Fazal Cloth Mills

1st Week
FAZAL CLOTH MILLS LTD

Corporate Information
BOARD OF DIRECTORS:
SH. NASEEM AHMAD
Chairman/Chief Executive

Mr. MUHAMMAD AFZAL ULLAF SIDDIQUI

Director (NIT)
SH. SHAUKAT MASUD
Director
SH. AMIR NASEEM
Director
MR. REHMAN NASEEM
Director
MR. FAZAL AHMAD SHEIKH
Director
MRS. FARRUKH MUKHTAR
Director

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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:
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Fazal Cloth Mills

FAZAL CLOTH MILLS LIMITED:

VANUE
MILLS:

FAZAL NAGAR, JHANG ROAD, MUZAFFAR GARH

HEAD OFFICE:

ROOM NO, 102-103, INTERNATIONAL PLAZA,

BOHRA STREET, MULTAN CANTT.

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

are

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.

GOALS
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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

2nd Week

MY Learning and Introduction to

various Departments of FAZAL CLOTH
MILLS LTD.
Following are the various departments at FCL:

1. Human Resources Department

2. Purchase & Sale Department
3. Import Department
4. Export Department
5. Information Technology Department
6. Shares Department
7. Accounting/Finance Department

I have the chance to spare some time in Accounting Department.

I shall share my experience in these departments as follows:

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Fazal Cloth Mills

3rd 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.

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Fazal Cloth Mills

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

4th 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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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 banks 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.

5th Week
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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
demand
Hierarchy 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.

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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 Companys 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 purchases
2-Credit purchases
3-Import i.e. purchase through L/C
4-Partially cash purchase
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5-Purchase by advance payment

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:

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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
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.

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Fazal Cloth Mills

6th Week
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 Store

2) 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

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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.
2.
3.
4.
5.
6.
7.
8.

General Journal
Ledger
Purchase Book
Sales Book
Supplier Book
Customer Ledger
Cash Book
Bank Book

7th Week

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Accounting Procedures in the

company:
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:
Companys owned:
Operating fixed assets are stated at cost less accumulated
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progress which are stated at cost.
Depreciation is computed by applying reducing balance
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 years
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:

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Fazal Cloth Mills

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
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 Accounting
Steps involved In Revenue Cycle
Customer request for G/S:
Confirmation letter
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Fabric sale contract :

Sale Order (Letter send to mill)

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 invoice
2nd to store as billing records
3rd is sent to accounts department for collections

Revenue cycle transactions

related documents
Type of transactions
Credit sale
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and

Documents
Sales order, shipping notice,
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sales invoice,
Cash sale

sales ticket

Cash receipt

Remittance advice

Sales return

Credit memo

Sales allowance

Credit memo

Bad debts write-off

trail

Memo and aged a/c receivable

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.
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Fazal Cloth Mills

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

2. invoice register
3. credit memo register
these 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
customers 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
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Revenue Cycle Accounting Records

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

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Customer number
Customer name
Billing-address
Shipping address
Credit-limit
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credit-terms
Statement date
Statement-balance
Current-balance

Order Entry application:

Its purpose is to record a customers request for goods or
services. Procedure for credit approval usually require the credit
department to establish a credit limit for each customer.

Billing application
The 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 Maintenance
A 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.

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8th Week

Administration Department
This 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 Office
As 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.

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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
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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.

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

Years

Other
Income

Financial
Charges

Workers
Participations

Net profit
before

Provision
for

after

Taxes

Taxes

Taxes

-1,515,948
4,872,659
16,701,033
18,730,927
87,361,347
51,124,027

317,000
2,028,645
16,734,429
12,264,702

-1,515,984
5,189,659
16,701,033
16,702,282
70,626,918
38,859,325

2008
2009
2010
2011
2012
2013

271,793
310,010
509,723
1,620,621
1,831,269
670,630

Years

Current
ratio

Quick
ratio

Debt
Equity
ratio

Total debt Asset

ratio

EPS

2008

0.51

0.51

0.82

0.42

2009

0.64

0.62

0.76

0.43

2.78

2010

0.26

0.72

1.05

0.51

2011

0.82

0.43

1.22

0.55

2.78

2012

1.05

0.68

0.72

0.42

11.8

2013

1.06

0.57

0.78

0.46

45380760
45,555,669
50,887,297
43,615,193
39,007,623
51,552,054

259,108
883,693
993,039
4,602,364
2,720,190

Net profit

MY LEAARNING ARE AS FOLLOWS

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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:
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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?

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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
organizations

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

learnings 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
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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.
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ix)

The company should build a dispensary for workers

in the premises.

x)

Company shouldnt 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.

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Annexure 1

ChiefExecutive
Executive
Chief

Director
Director
SeniorManager
ManagerImport
Import
Senior

Assistant
Assistant

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Annexure 1

CHIEF FINANCIAL
OFFICER

MANAGER FINANCE

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ASST. MANAGER
FINANCE

FINANCE OFFICER

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