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Entrepreneurship project

Outline
 Start

 Expansion of business

 Current position

 Challenges

 4 plans

 Investment major detailes

 Present as an entrepreneurial organization


 Start

Nishat Group

The history of Nishat Group dates back to 1951, when Mian Muhammad
Yahya founded Nishat Mills Limited.

This man of vision, courage and integrity, Mian Mohammad Yahya was
born in 1918 in Chiniot. In 1947 when he was running leather business in
Calcutta, he witnessed by the momentous changes that swept the Indo-Pak
subcontinent.

This is story of success through sheer hard work and an undaunted spirit of
enterprise. Beginning with a cotton export house, he soon branched out in to
ginning, cotton and jute textiles, chemicals and insurance. He was elected
Chairman of all Pakistan Textile Mills Association. He died in 1969, at the
age of 51 having achieved so much in so short time.
*The Nishat Group* Mian Muhammad Mansha Yaha is the captain of this
splendid ship having around 30 companies on board. Mansha, who owns
the Muslim Commercial Bank as well, is now setting up a billion rupee ($
17 m) paper sack project too. He is one of the richest Pakistanis around.
Nishat Group was country's 15th richest family in 1970, 6th in 1990 and
Number 1 in 1997. Mansha is on the board of nearly 50 companies. Chinioti
by clan, Mansha is married to Yousaf Saigol's daughter.

He is deemed to have made investments in many bourses, currency and


metal exchanges both within and outside Pakistan. He has had his share of
luck on many occasions in life and has recently been awarded Pakistan's
highest civil award by President Musharraf. He could have bought the
United Bank too, but then who doesn't have adversaries. Nishat Group of
comprises of textiles, cement, leasing, insurance and management
companies. If Mansha was bitten by Bhutto's nationalization stint of 1970,
his friends think he was compensated by Nawaz Sharif's denationalization
programme to a very good effect. There is no stopping Mansha and he is still
on the move!

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.

Nishat has grown from a cotton export house into the premier business
group of Pakistan with 5 listed companies, concentrating on 4 core
businesses; Textiles, Cement, Banking and Power Generation. Today, Nishat
is considered to be at par with multinationals operating locally in terms of its
quality products and management skills.

• Annual turnover 17 billion Rupees


• 14 Billion from textiles
• Earn foreign exchange US $ 236 million
• Taxes and levi of 2,080 million Rupees annually

Mian Muhammad Mansha


“I have had many lucky breaks. Lady Luck has always been on my side.
New projects just crop up before I stop doing the old ones" (Mian
Muhammad Mansha)

Mian Muhammad Mansha – a name signifying continuous struggle, hard


work and a faith so very firm in his Allah that nothing on the face of this
earth ever stopped him from attaining the goodies that life had in store for
him and he did attain the giddy heights of glory, for sure.

A father of three sons, Mian Muhammad Mansha stands out the richest man
of Pakistan with a fortune worth $ 2.5 billion. He is also the biggest single
exporter in Pakistan. He hails from Chiniot, Punjab. ‘Chiniotis’ are one of
the leading industrialists of Pakistan.

Mian Mohammad Mansha is the Chairman of “Nishat Group” - the biggest


industrial and financial conglomerate of Pakistan. This group was founded in
1948 by Mansha's father Mian Mohammad and his three brothers. It was
named after Nishat Haroon, the 3 year old grandson of Mian Mohammad
Yaqub. Nishat Haroon was born to Mian Farooq who was married to the
daughter of Mian Fazal Rehman of United Textile Mills, Multan. Windmills
of God work in strange ways. In 1948 when Mansha's father Mian
Mohammad Yahya and his three brothers incorporated a partnership
concern, it was called Nishat Corporation after Nishat Haroon, the three year
old grandson of Mian Mohammad Yaqub, eldest of the four brothers. The
child who gave his name to the group has disappeared in thin air and Mian
Mohammad Mansha, Chairman Nishat Group is today on top of Pakistan's
corporate world, boastfully accustomed to buying his casual outfit from
Harbe Frog on Bond Street, shoes inevitably from Gucci, cardigans and
overcoats from Burberrys’. Nishat Group had several industrial units in East
Pakistan, which they lost in 1970. This group now owns ‘Muslim
Commercial Bank’, five cement factories and numerous other industries.

Nishat currently comprises of 21 companies including 13 listed companies


with manufacturing assets of nearly 27 billion and three of Mansha's close
relatives, Saigols, Jehangir Elahi and S M Saleem of United Bank among the
top 45 industrial families in Pakistan.

Mian Mansha has catapulted to the top of Pakistan's richest families from the
15th position in 1970 and 6th in 1990 because of combination of factors like
his marriage to Naz, daughter of Yusuf Saigol. Like several other Chinioti
businessmen, Mian Yahya had a leather business in Calcutta (India) before
moving to Pakistan in 1947 and it was perhaps in Calcutta that he developed
friendship with Yusuf Saigol that led to the marriage of Mansha and Naz
Saigol sometimes around 1970.

The general perception is that MCB was privatized to Mian Mansha and his
associates because of his friendship with Nawaz Sharif. However, Mian
Mansha feels that, investing in the shares of Muslim Commercial Bank
(MCB) has been one of his biggest business slip ups. The privatization of
MCB remains a mystery, till to date. Nawaz Sharif came into power on
November 6, 1990, invited bids for the privatization of Muslim Commercial
Bank (MCB) on December 15, 1990 and announced its privatization to
successful bidder: Messrs Abdullah and others on January 9, 1991.

The stories from the past suggest that five bids were received for Muslim
Commercail Bank with ‘Tawakkals’ and ‘Adamjee’, being the highest and
second highest bidders. Adamjee who formed a joint venture with Yunus
Brothers, perhaps the biggest Export Houses in Pakistan, had incorporated
Muslim Commercial Bank in 1949. As previous owner, they had the first
right of purchase but, third lowest bid by Messers Abdullah and others, a
consortium comprising of 12 leading industrialists, mostly from Punjab and
headed by Mian Mohammad Mansha, was asked to match the highest bid
and declared winner. The consortium which called itself the National Group
comprised the following leading industrial groups and families:
 Expansion of business

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 business namely

Textiles

Power Generation

Banking

Cement

TEXTILES
The textile business is further subdivided into 2-textile division:

Nishat Faislabad

Nishat Chunian

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 plants has
increased the existing capacity of 242,000 spindles, 740 looms and dyeing
and finishing capacity of 5 million meters. The largest exporters of textile
products from Pakistan, for more then decade!

Nishat Mills Limited, the flagship company of the group was established in
1951. Its annual turnover for the year ------------ is over Rs.17 billion (US$
283 million). NML with the production facility of 270,000 spindles, 740
looms and dyeing & printing capacity of 7 million meters (7.65 million
yards) makes Nishat the largest composite textile set up in Pakistan.

POWER GENERATION
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.

Nishat Power Limited (NPL) is a Pakistan-based company. The Company is


focussed on building and operating a power generation plant for generation,
distribution, sale and supply of electricity to National Transmission and
Dispatch Company Limited (NTDCL). The Company was established to set-
up a power generation project having a gross generation capacity of 200
megawatts and a net generation capacity of 195.26 megawatts. The plant is
located in the vicinity of District Kasur near Lahore, Pakistan. NPL has
entered into a 25-years power purchase agreement with the Water And
Power Development Authority (WAPDA) through NTDCL, the sole
purchaser of power generated by NPL. The project is a 200 megawatts
residual furnace oil (RFO) fired reciprocating engine technology combined
cycle power plant. Through Nishat Mills Limited, Nishat Group of
Companies holds 63.2% of Nishat Power Limited.
CEMENT

D.G. Khan Cement Company

D.G. Khan Cement Company Limited (DGKCC), a unit of Nishat group, is


the largest cement-manufacturing unit in Pakistan with a production capacity
of 5,500 tons clinker per day. It has a countrywide distribution network and
its products are preferred on projects of national repute both locally and
internationally due to the unparallel and consistent quality. It is list on all the
Stock Exchanges of Pakistan.

DGKCC was established under the management control of State Cement


Corporation of Pakistan Limited (SCCP) in 1978. DGKCC started its
commercial production in April 1986 with 2000 tons per day (TPD) clinker
based on dry process technology. Plant & Machinery was supplied by UBE
Industries of Japan.

Acquisition of DGKCC by Nishat Group


Nishat Group acquired DGKCC in 1992 under the privatization initiative of
the government. Starting from the privatization, the focus of the management
has been on increasing capacity as well as utilization level of the plant. The
company undertook the optimization by raising the capacity immediately
after the privatization by 200tpd to 2200tpd in 1993.
Capacity Addition
To meet the increasing demand and to capitalize on its geographic location,
the management further expanded the capacity by adding another production
line with a capacity of 3,300 tons per day in year 1998. Design of the new
plant is based on latest dry process technology, energy efficient and
environmental protection from particulate pollution according to the
international standards. The plant and machinery was supplied by M/s F.L.
Smidth of Denmark. As a result, DGKCC emerged as the largest cement
production plant in Pakistan with annual production capacity of 1,650,000 M
tons of clinker (1,732,000 M.Tons Cement) constituting about 10% share of
the total cement production capacity of the country. The optimization plan is
still underway to increase the total capacity of the two units to 6700 TPD by
mid of 2005 from 5500 TPD at present.

Expansion -Khairpur Project


Furthermore, the Group is also setting up a new cement production line of
6,700 TPD clinker near Kalar Kahar, Distt. Chakwal, the single largest
production line in the country. First of its kind in cement industry of
Pakistan, the new plant will have two strings of pre-heater towers, the
advantage of twin strings lies in the operational flexibility whereby
production may be adjusted according to market conditions. The project will
be equipped with two vertical cement grinding mills. The cement grinding
mills are first vertical Mills in Pakistan. The new plant would not only
increase the capacity but would also provide proximity to the untapped
market of Northern Punjab and NWFP besides making it more convenient to
export to Afghanistan from northern borders.

Power Generation
For continuous and smooth operations of the plant uninterrupted power
supply is very crucial. The company has its own power generation plant
along with WAPDA supply. The installed generation capacity is 23.84 MW.
BANK

In 1991, Nishat Group ventured into the financial sector through the
acquisition of Muslim commercial Bank. MCB 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.

Muslim Commercial Bank (MCB) is one of the leading banks with a deposit
base of about Rs.230 billion (US$ 3.8 billion). MCB with more than 1200
branches country wide is the largest private bank of Pakistan also operating
Internationally. Since its acquisition, the management has improved its
financial performance and now it is one of the most profitable banks of the
nation.
MCB is also the first Pakistani bank to be enlisted at London Stock
Exchange in October 2006 after attracting US $700 million worth of demand
for its US $ 150 million GDR issue.

Insurance

Adamjee Insurance Company Limited (AICL) was incorporated as a


Public Limited Company on September 28, 1960 and is listed on all three
stock exchanges of Pakistan. The Company is also registered with the
Central Depository Company of Pakistan Limited (CDC) and is involved in
the business of general insurance.

The Company commenced operations with a Paid-up Capital of Rs. 2.5


million, which has grown phenomenally in the past 5 decades. As of 2008
the Paid-up Capital of the Company is Rs. 1.022 billion, which is the highest
amongst all the General Insurance companies in Pakistan. AICL enjoys a
competitive edge in the insurance industry due to its strong assetbase, paid-
up capital, substantial reserves, balanced portfolio mix and steady growth in
gross premium.

   4 plans

2.4Strategy Followed

The strategy followed currently is Differentiation Strategy

A differentiation strategy calls for the development of a product or


service that offers unique attributes that are valued by customers and that
customers perceive to be better than or different from the products of the
competition. The value added by the uniqueness of the product may allow
the firm to charge a premium price for it. The firm hopes that the higher
price will more than cover the extra costs incurred in offering the unique
product. Because of the product's unique attributes, if suppliers increase their
prices the firm may be able to pass along the costs to its customers who
cannot find substitute products easily.

The benefit of this strategy for Nishat mills are

• Access to leading scientific research.


• Highly skilled and creative product development team.
• Strong sales team with the ability to successfully communicate the
perceived strengths of the product.
• Corporate reputation for quality and innovation.

2.5 Human Resources and Corporation


culture
� Lowest Employee Turnover.
� Seeks to fulfill the highest practical degree in
administering its welfare and compensation program.
� Apprenticeship and other training schemes at all levels.
It is our company policy to adopt measures to achieve the following
objectives:
� To obtain, manage, develop, motivate and gain the
commitment of company's key resource- the people
who work in and for it.
� To develop a positive corporate culture to promote
commitment to excellence and quality through out
the company.
� To identify training needs and provide required training
to all categories of employees.
� To make best use of the skills and abilities of all those
employed in the organization.
� To ensure that the company meets its social and legal
responsibilities towards its employees, with particular
regard to the conditions of employment, quality of
working life provided for them and the need to
promote environment, occupational health and safety.
� To ensure industrial peace and harmony through
excellent employee relations to achieve optimum level of
employee, productivity and to contribute towards
company's aimed quality standards.
Key resources to gain competitive

advantage

Their resources has been identified and classified in terms of strength and
weaknesses.

• Their corporate capabilities are much more but those which gives it a
competitive advantage over competitor are
• High quality product and Latest mechanized machinery.

The strategy they are using is differentiation and product development


strategy by taking full advantage of its key resources

3. Strategies Formulated
The strategy formulated by Nishat mills are focus strategy ,First they
were focusing on a narrow segment of cotton only but now they are not only
focusing but also looking to broader segment and pursuing a differentiation
strategy to differentiate their selves from other competitors.

3.1Industry structure
The industry in which nishatll mills is operating is consolidated
industry in which there are few giants companies like sitara ,Chenab etcc.
The tactic they use as an offensive tactic is Frontal Assault which
mean head to head with its competitors because they have superior resources
and willingness to persevere.

3.2Corporate Strategies followed


The strategies usually that nishat mills follow are:

Growth strategies

• Vertical integration
• Horizontal integration
• Backward integration

In growth strategies the have been growing Backward by moving on value


chain and becoming supplier their selves.

Horizontal integration by Nishat mills is in such a way that they are


expanding their product line and as well as distributing to more geographical
locations.

Being involved in a forward integration they are their selves the distributor
of their goods manufactured.

Mostly they are involved in Taper integration which the firm produces less
then half of its own requirement and buys the rest from outside suppliers

In recession times the strategies followed by Nishat mills


were:
3.3Stability Strategies
The strategy in which the company stops growing and concentrates or
waits for any change in environment.

• Pause/proceed with caution

A company initiate a change only if there is a change in the


external environment of company or industry.

So nishat mills follows this stratregy in sense that they innovate there
offering only if their competitor intend to do so.

• No change strategy

A company doesn’t change its strategy because of the following


reason.

The company is either in ok position.

They don’t have many resources.

There is no hyper competition.

The strategy they are following is profitable.

• Profit strategy

This strategy is followed by Nishat mills when there firm sale is not
normal or you can say declining so what they do is that they try to minimize
there cost like advertisingcost,Expenses,R&Dexpenses,But mostly they
reduce there expenses for shorter period of time because in long run they
may suffer losses.
3.4 Strategies Adopted for

 MARKETING
 HUMAN RESOURCE
 FINACIAL

Marketing Strategy deals with pricing ,Promotion and sistrin=buting of


goods.The strategies are

MARKET DEVELOPMENT

Product development

Market penetration

Market Skimming

These are al strategies of Marketing but the strategies on which nishat mills
is emphasizing is Product development and Market development by pursuing
these strategies they expand there product line and as well as products to
capture the more and more market

Challenges

SWOT Analysis
Strengths:
 The major strength of Nishat is its location. The plant is
situated in Faisalabad which is renowned in the world for
textile production.
 Nishat is using the best machinery available in the
market in its all the
Department, which helps Nishat to produce the world class
products to meet the needs of the customers.
 As Nishat is a part of large industrial group, so it has no
need to search out the raw materials from the market
even during the peak season. For example, they can produce
high quality yarn.
 Nishat management provides an excellent working
environment to its
Employees, which motivate them to work more effectively
and efficiently.
 Nishat has strength to produce the quality products at
the lowest possible prices as compare to their competitors.
 Nishat is an ISO certified company, which produce a
sense of satisfaction to its customers.Nishat also follow the
ISO Standards.
 Quality control department equipped with most modern
machines is also a big
Strength of Nishat, which ensures the quality at every stage
of production. As a result the wastage is very minimal as
compare to competitors.
 Adequate financial resources are also strength of
Nishat. Nishat has the assets of worth about us4.5$ Billion.
 Nishat has highly educated and competent
management and skilled labour which contributed to the
success of Nishat.
 Nishat focuses on the chain stores and other big
customers rather than focusing on the small
customers.Nishat also focus on the long lasting relations with
the customers. For these reasons its customers are very
loyal.
 Nishat has a good reputation and image in the local as
well as in the
International market, which is also a major strength of
Nishat.

Weaknesses
 NML is purely following the centralized management
style, due to which management has a burden of
decisions, which ultimately takes too much time.
 As most of the machinery is imported from other
countries therefore sometimes few spare parts are not
available in the market which creates problems.
 Although NML pays very high salaries to the top
management, it is not offering attractive salaries to the
other employees of the organization. Therefore the moral
of the employees is decreasing.
 Due to low salaries the rate of turnout is very high
which hinders the growth of the organization.
 The rate of overtime payment to the employees is not
comparable with market. NML is paying at the normal
wage rate for overtime while the overtime rate is always
high in all the organizations.
 Due to centralized management there is n o delegation
of authority in NML which also hinder motivation of the
employees.
 Less chances of promotion are available for the
employees in NML, which is causing dissatisfaction.

OPPORTUNITIES:
 When the WTO will be implemented, there would be a
great opportunity of increase in exports if NMLl follow the
international standards and provide high quality products to
the customers at competitive prices
 NML should try to implement the latest
ISOstandardsincludingISO14000 series, which will improve
their image and customer satisfaction in the local market as
well as in international market.
 NML can explore the new markets for exports by giving
the different incentives to its employees in the export
department, which will improve its profitability.
 There is a lot of potential in the local market for NiCad’s
products because people believe that Nishat products are
always of high quality. So NML should also focus on local
market.
 Nishat can introduce its garments in the local market by
using the same
Stitching unit. This is also a great opportunity.

Threats:
 WTO implementation is a good opportunity but it is also
a big threat at the same time it STI fails to provide good
quality and competitive prices to its customers.
 There is no consistency in the government policies
regarding textile sector.
 Incidents like September 11, 2001 attacks would also be
a major threat.
 Political conditions of the country affect both NML and
its customers as well. On one hand it makes reluctant to the management to
make new investments.
On other hand its customers also hesitate before signing
new contacts.
 Increasing rate of electricity and GST are also big
threats.
 Currency fluctuations and exchange rates can also
create problems for NML.
 Government is focusing on the industrialization and is
giving different
Incentives to the investors. It is also a big threat because the
number of
Competitors will increase.
 More and more competitors (National and International)
are entering in the same markets and offering attractive
pric4es to the customer

PEST Analysis

Political Instability.
The political situation of Pakistan is not satisfactory. Due to the rapid
change in the Government every government sets its own new trade policies.

Govt. should apply sustainable policies for the beneficial of the exporters as
well as the investors.

Economic situation:

The economic condition of Pakistan can also affect the foreign investors
increasing inflation rate make the cost of production high and thus reduce
the profit margin of the investor.

Social situation:

The change in the lifestyle of the people affects the growing demand of the
NTM products. The change in the lifestyle and needs in different
demographics also affect the demand of the customers.

Due to all these changes NTM is performing excellent for the excellence
organization as well as for the customer.

Technological factor:
Technological advancement in all the sectors of the country has changed the
entire socio-economic environment. Especially in the textile sector there is a
lot of technological development.

NTM Excellent computerized machines and devices are installed in the


NTM \has made extension in its present setup by installation of well
advanced technology imported from Japan China and France.
Porter 5 forces model
Michael porter an authority on competitive advantage contends that a
corporation is most concerned with the intensity of competition with in its
industry. The forces which are discussed by porter are;
 Threat of new Entrants
 Rivalry among existing firms
 Bargaining power of suppliers
 Bargaining power of Buyers
 Threat of substitute products
Explaining each of the force in context on Nishat mills.
 Threat of new Entrants
For nishat mills there has been a threat of entering new firms, So to
defend themselves from this threat they gain economies of scale
And the other barriers which nishat mills create for entrants are;
Product differentiation
Switching cost
 Rivalry among existing firms
Another threat for nishat mills is the hyper competition in
industry.
The firms currently in the industry are also the threat for nishat mills
because their actions affect the profitability of the nishat mills.
Suppose if one competitor reduce the prices so nishat will also have
to reduce whuch in result will effect the profitability of company.

 Bargaining power of suppliers


The bargaining power of supplier also effect Nishat mills
profitability in such a way that if supplier increase their prices of raw
material so definitely the cost will go up as well .

 Bargaining power of Buyers


The bargaining power of buyers is also a threat for a firm
operating in industry. The buyer effect the profitability ion such away
that he wants discounts and other services which might lower the
margin of profit for the company.
 Threat of substitute products
The substitute product means any product which satisfies the
same needs. So substitute products in market are also a major threat
for Nishat mills.


 Current position

Textile

• Flagship Company established in 1951


• Most Modern, Biggest Composite unit of Pakistan
• Professional and Client Oriented Marketing
• Green Company
• ISO 9001 and IKO-TEX100 Certified
• SA 8000 Certification currently in process

NML today has 173,000 spindles, 284 Sulzer shuttle-less looms and 244
TSUDAKOMA air jet looms. NML also has the most modern textile-
processing unit, 2 stitching units and Power Generating plant with a capacity
of 33.6 MW. NML total export for the year 2000 was Rs. 9.1 billion (US$
143 million). Due to the application of prudent management policies,
consolidation of operations, a strong balance sheet and an effective
marketing strategy, this trend is expected to continue in the years to come.
The Company's production facilities comprise spinning, weaving,
processing, stitching and power generation.

Bank

MCB is one of the leading banks of Pakistan with a deposit base of Rs. 368
Billion and total assets over Rs.500 Billion. Incorporated in 1947, MCB
soon earned the reputation of a solid and conservative financial institution
managed by expatriate executives. In 1974, MCB was nationalized along
with all other private sector banks.

The Bank has a customer base of approximately 4 million, a nationwide


distribution network of over 1,000 branches and over 450 ATMs in the
market.

During the last fifteen years, the Bank has concentrated on growth through
improving service quality, investment in technology and people, utilizing its
extensive branch network, developing a large and stable deposit base.

Cement

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