• High production cost for Nishat Mills is another weakness which should
be handled but Nishat doesn't have much policy for it so we have rated as
Today textile industry is facing big challenges. Inflation and decline in purchasing
power resulted in decline in demand, which increased the competition to a greater
extent. In spite of the above facts Nishat mills ltd, had been successful in
maintaining its market position and growth.
NML has adopted different marketing strategies over the years to sustain its
better position in the economy of Pakistan. These strategies are described below.
Diversification strategy
Market development strategy
Contacting old customers
New & innovative product development
Improved quality products
Diversification Strategy
Market Development
In order to reduce their dependence on a few markets especially FAR EAST, new
markets were developed for grey cloth. This diversification not only reduced their
dependence on Hong Kong but also gave better profit margins at times when
Hong Kong market was very depressed. Under this market diversification, they
started business with South Africa, Australia, Taiwan, Srilanka, Italy etc.
The business with some of the old buyers in Europe was also revived during this
period after intense efforts. This revival gave both good volumes and better profit
margins.
They have developed fancy and special items like Cavalry Twills, Bedford Cords
and dobby items, which are being sold at premium prices. They keep on
modernizing their equipment in order to maintain the high quality of their products.
With the increase of competition, Nishat Mills have become more quality
conscious. In order to achieve their quality standards, they are maintaining better
quality by getting yarn from pre-approved sources, tighter fabrics inspection in
folding and providing service to their customers. They also import cotton from
Australia which is known best for its Quality. NML has its cotton fields too which
produce premium quality cotton.
LIQUIDITY RATIOS
2008 2009
Current Ratio 0.73:1 0.86:1
Interpretation
This ratio tells us about short- term solvency of the organization or it is the direct
evaluation of a company’s liquidity. Current ratio shows the availability of the
ready current assets to meet the short- term liabilities of the organization. The
current ratio shows stable increase due to excessive cash available to company.
But overall company is not I very good position as it is having only 0.86 asset
against a single liability.
2008 2009
Quick Ratio 0.34:1 0.38:1
Interpretation
This ratio tells the extent to which a firm can meet its short term obligations
without relying upon the sale of its inventories. The trend of 0.34 to 0.38 shows
that currently company is in better position to meet its short term obligations.
2008 2009
Debt-to-total Asset Ratio 26% 25%
Interpretation
This ratio tells the percentage of total funds that are provided y creditors. The
trend showing that this percentage is reduced from 26 to 25% in previous year i.e.
the amount of assets increased over the debt.
2008 2009
Debt-to-Equity Ratio 39% 40%
Interpretation
This ratio tells the percentage of total funds that are provided y creditors versus
owners. The trend showing that this percentage is increased from 39 to 40% in
previous year.
2008 2009
Interpretation
This ratio tells the balance between debt ad equity I a firm’s log term capital
structure. As debt is cheaper than equity, so, the ratio is showing good
performance of the company.
ACTIVITY RATIOS
2008 2009
Current Ratio 4.7 5.8
Interpretation
This ratio shows whether a firm holds excessive stocks of inventories and
whether a firm slowly selling its inventories compared to the industry average.
Trend of increasing from 4.7 to 5.8 shows that company is currently increased its
inventory level.
2008 2009
Fixed Assets Turnover Ratio 0.62 1.03
Interpretation
Fixed asset turnover indicates the efficiency with which the company uses its
assets to generate sales. Generally, the higher a company’s fixed asset turnover,
the more efficiently its assets have been used. This ratio is showing an increase
from 0.62 in 2008 to 1.03 in 2009 which is good for company.
2008 2009
Total Assets Turnover Ratio 0.49 0.76
Interpretation
Total asset turnover indicates the efficiency with which the company uses its
assets to generate sales. Generally, the higher a company’s total asset turn over,
the more efficiently its assets have been used. The ratio for company is very
good.
Account Receivable
2008 2009
Account Receivable Turnover Ratio 51.9 73.9
Interpretation
The ratio tells the average length of time it takes a firm to collect credit sales, the
trend of increased length is not good for the company.
365
2008 2009
Average Collection Period 5 days 70 days
Interpretation
The ratio tells the average length of time it takes a firm to collect on credit sales.
The tend of increased length of 5 days to 70 days is not good for the company.
Sales
2008 2009
Gross Profit Margin 14.35 18.23
Interpretation
The ratio tells the total margin available to cover operating expanses and yield a
profit. The increasing trend from the last year is good sign for the company.
Sales
2008 2009
Net Profit Margin 31.23% 6.54%
Interpretation
This ratio tells the after-tax profits from the sales of goods. The declining trend
from 31.23% to only 6.54% is giving ad effect to the company’s name.
Total Assets
2008 2009
Return on Total Assets 15.19% 4.95%
Interpretation
Turn on total assets measures the firms overall effectiveness in generating profit
with its available assets. The higher the company’s return on total assets, the
better it is. The return on total assets is showing a decrease from 15.15% in 2008
to 4.95% in 2009 which is not a good sign for the company.
2008 2009
Return on Equity 23.1% 8.1%
Interpretation
The return on equity indicates the equity utilization of the company to produce
profits. The ratio tells the shares holders about their expected profit on their equity
in a business. The ratio indicates sharply decreasing trend of net profit from
23.1% in 2008 to 8.1% in 2009. This sharply decrease in the return on equity is
not a favorable point for the organization and its shareholders. It shows that
company has suffered a loss.
2008 2009
Earning Per Share 36.86 6.81
Interpretation
The company earnings per share are generally of interest to present or
prospective stockholders and to management. The earning per share represents
the number of Rupees earned on behalf of each outstanding share. The earning
per share decreased from 36.86 in 2008 to 6.81 in 2009, which is not favorable
for the company.
Here is the SWOT Matrix of NISHAT Mills Ltd. The input of this matrix has been
extracted from IFE, CPM, & EFE matrices. It comprises of four strategies which
are
i. strengths/opportunity strategies (SO strategies)
ii. weakness/opportunity strategy (WO strategies)
iii. strengths/threats strategy (ST strategies)
iv. weakness/threats strategy (WT strategies)
Our first strategy proposed by us to the company by taking into account strength
# 5 & opportunity # 1 & 3 is designer wear garments for gents. We have made
this strategy because the company is making ladies outfits right now. They are
not in gents garments profession. Company can invest for expanding its product
line because it has strong financial back ground.
The first strategy we made by considering strength # 5 & threat # 4 is open retail
outlets in suburb areas. Nishat has limited retailing outlets where every
customer cannot go. It has an opportunity of strong group i.e Mansha group &
good financial history. This company can invest in opening retailing outlets in
suburbs areas & can earn more profits by reaching more customers.
The first strategy we propose to NISHAT by taking into account weakness # 1 &
threat # 2 is advertising internationally. Nishat as an export oriented
organization should increase its advertising in foreign markets. By increasing its
advertising focus can get high market share in overseas markets.
Left column of a QSPM consists on key external and internal factors and the top
row consists of a feasible alternative strategies. And the left column of it consists
of information obtained directly from EFE Matrix and IFE Matrix. In a column
adjacent to the critical success factors, the respective weights received by each
factor in the EFE Matrix and IFE Matrix are recorded.
The top row of QSPM consists of alternative strategies derived from SWOT
Matrix. The QSPM determines the relative attractiveness of various strategies
based on the extent to which key external and internal critical success factors are
capitalized upon or improved. The relative attractiveness of each strategy- within
a set of alternatives is computed by determining cumulative impact of each
internal and external critical success factor.
We have developed QSPM Matrix for Nishat Mills by using the six steps as
follows:
Step 1
In the 1st step we made a list of Nishat mills key internal strengths/weaknesses
and external opportunities/threats in the left column of the QSPM. The key
internal success factors include lowest employee turnover, Highly experienced
professionals, Decentralized organizational structure, Efficient information
system, Good financial position/strong group, Location of plants, Highest capacity
of production, Less advertising focus, Maintenance of Imported machinery, High
production cost and key external success factors include Opportunity to increase
Target market, Quality and Guaranteed Fabrics, Opportunity to expand product
line, International Fair Trade Certificate (IFTC), Increase demand of Pakistani
Cotton internationally, Political Instability, Low Market Share in Overseas Market,
Focus more on export oriented, Shortage of electricity supply.
Step 2
In the second step we assign weights to each external and internal factor. These
weights are identical to those in the EFE Matrix and IFE Matrix. The weights are
presented in a straight column just to right to the external and internal critical
success factors.
Step 3
In the third step we examined the SWOT Matrix and identified alternative
strategies that the Nishat mills should consider implementing. Then we recorded
these strategies in the top row of the QSPM, these are open retail outlets in gulf
OR open retail outlets in suburbs areas.
Step 4
The factors which are not attractive for the choice being made and received AS 1
for the first alternative that is open retail outlets in gulf are decentralized
organizational structure, less advertising focus, political instability, and shortage
of electricity supply. The factors which are not attractive for the choice being
made and received AS 1 for the second alternative that is decentralized
organizational structure, International Fair Trade Certificate (IFTC), increase
demand of Pakistani cotton internationally, low market share in overseas market
and focus more on export oriented. As these factors do not show much
attractiveness for the first alternative, so they all received AS equal to 1.
The factors which are somewhat attractive for the first choice are highly
experienced professionals and opportunity to expand product line, and for the
second choice being made are decentralized organizational structure, good
financial position/strong group, quality and guaranteed fabrics, political instability
and shortage of electricity supply. As these factors have some attraction to the
choices being made like they have highly experienced professionals will be
helpful in marinating the new outlet.
They have the opportunity to expand the product line so can easily capture the
new market. Similarly they have decentralized organizational structure so it will be
easy to communicate throughout the organization for opening a new retail outlet
nationally, they have good financial position so if they launch their product at low
introductory prices will also be effective and later on profitable for them, and as
there is shortage of electricity but they have their own power supply plants so it
will be easy for them to increase their production and cater more customers. As
all these factors are somewhat attractive so, all these receive AS equal to 2.
The factors which are reasonably attractive for the first choice are good financial
position/strong group, quality and guaranteed fabrics, International Fair Trade
Certificate (IFTC), increase demand of Pakistani cotton internationally, low market
share in overseas market and focus more on export oriented and for the second
choice are location of plants, highest capacity of production, opportunity to
increase target market, and opportunity to expand product line.
They have good financial position so if they launch their product at low
introductory prices will also be effective and later on profitable for them; they are
catering upper middle and upper class that are all quality conscious than price
conscious, so opening new retail outlets will be very profitable for them. They are
export oriented and there is high demand of Pakistan cotton made products
internationally, so opening retail outlet in gulf countries will be more beneficial for
them. As all these factors are reasonably attractive for the choices being made so
receive AS equal to 3.
Step 5
In the fifth step we compute the Total Attractiveness Scores (TAS). (TAS) are
defined as the product of multiplying the weights by the Attractiveness Scores in
each row. The Total Attractiveness Scores indicate the relative attractiveness of
each alternative strategy considering only the impact of the adjacent internal or
external critical success factors. The higher the total Attractiveness Score the
more attractive the strategic alternative (considering only the adjacent critical
success factors).
Step 6
In the final step compute the Sum Total Attractiveness Score. For this we added
Total Attractiveness Scores in each strategy column of the QSPM. The Sum Total
Attractiveness Scores (SATS) reveal which is most attractive in each set of the
alternatives. Higher scores indicate more attractive strategies, considering all the
relevant internal and external factors that could affect the strategic decisions.
The magnitude of the difference between the Sum Total Attractiveness Scores in
a given set of strategic alternatives indicates the relative desirability of one
strategy over another. As the Total Attractiveness Score is more for the first
alternative (open retail outlets in gulf) that is 3.85 than the second alternative
(open retail outlets in suburbs areas) that is 3.4 so, the first alternative choice
being made is the best choice for Nishat mills. So, best choice is to go for open
retail outlets in gulf.
• All the sub department of processing like bleaching, dyeing, printing, and
finishing are working under laboratory instructions so laboratory is playing
role of executive in quality control. All the schedules of bleaching, dyeing
printing and finishing are prepared by the laboratory.
• Nishat has also a big share in local market. Local marketers are
performing their jobs efficiently to enhance the sales and to satisfy the
customers however in local market quality is lower then export market. So
Nishat has greater capability to preclude what they claim for.
• Expanding product lines that will give more variety to people of country
could extend local marketing and ultimately sales would be increased.
There should be more staff in local marketing department to enhance the
sales figure and to capture wide area of local market.
• There is need to increases the staff in this department only three or four
persons are working with all the affairs regarding let the employees abide
by the rules 7 regulation, recruiting, selecting and other activities. This
area should carefully be handle to attract skilled employees and ultimately
to enhance efficiency and effectiveness.
• Job analysis should be done to know what are the jobs needed in the
organization. I know some persons who are doing the job of two or three
persons.
• There should be little compensation for trainees as well, as they can fulfill
their day to day traveling and food expenses. By doing this trainees will
show more interest, more devotion, more potentials and will work with their
full mental and physical efforts.
3. Marketing Department