Dawood lawrenepur textile ltd

University of Wah

Department of Management Sciences

Submitted by

Sobia Nawaz Maha Hassan Amna Rashid Muhammad Zain

June 15th 2011

Organizational Analysis of Dawood Lawrencepur Textile Mills

Submitted to

Ms Afshan Sultana

Semester Project of BBA-VI

Topic

"Organization Analysis"

Organization

Dawood Lawrencepur Textile ltd.

BY

Sobia Nawaz

Maha Hassan

Amna Rashid

Muhammad Zain

Approved: __________________

Ms. Afshan Sultana

(Course Instructor)

Marks Obtained: ________

Comments: ____________________

____________________

Acknowledgement

All our praises for ALLAH

THE ALMIGHTY, who

bestowed potentially upon us to

accomplish this present report

successfully. With all our

sincerity, we express. Our

gratitude to the HOLY

PROPHET (P.B.U.H) and his

fellows, who are the source of enlighten guidance and wisdom for the

humanity. We have deep sense of gratitude to our honorable teacher

Ms. Afshan Sultana for her generous guidance for this report. We

would also like to appreciate the praise-worthy efforts and the

assistance of some people who have kindly helped us out in the

completion of this report. They definitely include our parents,

teachers and friends. We want to thank Mr. Asif Comboh- (Manger

IR & Admin), Ms. Sobia-(HR Executive) and Mr. Tahir for their

support and guidance so that we are able to complete such project.

Abstract

Students of BBA 6th

semester ─UW carried out a visit to Dawood Lawrencepur

Texile Mills, Lawrencepur, to learn its business strategies, functions, local and

international operations etc. This visit was being done as a part of the project of BBA

course. The Project covered all steps from planning to final operations of

Management and Marketing.

The introduction covers the key features, company profile mission &

vision. In Pakistan all smart organizations are trying to understand and

implement the concept of modern business practices. The practices and

strategies should implement in their true sense in the organization in order to

achieve overall effectiveness and efficiency. This final report includes an

introduction, the finding, Analysis, learning and conclusions. In this report we

discuss the core functions performed at Dawood Lawrencepur, strategies,

marketing mix and SWOT analysis etc.

The success of Dawood Lawrencepur has been based on replicable and

state of the art technologies. The key Strength of Dawood Lawrencepur is their

well-recognized Brand, innovation and luxurious services, along with a highly

motivated management and loyal team, and excellent course material hold and

control and implementing the rules and regulations. It has clear and predefined

policies that fulfill the legal requirements.

About the Theme

We are streamlining our textile business to meet growing customer

needs while maintaining a profitable profile. We are focused on a single

agenda, to build our Lawrencepur brand driven by strong sales and

wide scale presence in the market.

Table of Contents

Company History

Mission and Vision Statements

Globalization

Products

Technology

SWOT Analysis

PEST Analysis

Demand and Supply

Future Prospects

Statement of Ethics and Business Practices

Investments

Trade

Conclusion

COMPANY HISTORY:

Business Description

Dawood Lawrencepur Limited is a Pakistan-based

company. The Company is engaged in the business of

manufacture and sale of yarns and fabrics made from

natural and man-made fibers and blends thereof. The

wholly owned subsidiary of the Company is Tenaga

Generasi Limited (TGL).

The name Dawood is known to everyone today and the generation owes it to

elders whose dedicated efforts, sheer hard work and commitment to the cause, the

cause of betterment to the country and self, placed them where they are today.

Dawoods, the people of vision and integrity are in business since decades.

The elders started business even before the momentous changes that swept the sub-

continent and culminated in the emergence of Pakistan.

Vision

To pursue sustained growth through a diversified

business portfolio for enhancing stakeholder value.

Mission

To be a responsible corporate citizen with respect

for the society.

To achieve a safe & healthy business environment.

To provide an excellent working environment and growth potential for the

employees.

To strive for excellence through commitment,

integrity, honesty and teamwork.

To make honest and ethical behavior a way of life.

To improve quality of life for our employees.

The Icon of Integrity

The Dawood Group, a distinguished and trusted name in Pakistan, traces its

origins back to almost a century ago. The Group owns companies ranging from

fertilizer, textiles, business and finance. Through its diverse businesses, the

Dawood Group of Companies delivers some of the top brands and the highest

quality services.

Most of the Group Companies consistently ranks among the top 25

companies of KSE. The Dawood Group's exemplary success for more than five

decades has transpired into collective benefit of its customers, shareholders and

employees of all Companies.

In 1947 Mr Ahmed Dawood migrated to Pakistan. Understanding the need

for industrial development as the only means for the prosperity of this newly born

state, he initiated a number of industrial projects in East and West Pakistan.

In 1949 Lawrencepur woollen & Textile Mills was founded, and acquired its name

after the Military Commander of the area before Independence, Sir John Lawrence

Pakistan's industrial sector was lacking in textile processing units due to the

non-availability of quality yarn. Realising this need, Dawood Cotton Mills Limited

was set up in Karachi, which commenced production in January 1952.

In 1954 Burewala Textile Mills Limited was established at

Burewala, District Vehari, Punjab. It was one of the largest

spinning and weaving mills of Pakistan at that time producing

100% cotton yarn and Grey Fabrics.

In 1954 Lawrencepur Woollen & Textile Mills became

operational and produced yarn for hand knotted carpets, blanket

for Armed Forces, tweed and worsted fabrics.

In 1960 Lawrencepur Woollen & Textile Mills, saw a revolutionary change

as Dawood Group took over the mills. The new management took radical steps to

expand and modernize the production facilities.

In 1967 Dilon Limited, Pakistan’s first Nylon Yarn

Producer, was established in Karachi.

In 1968 Dawood Hercules Chemicals Limited was

established as a joint venture between the Dawood Group of

Industries and Hercules Chemicals Inc. of the USA. It was the

first private sector venture in Pakistan to receive a loan by the

World Bank.

In 1971 East Pakistan, Mr Ahmed Dawood

established Karnaphuli Paper Mills. He also founded,

Karnaphuli Rayon & Chemicals Limited, Dawood Jute

Mills and Dawood Shipping Company. All his

investment in East Pakistan were lost with the creation

of Bangladesh in 1971.The East Pakistan industrial

undertakings constituted almost 60% of the Group’s activities.

In 1974 Mr Ahmed Dawood's business enterprise

suffered further setbacks as the Government of Pakistan

nationalised a number of large Pakistani industrial

undertakings and the Group lost its flagshipj company,

Dawood Petroleum Limited

In 1984 Keeping in view the industrial development of the country, a new

polyester plant was installed at Dilon unit with the daily capacity 4.5 ton of flat and

textured filament yarn.

In 1996 Burewala Textile Mills became Pakistan’s first spinning and

weaving mill to receive prestigious ISO 9001 certification.

In April 1998, Lawrencepur Woollen & Textile Mills obtained ISO 9001

certification.

In 2004 Amalgamation of all textile companies

of the Dawood group into a single entity named

Dawood Lawrencepur Limited.

In 2004 Dawood group acquired a majority stake in Inbox Business

Technologies Pvt Ltd - Pakistan's leading computer brand.

People

At Dawood Group, we do not consider

ourselves as a group of companies but rather a

group of people because our people are

fundamental to the way we do business; they

are at the centre of every thing we do. We grow

as a group by the growth of each one of us.This

insight is behind all our efforts to keep our

people fulfilled and committed. It’s also why

we stay connected within a company and with

the other companies of the group with shared

values and business goals.

The Dawood Group Companies

• Dawood Hercules Chemicals Limited

• Dawood Lawrencepur Limtied

• Central Insurance Company Limited

• Inbox Business Technologies

• Elixir Securities

• Pebbles Private Limited

Associate Companies of Dawood group

• Avanceon Limited

• Engro Fertilizers Limited

• Engro Polymer & Chemical Ltd.

• Engro Foods Limited

• Engro Powergen Limited

• Engro Vopak Terminal Limited

• Engro Eximp Private Limtied

Investor Information

The Dawood Group employees Over 1,200 people in more than seven

manufacturing units and 10 offices all across Pakistan. Our diverse management

team at the group level with global exposure is setting the standards for the

business practices in the region.

Group’s strong capital base, financial stability and diversified earnings

stream are strong indicators that we’re strategically well positioned for future

growth and development.

Globlization of Market

Lawrencepur first started their business locally. when they had achieved

their objectives to produce high quality woolen and fabrics they targeted the

international market they exported their products to European countries where their

products were highly appreciated by the royal family because of its high quality

they established their brand international even prime minister of USA know their

brand by name.

Glabalization of Product

In start Lawrencepur collected sheep all part of country and made wool and

cotton tops they first had their own weaving plant and produce 100 % threads for

their fabrics then they started achieve the factor of production to reduce the cost of

production they started importing threads from Australia still some their weaving

plant run in factory but instead of collecting sheep’s wool and cotton to make top

they importing the ready-made tops from Australia which not only reducing the

cost of production but also maintaining highest quality of product . They also

import wool from china and further processing such as dying and spinning and

weaving done inside the factory through same procedure polyester is prepared and

then different proportion of threads and polyester are made according to each

product line.

Globalization

Globalization negatively affects Lawrencepur. It is affected so badly that

Lawrencepur is now out of international market and other reason is power and

energy crisis in Pakistan 3 days of the week gas supply is being stopped electricity

prices are going high and ultimately cost of production as well as per unit cost has

increased. On other hand other competitors of Lawrencepur such as china turkey

and Japan are offering low prices for same quality in same international market

lawurncpur cannot offer such prices because of their increased cost of production

that’s why its share has dropped in international market and finally they with draw

from international business and the export business. The reason of their failure that

they had not any contingency plan to cope with such crisis situation.

Technology

During our visit in factory we noticed that Lawrencepur had not adopted

new or modified technology the plants installed in 1957 are still being used.

Most of the office work is done manually. No invention or innovations are

adapted. This all leading to high cost of product. Only labor efficiency is used. Due

to high cost most of the units are closed. Old machinery is maintained at high cost.

SWOT ANALYSIS

The availability on economical, reliable and sustainable energy is the key

Issue that companies face globally today. Countries all over the world are

grappling ways in which millions of households, industries and other Businesses

can be provided with energy that is dependable and does not tax our future

generations.

Stregnths

Experienced and competent management following a carefully strategies

Diversified customer base and geographical distribution e business plan

Substantial goodwill in the market

State of the art production facilities

Superior Customer services

Dawood Lawrencepur have decided that with technical and financial

capabilities within the company and the group, they can play an instrumental role

in an effort to the national objective of reliable, economical, sustainable energy for

sustainable economic development, creating an environment where everyone can

turn reach grow.

Weakness

Centralized decision making.

High overhead expenses

Slow Growth rate

High cost of production

Lack of contingency planning

Low focus on marketing

Threats

Energy crises

Economic and Political instability

Lack of quality raw material availability and high cost of procurement

New Entry of competitors

Increased marketing costs

Strong labor union

In Pakistan we face a slightly different challenge. While the world Figures

out a way to power the economic growth of the future, we at home while we are

concerned with the issue of inadequate energy today. Demand has Outgrown

supply massively in the past, the resulting in prolonged power Breakdowns and gas

load shedding.

Pakistan's energy scarcity is indeed disconcerting. It is seen as the single

biggest impediment to the growth for our industrial sector. Frequent power outages

render our exports uncompetitive, as idle factories cannot deliver goods so

desperately needed to be produce on time. This is the issue of reliable energy.

Opportunities

Install own power plants

Target middle class

Decentralized decision may lead to fastest growth

To offer online selling facility

Open its own retail network

The company currently generates over 6500 MW from renewable hydro

energy, but have the capacity to generate 32000 MW more. According to latest

figures Dawood has the potential to generate up to 43,000 MW through wind

energy alone, a source already producing electricity at commercially viable levels.

The location in the tropics gives Dawood Lawrencepur an added advantage to use

the sun to power our homes, with technologies becoming increasingly competitive

with conventional methods of power generation.

Pakistan possesses over 180 billion tons of coal. We also have the lowest

drilling densities and highest success ratios suggesting tremendous potential in

hydrocarbon exploration. On top of that we are located in the region that has

provided much of the world with cheap energy and is forecasted to do so for next

few decades. All of these factors have coupled together for us to look back and

turn.

PEST ANALYSIS

Political

The factors negatively affect all businesses; including the political wars

among the parties etc. The monthly wages were increased. These steps did prove to

be a successful in motivating an already depressed and low paid labor force but at

the same time increased the threats from labor unions for meeting their demands

and cost of production for already suffering textile industry.

Economic

The inflationary pressures as noted in the year 2006 influences the company

sales. However the inflation rate is stabilizing and is at 10.26% and the SBP has

decreased interest and is expected to further cut the interest rates. The rupee

depreciation during the year has been beneficial for the exporters, as unit prices in

PKR have increased for the textile segment.

Social

In rural areas of Pakistan there are fewer opportunities to earn a living, so

many bread earners move out to find a better earning opportunities. They mostly

find jobs in different sectors including textiles and also prove to be low cost labor.

This benefits the companies in competing in terms of cost.

Technology

Pakistan is facing serious power crises in terms of electricity shortage and

gas shortage as well. Due to this many textile units have completely shut down and

many units have to cut down production. Since decades many incentives were

given to the local industry such as tax rebates, R&D support in 2007.The domestic

companies took advantage of such policies but were not able to add value to the

textile exports due to which Pakistan exports are falling sharply.

Demand & supply

The demand and supply of a Dawood textile industry depends upon few

main factors. Some of them are mentioned below;

1. Internal Conditions of the home country

2. Condition of the country where the end product is to be exported.

3 Global financial conditions.

If we take an example of current situation of textile sector we’ll come to

know that the demands are much more then supply. Reason for less supply from

industry is;

1. Shortage of Cotton

2. Unavailability of Skilled Labor

3. Problems of Electricity Shortage

4. Problems of Gas shortage

5. Improper law and order situations

6. Unrealistic hike in fuel prices

The textile industry can supply more than it is already supplying if the

abovementioned problems get solved.

Regarding past if we compare then the demands were high but the supply

was low because of hike in freight charges and also the raw material which

depends upon oil or we can say due to hike in the prices of all petrochemical

products which are necessary for a textile industry. For example:

1. Plastic Resin: Which is used for making plastic bags

2. Dyes: Used as colorants

3. Chemicals of all types used in dyeing and finishing process

4. Lubricants.

5. Fuel (which is somewhat stable now than before)

6. Transportation charges.

In future if our government can provide the better fuel including power and

natural gas then much of the problems of a textile industry will get solved in this

way.

Future Prospects

The company is in the process of improving its woolen textile operations

with investments in technology, processes and human resources and this is likely to

result in improved results. Substantial progress has been made in our negotiations

with Wind Turbine Suppliers and EPC Contractors for setting up a 50MW Wind

Energy Farm. We expect to achieve financial close by the end of this year. Your

company will also be looking at the possibility of other projects in the Alternative

energy field.

Staff Relations

The company continues to benefit from the efforts and dedication of all its

employees. The Directors are pleased to record their appreciation.

Karachi: Inam Ur Rehman

March 25, 2010 Chief Executive

Statement of Ethics and Business Practices

Dawood Lawrencepur Limited exists on sound principles of development

and growth. It makes no compromises in any aspect of good business practices.

The Company takes pride in adherence to its principles and continues to serve its

customers, stakeholders and society on the following guidelines.

Guidelines

The Company strongly believes in free and fair business practices and open

competitive markets. Developing any association within the segment,

industry or with competitors to distort the pricing and availability is

contradictory to our business code of conduct.

The Company's financial policies for conducting business are transparency,

integrity and following the principles of accounting and finance as approved

by regulations and contemporary accounting codes.

The Company believes in uprightness of performance and expects it to be a

fundamental responsibility of our employees to act in Company's best

interest while holding confidential information. We expect our employees

neither to solicit internal information from others nor to disclose Company's

figures, data or any material information to any unauthorized person/body.

The Company believes in encouraging the individuals’ respect and growth.

Our employment and HR policies develop individuals without any

discrimination on the basis of race, religion, gender or any other factor.

The Company as a responsible corporate citizen strongly adheres to the

principles of corporate governance and complies with regulatory obligations

enforced by regulatory bodies for improving corporate performance.

The Company anticipates integrity and honesty of employees in doing

business for the Company. Any unfair or corrupt practices either to solicit

business for the Company or for personal gains of the employee is

fundamentally inconsistent with business codes of the Company.

The Company believes in community development without political

affiliations with any person or group of persons working for gains. We

contribute our resources for a better environment with an unprejudiced

approach.

Within our mills our policies gear towards unbiased and impartial employees

betterment

Legal Status and Operations

Dawood Lawrencepur Limited, "the Company" is incorporated in Pakistan

as a public listed company formed as a result of Scheme of Arrangement for

Amalgamation in terms of the provisions of the Companies Ordinance, 1984

between Dawood Cotton Mills Limited, Dilon Limited, Burewala Textile Mills

Limited, Lawrencepur Woolen and Textile Mills Limited. The shares of the

Company are listed on the Karachi and Lahore Stock Exchanges. The Company is

principally engaged in the business of manufacture and sale of yarn and fabrics

made from natural and man-made fibers and blends thereof. The registered office

of the Company is situated at 35-A, Shahrah-e-Abdul Hameed Bin Badees

(Empress) Road, Lahore. The Company in the years 2007 and 2008 closed its

manufacturing units located at Landhi, Karachi and at Dawoodabad unit,

Burewala, District Vehari. The operations relating to the closed down units have

been classified as discontinued operations, and are accounted for as ‘non-current

assets held for sale and discontinued operations’ as per the requirement of IFRS-5.

During the period, the Company has adopted special tax year ending on

December 31 for which permission of Commissioner of Income Tax has been

obtained vide its letter dated August 18, 2009. Consequent upon the change in tax

year, the Company's financial year has been changed from June to December. The

change was made so that the Company's year-end coincides with the year-end of

group companies.

Taxation

Income tax expense comprises current and deferred tax. Income tax expense

is recognized in profit or loss except to the extent that it relates to items recognized

directly in equity, in which case it is also directly recognized in equity.

Current

Provision for current taxation is based on income streams chargeable at

current rate of taxation under the normal tax regime after taking into account tax

credits and tax rebates available, if any. The charge for current tax includes

adjustments to charge for prior years, if any.

Stock-in-trade

Stock-in-trade is valued at the lower of cost and net realizable value. Cost is

determined using weighted average method except for raw material in transit,

which is stated at cost. Cost includes applicable purchase cost and manufacturing

expenses. The cost of work in process includes material and proportionate

conversion costs. Net realizable value represents the estimated selling price for

inventories less all estimated costs of completion and costs necessary to make the

sale.

INVESTMENT

Investments in Subsidiaries and Associated Companies

Investments, in subsidiaries where control exist, and associates where

significant influence can be established are initially stated at cost. Subsequently,

the recoverable amount is estimated to determine the extent of impairment losses,

if any, and carrying amounts are adjusted accordingly. Impairment losses are

recognized as expense in the profit and loss account. Where impairment losses

subsequently reverse, the carrying amounts of the investments are increased to the

revised recoverable amounts but limited to the extent of initial cost of investments.

A reversal of impairment loss is recognized in the profit and loss account adjusted

for impairment, if any, in the recoverable amounts of such investments.

Profit or loss is measured at fair value, and changes therein are recognized in

the profit and loss account. Purchases and sales of investments are accounted for at

trade date, i.e., the date that the Company commits itself to purchase or sell the

investment.

Trade and Other Payables

31 DEC 09 30 JUNE 09

Rupees Rupees

Creditors 34,740,816 27,688,595

Accrued expenses 28,914,218 24,414,899

Gratuity payable to resigned staff 8, 306,973 9,687,512

Advance from customers and others 12,345,234 17,208,925

Unclaimed dividend 20,698,412 20,732,552

Due to Islamic Development Bank 25,960,000 25,960,000

Deposits 740,376 766,42

Withholding tax 156,684 175,803

Others 6,468,03 2 6,699,792

Total 138,330,745 133,334,505

This represents preference share capital of one of the merged entity issued to

Islamic Development Bank with right to redeem. The merged entity had served

notice to the Bank for redemption before the scheme of amalgamation was

approved and as such the same has been classified as liability and redemption

reserve has been created. All deposits are re-payable on demand and no interest is

payable thereon.

Conclusion

The Lawrencepur is

well-managed and well

competing and renowned

brand in textile industry.

The devoting and hardwo-

rking management and

their offering are their

strength. Since they have

no competitor locally but

for few segments some

competitor are in international market, but due to energy crises it is only offering

its products to local market. The Lawrencepur has very strong employment policy

to retain their employees but as of the global trend the industry is in downsizing

phase. Lawrencepur has to coupe many challenges internationally, locally as well

as internally. The strategic planning and policies are quiet good; soon the company

will come out of these challenges. The Lawrencepur is also having plan for

targeting more markets and make come back to international market. Hence it is a

progressing organization that has the potential of in such tough scenario. But the

margin of improvement is still there, by which it can boost it growth.