Reliance Weaving Mills Ltd. RELIANCE WEAVING MILLS LTD is located in Multan. Reliance weaving Mills Ltd. (RWML) is part of the Fatima Group. Fatima Group established RWML on April 7, 1990 as a public limited company and obtained certificate for commencement of business on May 14, 1990. I visited RELIANCE WEAVING MILLS LTD three times for my report and was always warmly welcomed by their management and employees. All machinery installed in the mill is American. Plans and strategies are made in the head Office. Raw materials purchase decision is also made in the Head Office. Employees work in three shifts, whereas these are both permanent and on daily wages. The mills units is supported by different facilities as canteen, store room, laboratory, godown, and many others. The production process is divided into two sections: In this report I have done SWOT analysis of RWML. Good quality with reasonable price is the major strength of RWML. Export sales cover major portion of total sales due to good quality. They contain very low portion of local market. Internship Report Muhammad Fahim Khan 1
Internship report on Relience Weaving Mills Ltd........................
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Reliance Weaving Mills Ltd.
RELIANCE WEAVING MILLS LTD is located in Multan. Reliance weaving
Mills Ltd. (RWML) is part of the Fatima Group. Fatima Group established RWML on
April 7, 1990 as a public limited company and obtained certificate for commencement of
business on May 14, 1990.
I visited RELIANCE WEAVING MILLS LTD three times for my report and was
always warmly welcomed by their management and employees. All machinery installed
in the mill is American. Plans and strategies are made in the head Office. Raw materials
purchase decision is also made in the Head Office. Employees work in three shifts,
whereas these are both permanent and on daily wages.
The mills units is supported by different facilities as canteen, store room, laboratory,
godown, and many others. The production process is divided into two sections:
In this report I have done SWOT analysis of RWML. Good quality with
reasonable price is the major strength of RWML. Export sales cover major portion of
total sales due to good quality. They contain very low portion of local market.
Centralized decision-making is one of the weaknesses of the RWML, but good
management covers this weakness in an appreciable manner. So for as Account
department is concerned though there is a little bit workload on the employees, but inside
friendly environment helps a lot to cover these tasks without fatiguenes and boredom.
Finaly I have given some recommendations to cover these threats. My suggestions were
highly appreciated by the management of RWML.
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Reliance Weaving Mills Ltd.
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INTRODUCTION TO TEXTILE SECTOR
Textile includes all the business related with yarn and cloths, so all the business from
Cotton Ginning to Cloth and Apparel manufacturing comes under the Textiles. There are
different functions of Textiles, which are as under:
Ginning
This is the first stage where cotton is separated from the seeds. Raw material of this stage
is Cotton Seed. RELIANCE WEAVING MILLS LTD does not deal in this function.
Spinning
Raw material of this stage is Ginned Cotton. This cotton is spun to make yarn. Yarn
produced in various qualities, this is the main raw material of RELIANCE WEAVING
MILLS LTD, which is purchase from local market.
Weaving
In weaving unit yarn is converted into cloth through power looms or through hand
driven machines. RELIANCE WEAVING MILLS LTD, engaged in this function.
Processing and Dying
Cloth is further processed and it could be used for a lot of purposes, like Bed Sheets and
Garments etc.
Cutting and Stitching
This is a final use of cloth in which Cloth is cut and stitching made by the exporter than it
commercializes to various importers of the garments through wide world marketing
department.
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History of the Textile Industry
Whilst farmers were developing new and better methods of agriculture, life in other areas
of work had changed little for hundreds of years. Early in the 18th century, most of the
population still lived in small, rural settlements. Few people lived in towns, as we now
know them.
Many people worked as producers of woolen and cotton cloth. They cleaned, combed,
spun, dyed and many people worked as producers of woolen cloth. They cleaned,
combed, spun, dye and wove the raw material into cloth. They did this work in their own
houses. This type of production has become known by the general term of the Domestic
(or Cottage) Industry.
Work within the Cottage Industry was usually divided up between the members of one
family. The women and girls were responsible for cleaning the sheep fleeces, carding the
wool and spinning it. The process of weaving was physically hard work and,
traditionally, it was the men who were responsible for it.
Generally, at regular intervals, a cloth merchant visited each handloom weaver’s cottage.
He would bring the raw material and take away the finished cloth to sell at the cloth hall.
As soon as the new wool arrived, it was washed to clean out all the dirt and natural oil.
After this, it was dyed with color and carded. This was the process of combing the wool
between two parallel pads of nails, until all the fibers were laying the same way.
Next, the carded wool was taken by the spinner and, using a spinning wheel, the thread
was wound onto a bobbin. The unmarried daughters of the household who were called
spinsters often performed this part of the process. The term spinster still exists in English
to mean an unmarried lady. The spun yarn was then taken to the loom to be woven. In a
weaver's cottage, the loom was often to be found on an upper floor. There were large
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windows in the room to let in plenty of daylight. The loom was worked by both hand and
foot movements. Working the loom was quite strenuous work, which is why it was
traditionally the work of the men of the household.
TEXTILE INDUSTRY IN PAKISTANTextile is the important sector of Pakistan’s economy. It is playing the important t role in
economy of Pakistan and fulfilling the 65% export target.
PERFORMANCE
The textile industry which is endowed with a strong base of weaving had started its
journey from almost non existence in 1947 with a meager size of 3000 shuttle looms that
is too in the unorganized sector with only 10 textile units. The industry has gone through
a long way and now possesses 220 units, 45000 looms in which include more or less
30000 shuttles looms. The textile industry is not only catering to the entire local
requirement but sharing out 65% of the total foreign exchange earning.
Pakistan being the fifth largest cotton producing country provides a strong base for
development sustenance of the textile industry. In spite of tremendous growth in all the
peripheral areas of the textile industry includes cotton, ginning spinning, processing and
made up sector. This industry which is the main pillar of the economy has not attained its
optimum potential so far.
The textile industry at present is passing through a transition phase. It is sailing smoothly
under the protected cover of quota systems. How ever it has to face the rough water to
open the sea when globalization of trade is implemented under` WTO agreement in 2004.
CAPACITY INSTALLED OPERATIVE
PERIOD. UNITS LOOMS LOOMS
1999-00 55 6600 5500
2000-01 59 7080 6100
2001-02 91 10920 9128
2002-03 105 13125 11125
2003-04 115 14375 12950
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2004-05 153 19125 19556
2005-06 166 20750 19840
2006-07 157 19480 17850
PRODUCTIONPERIOD GREY CLOTH
IN METERS (000)
2000-01 602250
2001-02 667950
2002-03 999516
2003-04 1218187
2004-05 1428025
2005-06 2141382
2006-07 2172400
CURRENT POSITION OF
TEXTILE INDUSTRY
With the exception of the period from 1958-59 to 1974-75; the textile industry could not
maintain, a sustainable growth, and registered its growing rate at the nominal level in the
country. In the organized sector there are 452 textile companies of which 212 are not
listed and 240 textile units are listed on KSE/LSE comprising of 157 spinning units, 29
weaving units and 54 composite units. While the total number of textile units both listed
and unlisted is however is around 452 approximately.
The weaving capacity of the textile industry in our country is static at 9000 shuttle looms
for past many years. The capacity of conventional looms is also around 19840, which
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have no match with quantum jump the industry ahs taken in this spinning sector. Instead
of going for value added products the frenzy for setting up spinning projects dictated the
mind of the textile industry over the years which took the 4.1 million spindles in 1996-97
instead of going to more value added textile products like dying bleaching units in the
country.
CAPACITY UTILIZATION (%)
PERIOD LOOMS
1999-00 79.50
2000-01 81.00
2001-02 82.90
2002-03 85.10
2003-04 86.20
2004-05 87.00
2005-06 88.00
2006-07 90.00
EXPORTS
The textile exports projection in the trade policy 1999-00 worth 6.5 billions $ of major
textile products include cotton yarn with the target of 1800 million $, grey cloths 1680
million $, ready made garments 1050 million $, tent and canvas 55 million $, knit wear
950 million $ and made-ups 965 million $.
The industry has to achieve these targets in the face of difficult t6rading conditions
especially the disturb economies of Asian countries, threat of imposition of anti dumping
duties on our gray cloths by the European Union countries, (E.U. has withdraw and anti
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dumping duty w.e.f 1.01.2002) cotton yarn of 20/s in Japan and constant decrease in
imports from South Korea, all together posting an uphill task of achieving the export
targets for the textile industry during the financial year. Duty drawback (rebate) is
reducing from time to time and changing in sales tax refund to export oriented units,
which is very poor sigh for the exporter of the value added items.
PROBLEMS OF THE TEXTILE SECTORThe textile industry has been crisis ridden for some time because of shortage of raw
material due to three successive cotton crop failures. The main problems it is facing are
as under;
1) The production of lint cotton ahs remained below the target.
2) The shortage and non-availability of the lint cotton in the domestic market has led
to the price-hike in domestic market.
3) Competitor’s installation of over capacity in some production lines or closure of
spinning capacity due to higher prices and short supply.
4) Docile labor-intensive technology, needed to be changed to cost efficient capital
intensive.
5) Lack of institutional finance for modernization efforts.
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RELIANCE WEAVING MILLS LIMITED
MULTAN
GROUP PROFILE
The company has been sponsored by FATIMA GROURP in Multan. The sponsors are
already engaged in the field of manufacturing Sugar, Cotton lint yarn, Grey cloths. Their
company, RELIANCE COMMODITY PVT. LTD has been awarded Best Performance
Trophies for the years 1997-98 to 99-00 in the field of export of Molasses declared the
top 5 company of the Pakistan. The sponsors have also taken up the managing control of
a band new spinning unit at Rawat Distt. Rawalpindi form UBL through bidding.
Following are the companies included in the group:
Sr. # Company Name
1. FATIMA SUGAR MILLS LTD.
2. RELIANCE WEAVING MILLS LTD.
3. RELIANCE COTTON PVT. LTD.
4. RELIANCE COMMODITIES PVT. LTD.
5. RELIANCE EXPORT LTD.
6. RELIANCE FIBRES LTD.
7. FATIMA FERTILIZER COMPANY LTD.
8. FAZAL CLOTH MILLS LTD.
9. AHMED FINE TEXTILE MILLS LTD
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COMPANY PROFILE
Reliance weaving Mills Ltd. (RWML) is part of the Fatima Group. Fatima Group
established RWML on April 17, 1990 as a public limited company and obtained
certificate for commencement of business on May 14, 1990.
Authorized capital of RWML at the time of incorporation was Rs.250 million and
presently RWML has authorized and paid up capital of Rs.700million which has
gradually increased and at present subscribed share capital of company stands at Rs.
308109370 , listed at Karachi and Lahore Stock Exchanges and also inducted into Central
Depository Company (C.D.C). The company has issued 1st tranche of Term Finance
Certificate (TFC’s) of Rs. million in February 2002, which has been fully subscribed.
These TFC’s are listed at Karachi Stock Exchange and has also been declared as eligible
security in C.D.C.
The principal business of the Company is manufacture and sale of cotton yarn and grey
woven fabric. RWML production capacity consists of two main segments, Weaving and
Spinning, both are ISO-9002 Certified for its quality. Today Reliance weaving Mills
Limited is the 3rd largest weaving mill in Pakistan with modern and technologically
advanced greige weaving plant. The we4aving units are situated at Multan and the
Spinning unit at Rawalpindi. The details are as under:
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Weaving units:
Weaving unit is situated at Fazalpur; Khanewal Road, Multan commenced its commercial
production on May 01, 1993 with 96 Tsudakoma air jet weaving machines imported from
Japan along with modern auxiliary machinery to produce high quality cloth for export
markets. Further and additional 20 Tsudakoma air jet weaving machines form Japan were
installed in 1999 coupled with yarn doubling and twisting machines to produce value
added fabrics. The installed production capacity of the unit is approximately 16.085
million meters per annum. Further more, a captive power plant consisting of 2.5 MW
Capacities are also installed in the weaving unit-1 by which the company is saving
power cost and production losses.
During the last financial year, the company has implemented and expansion project for its
weaving unit at a cost of a about Rs.500 million, comprising 108 Tsudakoma air jet
weaving machines from Japan along with modern auxiliary machinery to produce high
quality cloth for export markets. The project started its commercial production from
October 01, 2001. The installed production capacity of the unit is approximately 21.70
million meters per annum.
Another 48 air jet looms expansion plan in existing weaving unit # 2 is at advance stage,
which will result in increase in production approximately by 9.00 million meters per
annum. Now weaving unit comprise of 295 Tsudakoma with production capacity of 57.6
million meters of grey cloth annually.
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Spinning Unit:
The spinning unit of the RWML is located at Mukhtarabad, Rawat, and District
Rawalpindi in the province of Punjab. The unit commenced its commercial production on
October 01, 1999 with 14400 spindles with a very good combination of European and
Japanese machinery with allied accessories. It produces high quality yarn for in-house
consumption and for export markets. The installed capacity after conversion into 20/s
count is approximately 4.849 million kgs.
The spinning unit has 35,520 spindles with an installed capacity of 12.30 million kgs of
yarn converted at 20/s count. Cotton yarn produced is used in weaving units for
manufacturing of fabric being sold in local and export market.
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ORGANIZATION’S (RWML) HIERARCHY
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CHIEF EXECTIVE
14
FINANCE MANAGER
MKTINGMANAGER
PURCHASEMANAGER
ACCOUNTSMANAGER
INTERNAL AUDITOR
C.F.O.
DCA ASSISTANT ACCOUNTANT
CHAIRMAN
CHIEF ACCOUNTANT
Reliance Weaving Mills Ltd.
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VISION STATEMENT
The company is interested to install complete textile finishing plant including bleaching,
dyeing, mercerizing, calendaring, folding, printing plant in the existing weaving units at
Multan to make it a complete composite unit, which can explore local and international
market of high value products. The company would keep its emp0hasis on product and
market diversification, values addition and cost effectiveness. We want to fully equip the
company to play a meaningful role on the sustainable basis in the economic development
of the country.
MISSION STATEMENT
The mission of the company is to operate state of the are textile plants capable of
producing yarn and fabrics.
The company will conduct its operations prudently assuring customer satisfaction and
will provide profits and growth to its shareholders through:
Manufacturing of yarn and fabrics as per the customer’s requirements and
market demand.
Exploring the global market with special emphasis on Europe
and USA.
Keeping pace with the rapidly changing technology by continuously
balancing, modernization and replacement (BMR) of plant and machinery.
Enhancing the profitability by improved efficiency and cost controls.
Recruiting, developing, motivating and retaining the personnel having
exceptional ability and dedication by providing them good working
conditions, performance based compensation, attractive benefit program and
opportunity for growth.
Protecting the environment and contributing towards the economic strength of
the country and function as a good corporate citizen.
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COMPANY’S QUALITY POLICY
COMMITMENT TO EXCELLENCE
All of our priorities action and products must be recognized as an
expression of unique quality.
We are dedicated to produce fabrics and yarn of the best export quality to
meet the requirement and expectations of our customers.
We strive for continuous improvement in day-to-day quality work;
organize the training and necessary feedback on our performance.
THE PROJECTThe project of setting up 96 looms was successfully completed and the company
commenced commercial production on May 01, 1993. The capacity of the project is
15.50 million Mtrs. Grey Cloth per year. In addition to further 20 looms was a installed in
1997 along with doubling machine and self power generation plant of 2.5 MW was
installed in 1999.
PLANT AND MACHINERY
IMPORTED
The imported plant and machinery for the project are purchased from world renowned
manufacturers of textile industry machinery. The production facilities are supported bay a
very modern quality control department equipped with laboratory and testing equipment
based on latest technology.
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The imported plant and machinery includes:
120 Shuttless Looms from Tsudakomna.
Humidification Plant & Chilly Equipment from Luwa Switzerland.
Overhead Travelling Cleaner from Luwa Switzerland.
Sizing machine from Sucker & Mullar Germany.
Knotting machine from Tomen Corp. Germany.
Air Compressor & Dryer from Atlas Capco Belgium.
Warping Machine from Benninger Switzerland.
Vaccum Cleaning plant from Germany.
Power Generator from UK.
3 sets power Generator (Gas) from Caterpillar Switzerland.
The above plant and machinery was imported with the foreign currency financial
assistance of Muslim Commercial Bank Limited.
LOCAL
The plant and machinery locally purchased up to 20% of the total machinery, which is as
under:
Bailing Press
Motor Lifter 2 Nos.
Beams 100 Nos.
Electric material from semins.
Folding Machines 3 Nos.
Equipment for workshops.
Electric appliances.
Fire fighting equipment.
Both the imported and local machinery was brand new at the time of purchase.
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COST OF PROJECT AND MEANS OF FINANCE
ESTIMATED COST
Pak. Rs. In (Million)
Imported machinery 210.50
Import incidentals 25.20
Local machinery 13.50
Land, Building, Others 44.80
Total Estimated cost 294.00
ACTUAL COST
Imported machinery 199.00
Imported incidentals 22.40
Local machinery 15.60
Land, building, others 47.00
Total actual cost 284.00
The company has successfully completed the project within the projected cost by saving
at least 11.00 (m) from the imported machinery due to forward booking of US $ on L/Cs
through speculation with the bank.
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Reliance Weaving Mills Ltd.
FINANCINGThe project has been financed through;
Pak.Rs. In (M)
Share holder’s equity 109.55
Redeemable capital 3.00
FC loan I.BR.D Line world bank 146.45
Local Bank Loan 13.60
Directors Loan 4.80
Local suppliers 6.60
Actual project cost 284.00
COMMERCIAL PRODUCTION
The company has commenced commercial production from May 1, 1993.
FINANCIAL YEAR
The financial year of the company is from October 1st to September 30th.
RAW MATERIAL
The basic raw material for the company is cotton yarn, which is easily available in
Pakistan.
LABOUR AND TEACHNICAL KNOW-HOW
The textile industry, being the oldest and largest industry in the country, there is cheap
labor available, both skilled as well as unskilled. The company has hired experienced
team, which is engaged in the running of existing manufacturing facilities.
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BUILDING AND CIVIL WORKS
Main factory building
Godowns 4 Nos.
Office buildings admin and ISO
Labor and staff quarters
Power house
The total covered area is approximately 120,120sq. Feet (13,345sq. meters).
UTILITIES
SELF POWER GENERATION
The project has a self-powerhouse of 2.5MW consisting of 3 power Generators imported
from caterpillar to provide smooth power to the Mills.
FEUL
Fuel requirement of the powerhouse is Sui Gas which is special installed by company on
self finance scheme by cost of Rs.10.055 (M) and also have a diesel generator in case of
any electric failure.
WATER
The total requirement of water for the project is met out of regular supply form the Tube-
well.
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PRODUCTIONYear/Month
Ended
Production
(000 Mtrs.)
Capacity
Attained %
30 September, 1998 12104 78.00
30 September, 1999 13255 85.00
30 September, 2000 13065 84.00
30 September, 2001 13530 87.00
30 September, 2002 13680 88.00
30 September, 2003 13193 85.00
30 September, 2004 14339 89.00
30 September, 2005 15539 96.00
30 September, 2006 15980 96.00
30 September, 2007 16587 97.20
It is difficult to describe precisely the production capacity in weaving mills since it
fluctuates widely depending on various factors such as count of yarn spun looms speed,
width and construction of cloth. It also varies according to the production pattern adopted
in a particular year.
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SALES(Cloth)
Year Total sales
Rs. (million)
Export sales
Rs. (million)
% of Export sales
To Total sales
1999 123415 54260 43.96
2000 402426 295639 73.46
2001 448905 395895 88.19
2002 667242 614060 92.03
2003 727163 660883 90.89
2004 723822 714587 98.72
2005 800382 755064 94.34
2006 1306888 1228367 93.99
2007 1252560 1115277 85.34
Exports are increasing due to increase in demand in various markets because of
withdrawl of quota.
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COMPANY DIVIDEND POLICY
The company is declaring regular dividend to its shareholders since previous 5
years.
The shareholders of the company are fully satisfied by the company
management decisions regarding dividends as well as operational matters.
Due to regular payment of dividend in each year to the shareholders the
market value of the company’s share has increased to its face value to Rs.23
per share.
Following dividends paid by the co.
2004 10% cash dividend
2005 23.50% cash dividend
2006 12.50% cash dividend
2007 52.50% cash dividend
SHAREHOLERS’S RIGHTS
None of the holders of the issued shares of the co. has any special or other interest in the
property of profits of the company other than of as holder of ordinary shares in the capital
of the company.
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PROCESS OF WEAVING UNITRWML UNIT-2 is engaged in the following functions.
WEAVING
Different types of the cloths are produced in the Weaving department. Weaving process
includes the following steps.
Yarn receiving and issuing
Doubling/twisting
Loading on sizing
Sizing
Loom shed
Cutting/Folding and Packing
Yarn Receiving and IssuingFollowing is the process of yarn receiving and issuing:
Yarn receive
Yearn tested through lab
Yarn record maintained in computer
Yarn requisition/issuing
Yarn Receive
First of all in weaving unit yarn received by yarn clerk from the spinning unit. Yarn clerk
check and count the bags and arrange its stacking in very arrange manner.
Yarn Tested In Lab
After receiving the yarn at least 2 cones are send to the lab to check the weight/quality
count and length.
Yarn Record
After receiving the correct result of the yarn from lab, it is recorded in stock register
maintained in computer.
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Yarn Requisition/Issuing
Yarn is issued to warping department after receiving the requisition from the General
Manager/Production Manager.
YARN DOUBLING/TWISTINGThe company has own doubler and twister machine in which yarn is doubled and twisted
before issuing to warping section. But it must be noted that this process can only be
operated due to demand of the certain construction to the cloth.
WRAPINGAfter receiving the yarn it is loaded on creel frame for the purpose of warping. There is
one set in one time comprising of 12 Beams in which yarn warped for sizing. It is called
one set ready.
SIZINGIn this department one set consisting of 12 beams loaded on the sizing machine where all
the chemicals are mixed and thread passed way from this mixture and prepare one full
beam at the required length, which is commonly consisting of 55000 to 60000.
Following are the chemicals used in the sizing machine:
P.V.A Imported from Japan
Textile wax from B.A.S.F. Pakistan Ltd.
Starch from Rafhan Maize FSD.
The above chemicals are mixed from the sizing machine through revolving
machine.
After sizing the beams these are transferred to the stock of the sizing department
and issued to production department as and when required otherwise these are
held in this department with marking of its specification on that beam so that it
can easily be located out of various beam’s stock.
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In this process, there are 116 looms installed by the company, which is the main
process where yarn converted in grey cloth. Beam received from the sizing
department is loaded on the loom and vacant beam replace with the beam gater.
New beam knotted with the remaining thread of old beam with help of a modern
knotting machine. These looms are adjustable. Its width can be or decreased with
the requirement of construction of cloth.
WARP/WEFTThere are two concepts of warp and weft in the looms shed. Warping is called the
running of sized beam in state away and weft is called running of yarn cones in
side away.
Machinery operation
In the looms shed there are more or less 40 workers are appointed on the looms.
Each person is responsible for his three looms regarding breakage of thread,
quality of cloth and efficiency of the loom production.
This department has all the technical as well as maintenance staff in the loom
shed so that any discrepancies may timely be removed and production may not
suffer.
PACKING
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There are two kinds of cloth packing one is bales shape band and other is in roll.
All these packing are made with polythene bags which received from the store
room bales are exported to Japan, Hong Kong, China and Taiwan. While roll
packing are exported to USA and European countries.
Normal packing
1 Bale = 500 Meters and 600 Yards
1 Roll = 350 Yards
Piece length
1to 10 mtrs use in cut piece sale
11 to 20 mtrs use in local normal sale
21 to 50 mtrs use for export
The packing may be changed in accordance with the demand of customers as well
as the nature of consignment.
PRODUCTION REPORTS
Different reports are prepared when yarn is received from sizing section to
completion of cloth. All records are maintained completely.
Yarn receipt report in weft
Sized beam receipt report
Waste report
Leno (cuttari)
Rags (cloth)
Cut pieces
Daily used report
Efficiency report
Daily production report
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MARKETING MIX
Marketing mix is the marketing tasks that the company is to acquire its objectives in the
target market.
4 P’S
1. PRODUCT
2. PRICE
3. PLACE
4. PROMOTION
1. PRODUCT
RWML produces high quality cloth only. They produce all kinds of construction
as demanded by to customers. Its exports are more than 90% of its produce and
remaining they sell in the local market. They sell to the well known local buyer
like Al-Abid Silk Mills ltd. Fateh Textile Ltd. Chenab Ltd., which are the top
leading companies of the Pakistan subsequently they export the cloth after
processing. RWML take the advantage of second exporter from the govt.
department.
TYPES OF CLOTH BEING PRODUCED
100% Cotton Grey Cloth of the following main types is being produced.
20*20/108*56=63”
20*16/128*60=61.5”
10*10/80*54=55”
30*30/100*60=72”
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2. PRICE
Pricing is an important element in the marketing process for any company. The
price policy of co. should be in such a way that it should produce a reasonable
profit for the co. and should satisfy the customer. Following tow factors are very
important.
Fixed cost
Variable cost
FIXED COST
Fixed cost is the costs which remain always same in total whether produce large
quantity or small quantity. Fixed cost per unit rises as the quantity produced
decreases and vice versa. Some of the importent factors of fixed cost are;
Salaries
Rent
Local taxes
VARIABLE COST
Variable cost changes in total with the change in quantity produced. It increases in
total as quantity increases but remains same on per unit basis. Some examples are;
Material cost
Labor cost
FOH
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RWML’S PRICING STRATEGIESRWML adopts following pricing strategies:
Direct selling
Through agent selling.
Direct selling
If co. sells directly then price components will be as follows;