Fazal Cloth 2014-15

Fazal Cloth Mills 1 st Week FAZAL CLOTH MILLS LTD

Corporate Information BOARD OF DIRECTORS:

SH. NASEEM AHMADChairman/Chief Executive

Mr. MUHAMMAD AFZAL ULLAF SIDDIQUIDirector (NIT)SH. SHAUKAT MASUDDirectorSH. AMIR NASEEMDirectorMR. REHMAN NASEEMDirectorMR. FAZAL AHMAD SHEIKH Director

MRS. FARRUKH MUKHTARDirector

Internship Report 1

Fazal Cloth Mills

COMPANY SECRETARY:

MR. M. D. KANWAR

AUDITORS:

M/S HAMEED CHAUDHRY & CO.

CHARTERED ACCOUNTANT

BANKERS:

HABIB BANK LIMITED

NATIONAL BANK OF PAKISTAN LTD.

ASKARI COMMERCIAL BANK

SONERI COMMERCIAL BANK

MILLS:

FAZAL NAGAR, JHANG ROAD,

MUZAFFARGARH

REGISTERED OFFICE:

ROOM NO. 102-103,

INTERNATIONAL PLAZA,

BOHRA STREET, MULTAN CANTT.

COMPANY NAME:Internship Report 2

Fazal Cloth Mills FAZAL CLOTH MILLS LIMITED:

VANUEMILLS: FAZAL NAGAR, JHANG ROAD, MUZAFFAR GARHHEAD OFFICE: ROOM NO, 102-103, INTERNATIONAL PLAZA,

BOHRA STREET, MULTAN CANTT.

GROUP PROFILEThere 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.

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Fazal Cloth Mills

Vision:

To become a leading exporter of best quality yarn.

Mission Statement:

To achieve sustainable competitive advantage by consistently producing quality yarn that will satisfy both our customers and in return, our investors and employees.

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Fazal Cloth Mills GOALS

To produce best quality yarn.

To serve our customers, employees, suppliers, shareholders and the society as a whole.

To become profitable and groom, through providing high quality product and services.

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Fazal Cloth Mills 2 nd Week

MY Learning and Introduction to various Departments of FAZAL CLOTH MILLS LTD.

Following are the various departments at FCL:

1. Human Resources Department2. Purchase & Sale Department3. Import Department4. Export Department5. Information Technology Department6. Shares Department7. Accounting/Finance Department

I have the chance to spare some time in Accounting Department. I shall share my experience in these departments as follows:

Internship Report 6

Fazal Cloth Mills 3 rd Week

ACCOUNTS AND FINANACE DEPARTMENTS:

The art and science of managing money is known as management of finance. Finance and accounts departments keep the quantitative control over the transaction before describing the activities of this department. I would like to define the hierarchy structure then it will be easy to understand the division of authority and responsibilities.

G.M FINANCE SENIOR MANAGER FINANCE

MANAGER ACCOUNTS

ASSISTANT ACC ASSISTANT ACCOUNT DATA OPERATOR So the activity start in such a way that all the voucher and invoices of all the transaction first come the concerned mill to this department and then they enter it in order to maintain their records

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Fazal Cloth Mills Following are sections of Accounts Department:

1. Banking Section 2. Purchase Section 3. Inventory Control

FUNCTIONS OF ACCOUNTING DEPARTMENT:

Keeping Records. Cash Management Payment of Bills and Charges Cash Receipts. Stocktaking. Reporting to Top Management. Preparation of Bank Reconciliation statement. Depositing Income tax through Challan. Preparation of Monthly Trial Balance Preparation of Final Account. Stock Procurement Provide Information During Audit. Analysis Of Reports.

PARTIALLY COMPUTERIZED ACCOUNTING SYSTEM

The company has not computerized Accounting System. Transactions are recorded and posted in their respective head both by the Accounts Assistant and Computer Operators. Only the Computer operator or Accounts Assistant maintains some record. For example: yarn Stock register, Spindles worked Register is not maintained By the Computer Operator.

Similarly Records of Banks is only kept and maintained by the Computer operators. There is no complete computerized accounting Internship Report 8

Fazal Cloth Mills system. To minimize the error or omission risk record is also maintained manually. At the end of each month manual and computer record are compared to remove error or omission.

With the use of computer it is possible to make available required data promptly.

Various reports are prepared and presented to top management for analysis. This was not easy without the computer help.

Trial balance is prepared at the end of each month. Bank reconciliation statement is also prepared at the end of each

month. Stocktaking is done and production account is prepared at the

end of each month. The cashier first, makes forecasting and then draws cash from

the bank so that payments can be made on that particular day.

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Fazal Cloth Mills 4 th Week

VOUCHERS USED IN ACCOUNTING DEPARTMENT

Cash Payment voucher. Cash Receipt Voucher. Bank Payment Voucher. Bank Receipt Voucher. Journal Voucher.

Other Documents used is… Income tax Challan. D.D. T.T Slip. Bank Pay In slip.

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Fazal Cloth Mills BANKING SECTION:

This section is the very important part of the Accounts Department. This section handles all the functions that are related to the banks. Key functions of the section are as under:

Preparation of Bank reconciliation statement. Treatment of the bank’s debit and credit pieces of advice. Preparation of the duty, drawbacks statement and presenting to

the authorities. Preparation of D.D, T.T. Payment Orders. (PO) with reference

to payments to the parties. All the works related to the letter of credit. L/C. Re-imbursement and adjustment of the export finance.

5 th Week Internship Report 11

Fazal Cloth Mills

PURCHASE SECTION

Purchasing department deals with purchase of any thing that is demanded by included machines, parts, raw material, packing material, critical accessories, and lubricants etc

This department headed by a purchase Manager conducts all the purchases. . Whenever any particular department requires any part of material, its head makes demands of items to be required. This demands contains the information like, items description, quality, quantity and others. The departmental head and the C.O.O sign the demandHierarchy structure of the purchase department is as follows MANAGER PURCHASE

PURCHASE OFFICER

ASSISTANT PURCHASE OFFICERS

The purchase Manager has the list of preferable suppliers of the certain items. It selects the supplier from the list. Then he visits personally to the market and given the purchase order. The purchase officer has been provided a van, he himself or through some other sources makes the arrangement to bring the purchased material in the Mills premises.


Fazal Cloth Mills When any material is issued to the relevant section, store issued an S.I.V (Store Issued Voucher). This S.I.V is then sent to store purchase section of the accounts department. The section clerk then writes down the codes off each item on the S.I.V. from the Chart of Account each item is then valued from the store ledger on the basic of the moving average, and then expensed out in the Company’s expenses account according to the treatment required like.

Office expenses (general and Administration) Material issued to the production of the yarn is treated in the

C.G.S. (cost of goods sold). Electricity and other such of expenses are charged to the general

expenses. Printing and stationary used in the Accounts office is charged to

Profit and Loss A/c as expense.

At the end of the every month and the accounting year the stores valuation is conducted. For this the section counts the numbers of items from the store valued them on the basis of moving average.

GENERAL PURCHASE PROCEDURE

The responsibility of the purchase office is to purchase all type of material needed by the company. This department makes five types of purchases.

1-Cash purchases2-Credit purchases3-Import i.e. purchase through L/C4-Partially cash purchase5-Purchase by advance payment


Fazal Cloth Mills

PROCEDURE

Demand:

The purchases are made when different departments raise demand. These purchases are made when main store recommend the demand

PURCHASE OF GENERAL ITEMS:

Purchase department purchases the general things without asking any quotation from the parties rather it is directly purchased from the market.

PURCHASE OF SPECIAL ITEMS:

Asking quotations from different parties does this type of buying.On the arrival of quotations, these are compared according to the rates and quality of samples.

FINAL BUYING:

The purchase department purchases the desired items from the winning party and sends it to store department of mill. Here these items are issued whenever demanded by different departments. Even the head office also gets its desired goods and stationary and supplies from the store of the mill.

COTTON STOCK REGISTER:

In this section a cotton control account register is maintained. When purchase section makes a contract with the buyer, it seeks for that certain Purchase order form the ginning mills. When the cotton comes


Fazal Cloth Mills in the factory gate, the gate clerks makes contact with the commercial section and the Mills Manager who checks the cotton that whether the cotton is according to the requirements or not. If the answer is in O.K, then gate clerk is issued an I.G.P (inward gate pass) pass.



INVENTORY CONTROLLING Inventory controlling plays an important role in any manufacturing concern. There are two types of store in FCM, which are: -

1) The main Store2) Raw Material Store

1) The main store contains:

Spare parts. Electric goods. Packing material. Stationary Workshop

ii) While the raw material store contains:

Cotton Polyester. Acrylic Viscose.

The functions of store controlling can be further sub divided into two parts:-

1) Purchase for stores.2) Stores Issued

PROCEDURE OF STORE ISSUE


Fazal Cloth Mills In FCM, store department has issued an issue book to every department. The requisitioning department fills the store issue note and signs it from departmental heal and mills manager. The storekeeper issues the goods to the specified department and makes an entry in the issue file. Three copies of the store issue note are prepared. One copy is kept in the relevant department, the second copy is sent to the accounts department and the third copy is kept in the store record.

BOOK KEEPING

The following books are maintained at the FCM Ltd…-

1. General Journal2. Ledger3. Purchase Book4. Sales Book5. Supplier Book6. Customer Ledger7. Cash Book8. Bank Book

7 th Week

Accounting Procedures in the company:Internship Report 17

Fazal Cloth Mills

Following are the accounting principles and procedures that are followed in the Fazal Cloth Mills Ltd.

Going concern:

These accounts have been prepared on going concern basis The going concern basis is valid as:The company is able to arrange finance for its smooth operations.Repayment of liabilities is being made and arrangements for matured finance have been made and there are not defaults.

Accounting convention:

These accounts have been prepared under the historical cost convention.

Taxation:

Current:Provision for current taxation is based on taxable income at the current rates of taxation after taking into account admissible tax credits and rebates, if any. The company accounts for deferred taxation on all significant timing difference using liability method.

Fixed assets:Company’s owned:Operating fixed assets are stated at cost less accumulated depreciation except freehold land and capital work-in-progress which are stated at cost.

Depreciation is computed by applying reducing balance


Fazal Cloth Mills method whereby the cost of an asset is written off over its estimated useful life. Full year depreciation is charged on the assets acquired during the year while no depreciation is charged in the year of the disposal.

Maintenance and normal repairs are charged to income as incurred. Major renewals and improvements are capitalized and assets so replaced if any, are retired. Profit or loss on disposal of fixed assets is included in the current year’s income.

Leased assets:

The company accounts for plant and machinery under financial lease by recording the asset and related liability. The amount are determined on the basis of discounted value of total minimum lease payments and residual value of the asset at the end of lease period to be paid by the company.

Finance charges are allocated to accounting period in a manner so as to provide a constant periodic rate of charge on the out-standing liability. Depreciation is charged at the rates specified in the related note to write off the asset over its estimated use-full life keeping in view of the certainly of the ownership of the asset at the end of lease term.

Lease rentals payable on assets held under operating lease are charged to profit and loss account for the year.

Long Term Investment:

These are stated at cost, less provision for permanent diminution if any in the value of long term investment. Working of permanent diminution determined on the basis of difference market price prevailing during the year and Internship Report 19

Fazal Cloth Mills carrying value of the investment.

Inventories:

These are valued as follows:

Store and spares-In stock -At cost on FIFO basis.-In transit -At actual cost.Loose tools -At valuation.Work-in-process -At average cost of raw materials.Finished stock -At lower of average cost and net Molasses -At net realizable value

Trade debts:Debts considered irrecoverable are written off and provision is made for the amounts considered doubtful, if any.

Computerized AccountingSteps involved In Revenue Cycle

Customer request for G/S: Confirmation letter Fabric sale contract :

Sale Order (Letter send to mill)Internship Report 20

Fazal Cloth Mills Check availability Delivery

When the customer received desired goods then the bill department received the delivery notes and make the bill for those goods and services or request for the payments so sale transaction is occur.It make three copies 1st is send to sipping department for consumer invoice2nd to store as billing records3rd is sent to accounts department for collections

“Revenue cycle transactions and related documents”

Type of transactions DocumentsCredit sale Sales order, shipping notice,

sales invoice,Cash sale sales ticketCash receipt Remittance adviceSales return Credit memoInternship Report 21

Fazal Cloth Mills Sales allowance Credit memoBad debts write-off Memo and aged a/c receivable trail balance

REVENUE CYCLE REPORTS

Control Reports: control reports may disclose the transactions, or they may list changes made during file maintenance.

Registers: A register is a listing of all transactions of a certain type that were processed during a single processing period.

Special purpose Report: most systems require three special purpose accounting reports in the revenue cycle.

Kinds of Reports Prepared

Control Reports: control reports may disclose the transactions, or they may list changes made during file.Registers: A register is a listing of all transactions of a certain type that were processed during a single processing period.Its includes

1. cash receipts register


Fazal Cloth Mills 2. invoice register3. credit memo registerthese are used in internal control , audit review , and six setups of accounting cycle

“Special purpose report”

Customer statement: it is a list of all transactions in a customer’s account during a specified time period.

Aged a/c receivable trail balance: it is a list of all customers and the balances they owe at a specified date. When this trail balance is aged, each customer balance is categorized according to how long it has existed.

Remittance list : a remittance list enumerates all currency and checks received during one day.

These above kinds of reposts are used in the sales analysis reports the marketing management department used it

• To evaluate the profitability of products• The performances of sales personal• The effects of special advertising comparisons

“Revenue Cycle Accounting Records”

Computerized records : Accounting records kept by computerized processes are in the form of computer files and


Fazal Cloth Mills databases. In traditional data file system, revenue cycle applications use two master files and as many as six transactions files.

Two master files

1. Customer master files includes (date, customer address, credit limits, credit terms, and balances owed).2. Inventory master file which contains(perpetual inventory records. Records each items kept in inventory warehouse when merchandise is shipped from the quantity on hand in the inventory master files.“Applications in the revenue cycle routinely update the customer master file record.” This file has one record for each credit customer.

Contents of Customer Master Record:• Customer number• Customer name • Billing-address • Shipping address • Credit-limit• credit-terms• Statement date• Statement-balance• Current-balance

Order Entry application:


Fazal Cloth Mills It’s purpose is to record a customer’s request for goods or services. Procedure for credit approval usually require the credit department to establish a credit limit for each customer.

Billing applicationThe purpose of billing application are to prepare sales invoices for merchandise that has been shipped and to record the sale in the appropriate accounts. This application also produces credit memos to document sales returns and sales allowances.

File MaintenanceA computer application system adds or deletes a master record or makes changes to the reference data. In the revenue cycle, maintenance is necessary when the organization obtains a new customer or loses an old customer, or when the name, address, credit limits, or credit terms of an existing customer change.



Administration DepartmentThis is very important department of the organization as the name shows; this department has to administer all the operations of the organization. This is headed by the G.M (General Manager) of the company. Sections of this department are divided into offices as follow:

Labour Office Security Guard Office Gate Office Time Office

Labor OfficeAs required by the labor department of the government of Pakistan, this office has been set up to deal with all the matters that are related with labour. The dept. is headed by the labor officer. He is responsible to resolve all the disputes, conflicts, misunderstandings and any other kind of matter which may arise from time to time b/w the labor and the immediate supervisor or with any other person in the organization.

It is the duty of the labor officer to inform the legal requirements concerning the labor and company affairs. It is also the duty of the labour officer to satisfy himself regarding payment of bonus, gratuity, and other benefits to labor and to keep their morale and motivational level high. It is also a requirement to be a successful labor office that he should keep his knowledge up to date regarding the rules and regulations of the labor department.


Fazal Cloth Mills Security Guard Office

The main objectives of the security office are to safe handling of the goods from/to the mill premises. For the achievement of such objective a team of security guards has been employed by the Company. All the keys relating to the mills office, labor colony, (quarters) are lying into the responsibility of the security officer.

* No out side visitor can come into the Mills premises without the permission of the security guards.

* Whenever any visitor wants to enter into the mills, security guard firstly contact with the authority in the Mills to grant the permission to enter into the Mills premises.

* Security guards can check each and every person before coming in or going out of the Company gate for the security purposes.

* They see and check the OUT WARD GOING PASS of the certain things when these ought to bring out of the Mills premises.

* They have certain uniform of blue shirt and light brown pent.

They are the guardian of the every thing of the Company.

Gate Office


Fazal Cloth Mills This office has been made to keep the record of each and every thing coming into and going out of the Mills gate.

For this purpose gate office clerk maintains two types of registers called:

1- Outward going pass register

2- Inward going pass register.

When every thing including raw material, stores supplies, or any other thing comes into the Mills premises a document named as I.G.P is made in which information like date of supplies, description, quantity of the material and any other remarks are written. In the same way, D.G.P is prepared for out going things etc.

TIME OFFICE

This office keeps and maintains the time record of all the workers on time cards and pay register for the final costing of the workers salaries.It keeps the attendance records, which is than used to calculate the salary to be paid to the workers on monthly basis.It keeps the records of the overtime, leaves, number of days worked of all the workers and than calculate their overtime on the basis of the basic salary of each worker.


Fazal Cloth Mills

Financial AnalysisFinancial Analysis:Financial position of the company in the previous six years:

Years Other

Income

Financial Charges

Workers’

Participations

Net profit

before

Taxes

Provision

for

Taxes

Net profit

after

Taxes

200820092010201120122013

271,793310,010509,7231,620,6211,831,269670,630

4538076045,555,66950,887,29743,615,19339,007,62351,552,054

-259,108883,693993,0394,602,3642,720,190

-1,515,9484,872,65916,701,03318,730,92787,361,34751,124,027

-317,000-2,028,64516,734,42912,264,702

-1,515,9845,189,65916,701,03316,702,28270,626,91838,859,325

Years Current ratio

Quick ratio

Debt Equity ratio

Total debt Asset ratio

EPS

20082009

2010201120122013

0.510.640.260.821.051.06

0.510.620.720.430.680.57

0.820.761.051.220.720.78

0.420.430.510.550.420.46

-2.78-2.7811.8

MY LEAARNING ARE AS FOLLOWSInternship Report 29

Fazal Cloth Mills

Objectives of Learning:

Following are the basic objectives of my learning at Fazal Cloth Mills:

1. To complete a requirement of M.Com Degree Program.

2. To work with an esteemed organization.

3. To get practical experience.

Following are some of the work that I learnt:

How the working is being done.

How correspondence has to against different orders and different customers.

The important matter is to understand the perception from customer and his expectation because it differs from customer to customer and to order.

Preparation of different sorts of reports

Purchase of yarn and its recording in the books of accounts

Payment of petty cash expenses and their recording.

PRACTICAL WORK: Internship Report 30

Fazal Cloth Mills The team at Fazal cloth is very co-operative they provided me the following opportunities:

I made entries in books of accounts They taught me the format of their Bank Reconciliation and showed

me bank reconciliation. They showed me their monthly Trial Balance (Journal Voucher) . They briefed me about Bank Accounts.

WHATS AS AN INTERNEE LEARNT?


Fazal Cloth Mills Working as an internee at Fazal Cloth Mills was a great experience for

me which not only provided me an opportunity to observe difference

between theory and practice. This experience also broadened my

vision and confidence.

As an internee I spent good time in learning and was rewarded for my

best efforts, learnt to deal with different situations, had experience of

organization’s working environment which affects an employee

performance and attitude towards work, had good time in learning.

Confidence, on time decision making, consistency, hard work, team

work, seeking success out of dark, innovation, creativity, organizational

survival and customer handling techniques are the key learning’s out

of my job And I would like to say that it will be one of my best skill that

would remain with me and help me in the coming life which offer many

challenges.

Suggestions


Fazal Cloth Mills There is no doubt Fazal Cloth Mills is very organized textile mills. Still there is always room for improvements and following are some measures I 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) Company should have separate organized marketing department.

iii) Company should introduce products with its own brand name.

iv) Company should capture Middle East markets.

v) Company should start its own “Apparel Stores Chain”.

vi) Company should try to reduce workload.

vii) Promotions, increments and other benefits should be performance based in the company.

viii) Company should introduce fork lifters for indoor logistics.


Fazal Cloth Mills ix) The company should build a dispensary for workers

in the premises.

x) Company shouldn’t depend upon large customers it should also try to capture small ones.

xi) Company should try to develop over all thinking in employees, not only departmental thinking.

xii) Company should try to create interdepartmental coordination and harmony.


Fazal Cloth Mills

Annexure 1

Internship Report

Chief Executive

Director

Senior Manager Import

Assistant

35

Fazal Cloth Mills Annexure 1

Internship Report

CHIEF FINANCIAL OFFICER

MANAGER FINANCE ASST. MANAGER FINANCE FINANCE OFFICER

36