azgard nine limited - internship report

AZGARD NINE LIMITED

2.5 Km off Manga, Raiwind Road, Pakistan

Phone: +92 (0)42 111-786-645

Fax: +92 (0)42 538 3591

Website: www.AZGARD9.com

Supervised By:

Saqib Hussain Business Development Manager

Email: [email protected]

Internship Advisor:

Tariq Hameed Alvi Lecturer Management Sciences

Submitted By:

Saad Mahmood MBA-FA08-124

Submission Date:

September 1, 2009

Azgard Nine Limited Internship Report

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Acknowledge

At first I am thankful to Almighty ALLAH and the Holy Prophet (P.B.U.H), their blessings have been have with me in all good and bad times.

Then I’m grateful for the thorough support by my advisor Prof. Tariq Hameed Alvi for helping me determine the objective of the report and guiding me though to get to the end. He made me grateful with his valuable suggestions from time to time during my internship.

I must thank Mr. Saqib Hussain (Business Development Manager) and Shah Bano ( Deputy Manager Marketing) for providing related information on which this project is based. He has been a great support from the choice of the topic, learning of different part of research and understanding the difference between theory and practices.

I really should thank every other employee of Azgard9, whom I found during different phases of my internship. Most of them have been very open and friendly with me and provided me with the answers I needed from them. They were the constant source of inspiration and encouragement that helped in completion of my internship.


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Table of Contents

Page 1. Executive Summary 1 2. Industry Overview 2 2.1 Textile Industry 2 2.2 Spinning Industry 3 3. Introduction of Organization 6 3.1 History of Azgard9 7 3.2 Company Vision 7 3.3 Company Mission 8 3.4 Core Values 8 3.5 Corporate Philosophy 9 3.6 Code of Business Principle 9 3.7 Products 10 3.8 Services 10 3.9 Name of Department 10 3.10 Name of Unit 10 3.11 Structure of Unit 11 3.12 Culture 12 3.13 Customer 12 3.14 Markets 12 4. Introduction of Business Division 13 4.1 Spinning and Specialized Yarn 13 4.2 Spinning Process 14 4.3 Denim Fabric Division 15 4.4 Denim Fabric Process Flow Chart 16 4.5 Garment Division 17 4.6 Garment Division Process Flow Chart 18 5. A Managerial View 19 5.1 Departmental Flow Chart of GBU 19 5.2 Planning Process and Tools / Techniques 20 5.3 Organizational Structure and Design 36 5.4 Communication 37 5.5 Motivational Techniques Used 39 5.6 Controlling Authorities 39 5.7 Control Approaches Used 39


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6. Structure, Design and Issues 40 6.1 Divisions and Groups of its Units 40 6.2 Azgard9’s Business Include 40 6.3 Graphic Distribution of Azgard 40 6.4 Structural Dimensions 40 6.5 Contextual Dimensions 41 6.6 Decision Making 41 6.7 Conflicts and their Resolution 41 6.8 Power and Policies 41 7. Strategies & Analysis 42 7.1 Competitive Strategy 42 7.2 Marketing Strategy 42 7.3 SWOT Analysis 42 7.4 Financial Analysis 43 8. Core Internship Experience 44 8.1 Hierarchy of Marketing Department 44 8.2 Export Section 45 8.3 Export Order Execution 46 8.4 Procedure Inquiry 46 8.5 Production Mix 50 8.6 Local Sale Section 51 9. Conclusion 52 10. Recommendations 52 11. Bibliography 53 12. References 53 13. Glossary 54


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1. Executive Summary

This report consists of my six weeks internship at Azgard9 Limited which is situated

at Manga, Raiwind Road, near Lahore. Azgard is consistently focusing on improving

performance so that risks can be left far behind. Azgard is a responsible entity which

is highly committed to comply with the corporate, envoi mental laws and to conduct

their business with utmost honesty and sincerity. At Azgard it is believed that

development can only be achieved by equality and respect at work place. They have

been doing it for decades and there is no doubt they are reaping its benefits.

The Company’s management, combining innovative strategies, aggressive

marketing, creative synergy and visionary approach together with a lean

organizational structure capable of efficient response, succeeded in establishing

Azgard9 as the largest Denim Products Business in the country, with sales to the

tune of Rs.6,628,341,926.

Azgard9 has been benefited by the management’s highly responsive approach,

increasing its profits significantly since its acquisition from the Government of

Pakistan. 2008 posed to be challenging, primarily owing to the high raw material

prices, comparatively less productive workforce as compared to the major competing

countries, rising fuel prices resulting in higher domestic and International freight

costs, and probable rise in minimum wages, these factors are mitigated by Azgard9's

stronger business model within the Division and the Company.


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2. Industry Overview

2.1 Textile Industry

In 1947, at the time of independence Pakistan Textile Industry was like a

feeble child with only three cotton mills, a small woolen spinning, whereas weaving,

hosiery and knitwear were features of cottage industry. Now when we have entered

into new millennium, Pakistan’s Textile Industry has become a stalwart fellow, which

has grown in all sections. Now we are not only self-sufficient but are also exporting

surplus products. Today we have over 8358 million installed spindles, 166,000

installed rotors, 20,000 shuttle less looms, 200,000 power looms, 8,000 terry towel

looms, 7620 canvas looms, 157,000 woolen/worsted installed spindles, 15,000

woolen looms, 12,000 knitting machines, over 600 processing units and over 2500

garments units.

We all know, journey of textiles start from seed and culminates at ready-to-

wear garments and in present competitive world scenario, it is combination of high

production efficiencies, most appropriate technologies and work methods, together

with trained work force, management and marketing skills which give any Industry a

successful status.

Textile industry today is the backbone of economy of Pakistan and provides

the largest number i.e. about 40% of total industrial jobs and very vast industrial

service opportunities. It has always been the pillar of Pakistan’s economy

contributing substantially to Govt. revenues. It also has a dual linkage. As a major

consumer of domestic cotton, it provides a market for a leading cash crop and thus

has a critical influence on the growth and productivity in agrarian sector. Hence the

performance of the textile industry has a vital impact on the overall growth and

performance of the textile industry has a vital impact on the overall growth and

development of the economy. The industry also tops, as an earner of ever-so-scarce

foreign exchange and exported goods worth US $4.9 billion last year and this

amount is about 60% of the total national exports. Its share in total GDP is 8.5%. The

investment in Textile Industry is 31% of the total investment. The interest that banks

and other financial institutions earn from Textile sector is Rs. 4 billion per annum.


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The salaries and wages that Textile sector provides to workers is 40 billion

per annum. Its contribution to R & D is Rs. 116 million per annum. This very

remarkable achievement did not come easily and is due to combined and tireless

efforts of the Govt. planners, industrialists, technical support staff and our hard

working and inexpensive labor. On the top of these, Pakistan has been blessed with

suitable climate and perennial supply of good quality water to grow about 1.7 million

tons per annum of lint cotton, “the silver fiber” that forms a natural and sound base

for a viable textile industry. Pakistan textile industry consumed 1441 million Kg raw

cotton and 406 million Kg fiber during 1998 – 1999.

Value-added product exports of Pakistan Textile industry are very less. The

percentage of yarn exports in total textile exports in total textile exports in 20% and

percentage of cloth is 24% while 56% of total textile exports includes others textile

manufacturers. We should product more value-added products because if we see

the value addition chain the prices of cotton, yarn, cloth, garments, towels, bed wear

are US$ 1.33, US$ 2.33, US$ 5.41, US$ 6.71, US$ 4.05, US$ 5.51 per Kg

respectively. Thus we can earn additional foreign exchange by exporting value-

added products.

2.2 Spinning Industry

Areas comprising West and East Pakistan were big producers of good quality

cotton and jute fibrous raw materials but the value-added conversion industries were

mainly located around the Indian cities if Bombay and Calcutta in the respective

order. At the time of independence Pakistan was producing about one million bales

of cotton, which were exported and from the receipts, cloth and yarn for the

handlooms were imported. The Govt. took notice of this situation immediately and

encouraged setting up mills in both the wings of the country and in 1960 installed two

million spindles and 30,000 looms. In those days Govt. sanctioned only composite

mills with 25,000 spindles, 500 looms and a wet processing unit to finish the cloth

produced in mills. The balanced quality of yarn was required to be sold often through

an official channel to the weavers of handlooms and later to the power looms. The

mill owners made huge profits but their efforts for further investment were hindered

due to paucity of foreign exchange.


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This situation, however eased when the machinery manufacturers started

offering their plants under “the suppliers credit or pay as you earn” plans. This facility

brought is its wake escalation of prices of the textile machines and this started a new

development of installing only the spinning units of 12,500 spindles. Many of the

spinning units were then sanctioned on political consideration but went into the

hands of genuine entrepreneurs is no time. At the time Govt. tried to disperse the

industry away from the existing industrialized cities and new textile centers emerged

in small towns like Kotri, Sheikhupure etc. although these were quite close to the

existing centers in the big cities. By 1971, Pakistan had a substantial textile industry

with about 3.5 million spindles and 38,000 looms in the mills sector and exported

textile goods worth US$ 400 million.

After the separation of East wing, Pakistan was left with about 2.5 million

working spindles but growth was continuous and rapid and by 1985, the figure

reached 3 million. At that time the Govt. took a decision to convert all the home

growth cotton into yarn and for the first time, decided to waive the requirement of

getting official sanction for setting up a spinning mill. This decision opened the

floodgate and in just five years, the capacity increased to 5 million spindles. The

present working capacity is about 8,358 million spindles and 166,000 rotors. It may

be mentioned that about 1.724 million spindles are lying idle in 143 financially sick

mills which being of old technology have become redundant.

In 1998-1999, the spinning industry produced 1542 million Kg of yarn out of

which about 26% was blended yarn, 47% was coarse count yarn, 24% was medium

court yarn, 2% fine and 1% super fine yarn.

Development in the spinning sector is not in numbers alone but there is also

an improvement in average productivity. On the basis of 20/1 count productivity has

gone up from 190 grams in 1986-87 to 235 grams per shift per spindle in 1996-97.

Pakistan exported 508 tons that is about 33% of total cotton yarn produced in 1996-

97 and this makes her the largest exporters in the world with a share of about 28%.

This is not to be very proud of because of the yarn in a primary and not a value-

added commodity. Incidentally it has been estimated that about 70% of the total

cotton yarn is exported directly or after conversion into the value-added products.


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During 1998-1999 textile industry produced 1,542 million Kg of yarn, out of

which 54.94 million Kg (3.56%) was consumed in mill while 417.78 million Kg

(27.10%) was exported and 1,069.2 million Kg (69.34%) was available for local

market. The price of yarn (20/1) during 1998-1999 was Rs. 472.61 per bundle of 10

lbs.

Pakistan exports yarn to the following major countries: Hong Kong (25.38% of

total yarn export), Japan (19.72%), South Korea (8.90%), Asian countries (8.31%),

Dubai (3.72%), China (7.77%), and USA (4.81%).


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3. Introduction of Organization

We are a vertically specialized textile company. We manufacture virgin fibers

to retail ready products, which are marketed through our global sales and distribution

set up. Azgard9 Ltd is about a 100 million US $ company with sales offices in five (5)

countries. Our business includes Specialized Yarns, Denim Fabrics and Denim

Garments.

Azgard9 Limited

The Origins and the Inception

‘A place at the centre of the universe inhabited by the GODS’

Azgard is represented and embodied by the LOGO we have created; the oval

male form is representative of the universe and the void or female portion in the

centre, where ‘THE GODS RESIDE’. The universe is cradling the void as if to protect

as well as nurture it as it is contained in the centre of the ‘WOMB’ of the universe in a

fetal position.

In the ancient legend ‘AZGARD’ was one of nine worlds in NORSE

MYTHOLOGY- it was protected by ‘HEIMDALL’ the son of nine different mothers

each attributing him with a particular skill and power- and thus he would protect

Azgard from the powers that be.

The significance of nine for the members of Azgard

The significance of Nine for our company is not just based on this mythology

but also connected with the auspicious nature of this number throughout many

different elements in and of the world today that affect humans and their behavior.

The number ‘NINE’ is considered to be an auspicious and important number in

Indian, Chinese, Japanese, and Greek, cultures for various different reasons.


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In Chinese culture the number Nine represents ‘Change’ and

‘Transformation’, as is the case with Azgard Nine Limited, which is changing and

transforming itself into a global entity with new goals, aspirations, and targets.

Nine is much of Ancient Greek Mythology also has represented ‘Gestation’

and ‘Fulfillment of Creation’ as it does for us at Azgard Nine- The ‘Fulfillment of

Creation’ for us being the forming of this global entity incepted by Nine members on

the Ninth day of February sowing the seeds for an auspicious and rewarding future.

3.1 History of Azgard9

Azgard-9 Nine Limited is one of the oldest business groups on the Asian sub-

continent. It was started as a family business over four generations ago. The Sheikh

Family, now in the fourth generation, is one of the oldest business families in the Sub

Continent with experience in many different sectors. The family began its first

operations in 1886 as a first Ginning factory in Shamkot India.

After the formation of Pakistan in 1947, the group saw massive growth, whilst

consolidating its position in the market. At the end of this period the group employed

over 15000 people.

In 1972 the group became international by expanding to Ireland in the textile sector.

In 1978 the group established a presence in the United States by acquiring Burke

Mills Inc. in North Carolina. By 1980 this presence was also expanding and fortified

with the addition of another company Tennessee Textiles. The group was now

solidly focused on the textile sector. We set up AZGARD NINE LIMITED in 1994 as

a fully integrated vertical denim unit for fabrics and garments in collaboration with

LEGLER SPA. Of Italy.

In 1996 we expanded our American operations to Mexico where we set up a yarn

twisting operation as another joint venture between the NAFEES group and the

Alpha group, which is the largest industrial group in Mexico.

3.2 Company Vision

Our vision is to become a major global fashion Apparel Company


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3.3 Company Mission

“To retain a leadership position as the largest value added denim Products

Company in Pakistan”

3.4 Core Values

(a) Respect For All

(b) Integrity

(c) Hard Work

(d) Ethics

(a) Respect for All

Does not discriminate on the basis of race, religion or ethnic

background

Respect for Women

Strongly prohibit all forms of harassments. For example racial, sexual

or any kind

Attract, retain and develop outstanding people (b) Integrity

Honesty to self, colleagues and Azgard9 (c) Hard Work

Company mission can be only achieved by hard work

Honesty and hard work is appreciated and rewarded such as:

(i) Incentives upon achievement of target

(ii) Performance based incentives and promotions

(d) Ethics

Professional behavior shall be entertained. e.g. gifts and favors will not

be accepted

Personal beliefs of employee will be respected

Responsibility and accountability

Changes in Policies/Procedures shall be informed beforehand to the

concerned individuals


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Work ethics:

Attendance

Teamwork

Appearance

Attitude

Productivity

Cooperation

Respect

Character

Communication

3.5 Corporate Philosophy

Azgard9 is a centralized and formalized organization. It believes in teamwork.

3.6 Code of Business Principle

AZGARD 9 is an equal opportunity employer and safe guards the

Rights of gender

Religion

Race

Encourage Employees on the basis of

Education

Experience

Professionalism

The Company does not discriminate on the basis of

Religion

Race

Ethnic Values

Gender

Cost

Nationality


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3.7 Products

Specialized Yarns

Denim Fabrics

Denim Garments

3.8 Services

Construction of 2.5 Kms road leading from the main Multan Road to a

nearby village.

Set up a Police Post in the adjacent village

Cost sharing with Punjab Govt in arranging Annual Lahore Marathon

Race (All categories)

To promote & set-up facilities for technical as well as general education

programs.

To start community social development programs in areas of health,

education, civic facilities etc.

3.9 Name of the Department

Marketing Department

3.10 Name of the Unit

Garment Business Unit (GBU)


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3.11 Structure of Unit

This Departmental Flow Chart shows the structure of GBU

PRODUCT DEVELOPMENT

PRODUCTION PLANNING CONTROL

MERCHANDISING

SAMPLING

CUTTING

FINISHING & PAKING

WASHING

STITCHING


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3.12 Culture

“The high speed passionate pursuit of progress through teamwork”; Azgard

believe in team work and all the departments follow the hierarchy levels of reporting

strictly.

3.13 Customers

Montebello (Azgard9’s Italian Subsidiary through Fartital AB)

JC Penney

Levi’s

Diesel

Mango

Yellow

H&M

Old Navy

GAP

ESPRIT

Tommy Hilfiger

Nike

C&A

3.14 Markets

Azgard9 have strong roots in the foreign market. The company is

providing very little of overall products and services to the local market.

51% Direct Exports, 32% Indirect Exports &17% Local sales


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4. Introduction of Business Divisions

4.1 Spinning & Specialize Yarn

The department of specialized yarn started its production in 1972. And they

are yearly producing 67 million/ LBS per year. And the department of spinning

division started its production in 1995, its produce 400 bags per day.

The company focus is on producing fashion oriented yarns developed in close

cooperation with our customers and our raw material suppliers so that we can

provide products, which are already in demand in the market place.

The range includes both Greige cotton and dyed cotton yarns, blended yarns and

pure synthetic yarns we also offer organic cotton yarns for those customers who

demand it. We are cotton ASA certified and can provide certificates upon request.

Our open end yarns are used primarily in the denim sector. They lend themselves

perfectly for these applications and have achieved a very high degree of brand

loyalty in the markers in which they are sold. Technical data about machinery and

plant equipment and capacities is available in the “technical data” section.


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4.2 Spinning Process

Laboratory

Carding

Sensor

Separator

Steamer

Plucker


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4.3 Denim Fabric Division

The department of denim division started its production in 1995. And they are

yearly produce 14.4 million meters of fabric.

The primary focus and concentration of the denim division is to produce value

added fashion forward advanced denim fabrics which are in line with the marker

leaders located around the world. But at a proce point that truly offers the best buy to

our customers.

We are nominated to be the only supplier in Pakistan for some of the largest

and most prestigious customers from around the world.

Azgard-9 has state of the art manufacturing facilities employing rope dyeing and

air jet weaving technology. Our total capacity will be 26 million linear meters by

year’s end 2005.


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4.4 Denim Fabric Process Flow Chart

BALL WRAPING

DYING

REBEAMING

WEAVING

FINISHING FABRIC

SPINNING

INPUT


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4.5 Garment Division

The department of garment division started its production in 1996. They are

fulfilling the initial minimum order quantity 7000 pieces. But, now the total production

of the garment division is per day 12000 pieces.

The garment operation is the newest addition to complement. The azgard-9

portfolio and thus completes the fully vertical aspirations and visions of the group.


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4.6 Garment Division Process Flow Chart

CAD

Cutting

Stitching

Finishing

Washing


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5. A Managerial View

5.1 Departmental Flow Chart of GBU

PRODUCT

DEVELOPMENT

MERCHANDISING

SAMPLING

CUTTING

STITCHING

WASHING

PRODUCTION

PLANNING CONTROL

FINISHING & PAKING


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5.2 Planning Process and Tools/ techniques

5.2.1 Product Development (PD)

First of all OCS (Order Confirmation sheet) is received from merchandiser,

which is attached with following details, which are as follows;

Customer specification A/W sheet.

Cutting details.

Packing details.

Approved trim cord B/W and A/W.

Original sample which is valid for styling.

Thread and washing details.

After receiving OCS the PD department send MS (merchandising sheet),

which is also known as work order sheet to MMC (Merchandiser Material Control)

department.

It is basically a procurement or purchase department. This department then

purchase and provide the material listed in the MS sheet.

The 2nd main function of PD department is to issue the Technical sheet which

is also known as production sheet. This Technical sheet describes every single

complication in the order.

Many Technical problems are solved and explained in this sheet. The

technical book contains the following contents:

Style summery

Stitching standards.

Accessories standards.

Packing standards.

Customer specs MS.

This technical book is then distributed to all departments


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5.2.2 Product Development Flow Chart (PD)

Detailed Information Along With Order Confirmation

Sheet

Thread Calculation,

Fabric Consumption,

Merchandising Sheet

Verification Of Merchandising Sheet

Verification Of Technical Sheet

Production Check Run Activity

Technical Sheet

Forward Merchandising Sheet to Concerned

Department

Audit Of Production Check Run

Final Verification of Technical Sheet

Forward Technical Sheet to All Concerned Department

NO

NO

NO


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5.2.3 Production Planning Control (PPC)

The main function of PPC is to plan from booking to shipment and giving the

final dates to the marketing department for the completion of orders.

In this process the confirmation of order is first received from marketing

department with order number and desired date for completion. PPC department

receives availability report of goods and trims from the supply chain department. If

there is any shortage of fabric or before wash (B/W), after wash (A/W) accessories

then PPC demands estimated date for the availability of trims and fabric from MMS

(Main & fabric store) department for the procurement of goods .Then PPC

department make analysis of the capacity of the all operations in the company and

then give their possible date of completion to the merchandiser with the addition of

few days to the calculated completion date as a factor of safety.

If there is much difference between the desired date of merchandiser then

marketing department negotiate with customer and the date is then finalized .It is

PPC department which defines the targets for all the functioning departments on

daily basis also.

For this purpose a graphical chart is made which tells the starting and

completion time of stitching operation. This chart can be based on coming 2 months

or more depending upon the load of orders. The chart on next page shows it clearly.

The main functions of PPC are:

Potential Planning Departmental Goals Time and Action Plan.


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5.2.4 PPC Flow Chart

Distribution Of

Orders in Lines

Distribute Of Plan

Plan Discussion

With Production

Monthly Cut\Shipment

Induction Plan

Potential Analysis

(Unit Selection)

Deliverance Finalization

Order Inquiry from MRC

Order Allotment


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5.2.5 Marketing Department

First of all, the Customer sends inquiry to the marketing department. There

are two ways regarding inquiry depends on the demand of the customer. i.e.

With Garment

Without Garment

After this, 1st sample or prototype is sent to customer for approval. If it is

rejected then 2nd prototype is made for approval of the order. If rejection continues,

then this process continues until the sample is approved. In case of approval of the

order, the customer tells its demand regarding order of SIZE SET or demand for

SMS (Sales Man Sample), its all depend on the customer requirements. It would be

delivered to customer for final approval of order. After approval of the order from the

customer, order confirmation is required from the marketing department. After this,

the customer sends purchase order to marketing department. The marketing

department sends the sales contract to the customer. Then the production starts.

After completing the target the finish garment ready for shipment. Before the

15 to 20 days of shipment payment should be received.


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5.2.6 Flow Chart of The Marketing Department

Customer

Inquiry

With Garment Without Garment

1st Sample (prototype)

Send Customer (for approval)

2nd Prototype

SMS (Sales man sample)

Size Set (Sales man sample)

Sample

Payment

Production

Sales Contract Performa Invoice

Purchase Order

After Approval

Order Confirmation

Shipment

Reject

OR


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5.2.7 Sampling Department

First of all the customer specification page is received in which sizes of

different parts are stated, with the help of these specifications the pattern master

makes the hard pattern of the different parts of the sample.

Then a sample called inquiry sample is sent to the customer in which some

developments are made. Customer can make changes in it by giving suggestions.

After making some modifications the customer sends the sample to sampling

department. Where another sample is made which meets the customer modifications and suggestions. This sample is called ‘approved sample’.

A size set is then sent to the customer along with preproduction sample. The

customer select one specific size called base size out of that size set provided if he

passes the sample. This selected sample is called ‘sealed sample’.

After the approval of this sample it is sent to the marketing department and

then to Production Development (PD). Where Technical sheet is received. This

Technical sheet along with sample of fabric is sent for the Production Check Runner

(PCR) where shrinkage of swatches is measured. The values of shrinkage

allowances based on PCR are noted on shrinkage report and sent to the GGT,

where values of allowances are adjusted in the base pattern.

Then final marker is received for the purpose of cutting fabric for at least 6

pieces. Then fabric is cut according to the marker and ready to be stitched. Cuttings

are stitched and sample is created.

Before wash and after wash measurements are made in the sample. Change

in dimensions is noted on a report and that report is again sent to GGT. Where some

amendments are made in the drawing to overcome the shrinkages in bulk

production. The sample is sent to Quality department which send a quality report to

Quality manager.

There should be more pattern makers (trained) as the load to pattern master

ratio seems too much. Wastage of time can be controlled.


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5.2.8 Flow Chart of Sampling Department

Flow of Sub Departments

CAD (Computer Aided Design)

Cutting

Stitching

Washing

Finishing & Packing


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Flow of work

In CAD

Digitizing

Converter

Marker Making

Send to Plotter

Out Put (Send to cutting department)

Customer Send Sample

Pattern through e-mail


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5.2.9 Cutting Process

In Put (From CAD)

3 manual Cutters

Stitching Department

Small Parts + Back Parts Front Parts + Assembling

Washing Department

Finishing & Packing


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5.2.10 Flow Chart of Cutting Department

SPREADING

CUTTING

NUMBERING

STACKING

WIP

PPC

FABRIC AVALIABILITY

ORIGNAL SAMPLE TECHNICAL SHEET

PCR CUTTING

PCR MEASUREMENT/

CHECKING

AMENDMENT ON PCR

MARKER MAKING

PATTERN CHECKING

MARKER CHECKING

YES

NO


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5.2.11 Flow Chart of Stitching Department

Small Parts

Back Parts

Front Parts

Assembling


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5.2.12 In-Depth Look over the Flow of Work

Small Parts Back Parts

Watch Pocket

Pocket Formation

Front Right &Left Pocket

Attach

Back Pocket Formation

Front Fly

Dart Formation

Panel Patch NO.1 Attach



Right & Left Panel Attach


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Front Parts Assembling


Right & Left Panel Attach



Belt Loops

Hamming

Waste Band

Labeling

Out Sean

In Sean


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5.2.13 Washing Flow Chart

WASHING

AFTER WASH QUALITY CHECKING

DISPATCH TO FINISHING

SAND BLAST CHECKING

WASH CHECKING


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5.2.14 Finishing & Packing

WIP

Accessories

Cutting & trimming

Finishing

Press

Packing


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5.3 Organizational Structure and Design

Organization Structure designates formal reporting relationships. It identifies

the grouping together of individuals into departments and of department into the total

organization. It includes the design of systems to ensure effective communication

and coordination across departments.

Employees of AZGARD NINE GROUP

Management Staff Non-Management Staff

Management Trainee

Assistant Manager

Manager

General Manager

Business Unit Manager

CEO

Un-skilled Workforce

Skilled Workforce

Supervisor

Senior Superv isor

Shift In charge

Organization Structure

Asst Supervisor

Perfo

rman

ce, c

ompe

tenc

y, n

ew sk

ills,

achi

eve

targ

ets

Clear Direction - Values, Vision, Mission, Goals

Human Resources Depa rtment


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5.4 Communication

In Azgard9, there is paper-less communication. Communication plays a vital role in

daily routine of Azgard9 culture. The means of communication used by the

management are: Office telephone extensions, E-mails, Notice boards.

How to get information regarding Office telephone extension?

There are two main sources from where information can be obtained regarding office

telephone extensions i.e. Consult the Telephone list in your department or Dial “0” to

talk to company operator for further details.

How to get direct dialing from operator for official works?

The direct dialing from operator for official work can be managed through dialing “0”

from the office extension. Please note that mostly we dial “0”; the operator will attend

your phone; provide your information regarding your name, department and office

extension; the operator will ask you to hold; operator will dial the number and direct

you to talk. The maximum period for one call is restricted to 5 minutes due to

pressure of calls on telephone lines / telephone exchange. Please show patience

when dialing the operator.

How to create E-mail account?

To create the E-mail account of an employee, the employee will communicate the

name, designation and department with the Information Technology (IT) department.

The employee has to fill the “User Account Creation Form” to activate the Login

name and E-mail address. E-mail shall be provided if recommended by Head of

Department (HOD), otherwise only Login name will be created for the employee.

Those employees who were recommended to get E-mail address shall submit the

“User Account Creation Form” to IT department and the System Administrator will

activate their E-mail address.


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How to use Microsoft Outlook for E-mail?

Major applications:

1. Send / Receive E-mail

2. Address Book

3. Create Signature

4. Attachment of file

Consult Key book at IT department

Where IT department is located?

The IT department is located on the first floor near Managing Directors (MD) room.

IT Support Services Extension no # 125, 225

Extension no # to confirm the purchase of system: 325

Where main notice boards are located?

There are two main notice boards for administrative information located in the

garment passage hall. There are two directions to reach the notice boards. Firstly,

enter the garment gate, pass the IN/OUT machine, walk ten (10) meters and you will

find the notice board at your right hand wall. Secondly, enter the reception gate, pass

the reception, enter the tunnel passage and turn to your right or left at the end of the

tunnel passage. You will find the notice board pasted on the adjust walls.

However, there are departmental notice boards located in each department to paste

their information. The further departmental notice board information can be gathered

from the respective departments in detail.

What are the major information’ communicated by the means of Notice board?

The major information regarding Gazetted holidays, announcements, policies and

administrative matters are communicated through two major notice boards.


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5.5 Motivational Techniques Used

Pay increment is being provided not on experience basis but on performance

basis. Also there are lists of benefits which are being provided to employees to

increase their productivity level.

Employee Benefits Highlights

• Foreign Training Trips • Residential

Colony• Performance BasedAnnual Increments

• Variable PayScheme

• 32 leaves per annum

• Company LoanFacility

• Recreational TripsSubsidized

Lunch Facility

• Company Paid Mobile Phone

• Pick and DropFacility

• Health Insurance

• Group Insurance

• Provident FundScheme

• Incentive Scheme(On achieving tar gets)

• Car Scheme

Human Resources Depa rtment

5.6 Controlling Authorities

Managing Director (MD) and General Manager (GM) are the controlling

authorities over there.

5.7 Control Approaches Used

Personal observation

Statistical Reports


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6. Structure, Design and Issues

6.1 Divisions and Groups of its businesses

Specialized Yarns

Denim Fabrics

Denim Garments

6.2 Azgard Businesses Include

Azgard 9 diversified into this sector by acquiring PAFL from

Government of Pakistan in 2006. The unit manufactures ammonia &

urea.

Azgard Project Management &Engineering Solutions manages two

power Plants, which provide maintenance & support services.

6.3 Geographic Distribution of Azgard

Garment business unit (Manga Site)

Garment business unit (Ferozpur Road/ FPR)

Spinning Unit (Multan)

Pak American Fertilizers Limited (Mianwali)

6.4 Structural Dimensions

Formalization: “The act of making formal by stating formal rules and standards.”

Azgard9 is a formalized Organization. There are some set rules and standards which

every employee has to follow.

Specialization: Azgard9 is a composite unit and its specialization is Yarn.


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Centralization: Its both FPR i.e. Ferozepur Road site and Manga site are

centralized except their production department.

6.5 Contextual Dimensions

Size: Azgard9 Ltd is about a 100 million US $ company with sales offices in five (5)

countries. Our business includes Specialized Yarns, Denim Fabrics and Denim

Garments.

Technology: AZGARD 9 has state of the art manufacturing facilities employing rope

dyeing and air jet weaving technologies. Our Total capacity will be 28 million linear

meters by year ending 2010.

External Environment: As Azgard9 deals with the foreign market only. So the

company strong competition with its foreign competitors.

6.6 Decision Making

GM and MD are involved in decision making. And also head of the departments take

part in formal decision making.

6.7 Conflicts and their Resolution

Being formalized organization, all the disputes and conflicts are sent to the next

higher authority in the hierarchy. And authority decides its resolution.

6.8 Power and Politics

Power is in hands of top management like higher authorities. There is no any

concept of employee empowerment. Politics exists everywhere in the company. No

employee can escape from that politics. Leg pulling is also there.


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7. Strategies and Analysis

7.1 Competitive Strategy

Better performance

Providing value added products

Providing on demand washing effects

Adopted pull and push strategy

Providing better products at lower rates

7.2 Marketing Strategy

Firstly improving own product

Better research & development

Product innovation

Reasonable price against market

Smart and excellent outlook of garments

Using price strategy for youngsters

7.3 SWOT Analysis

Strengths:

Vertical Composite Unit

Multinational Company dealing with worldwide big brands (e.g.: H&M,

Diesel)

Unique washing and dying

Two power supply units

Weaknesses:

Health and safety Environment problems

Manual cutting


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Opportunities:

Company is going to launch a new local brand in 2009

TQM Implementation is one of its big opportunities.

Threats:

Competitors ( CBL, US Denim)

Political instability in Pakistan

7.4 Financial Analysis

The challenging trading conditions have a great impact however the

performance of Azgard9 shows a healthy growth trend. However the increase in

finance cost was greater than the growth in income which significantly affected the

bottom line. The rapid increase in the finance cost is basically due to the devaluation

of the Pak Rupee. Company had borrowings in foreign currencies either directly or

indirectly thus effecting the finance cost very badly.

Performance

Equity of company is Rs. 10,317,920,684

Production reached 5 million tons, approximately.

Sales Rs. 10,113,499,351 which is 53% change as compared to last

year

Profit after tax is Rs. 897,283,923 which is 17% change as compared

to last year

Having total assets of Rs. 29,600,032,254

Goals

Continue with its low pricing strategy

Keeping sufficient margins

Further enhancing the product and services portfolio

Ensuring seamless business process interaction with the customers

Create a highly integrated supply chain

Enhanced customer loyalty and value creation


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8. Core Internship Experience

Being a marketing internee, I was assigned a task related to marketing practices.

Here firstly I am going to discuss briefly whatever I learned over there regarding

other marketing practices.

Marketing department is the key department of the organization and half of

the success of the business depends upon the activities of this department because

this department has direct contact with the customers.

Marketing department deals with two types of markets

International Market

Local Market

8.1 Hierarchy of Marketing Department

Hierarchy structure if the marketing department is as follows:


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8.2 Export Section

Azgard has local market as well as export market; therefore the major job of

all the marketing managers is defined. The major steps, which are involved in the

process, are as follows.

Broadly categorized there are two types of customers:

8.2.1 Direct Customers

Direct customers are those who directly import the yarn from Azgard. These

types of customers enjoy the low prices because of the fact that there is no

commission involved in that case. In this type of correspondence there is no

intermediary.

8.2.2 Agent Customers

In this aspect there are three possibilities

1) Pakistani agent is involved

First possibility occurs when a local agent has some direct customer in the

local country and that agent contact with Azgard. The commission paid to the

agent is added to the cost. The commission ranges from 2% to 3%.

2) Foreign agent is involved

Second possibility occurs when a foreign agent has some customers in his

country and that person is in direct contact with Azgard. The commission in

that case is also added to the cost. The limit of that commission ranges 2% to

3% according to the amount of the invoice. The percentage depends upon the

profit margin which is given by the customer.

3) Pakistani as well as foreign agent is involved Third possibility occurs when a foreign agent has some customers and that

agent had no direct link with the company but with a local agent who have

direct link with the company. In this case the maximum commission for both

the agent is 4% which is distributed among them by mutual understanding.


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8.3 Export Order Execution

Scope

This procedure is applicable for all sort of yarn being produced.

Purpose

To maintain & increase the export with better quality goods and

services.

To ensure that services fulfill the needs of customers

Responsibilities

C.O.O. To give price approval

Dept. In charge To make inquiry to relevant section and watch all related

activities

Section In charge To do costing and setting approval & follow up.

Senior/Junior Staff To send samples

To note dispatches orders

To maintain all records in Customers Dockets

8.4 Procedure Inquiry

First of all, customer send enquiry. He tells about his requirements that how many

quantity of yarn is required in what count and specification. In response the supplier

sends quotation to the customer and tells about the detail of his order. Suppliers see

whether he can meet his requirements or not. The negotiation is started between

seller and customer in which prices are settled, delivery date is decided and other

terms and conditions are discussed.


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At the end a sales contract is signed from parties, seller and customer. In his sales

contract following things are mentioned.

Costing

Costing sheet is prepared for C.O.O approval. In absence of C.O.O

department in charge approves the price.

Costing Approval

CEO gives approval or may suggest any other price to be offered.

Contract Review and Issue

Section in charge takes following steps before issuing a contract:

1. Prepare contract review check sheet

2. The requirements are adequately defined and involvements of

production areas are specified.

3. In-house/Out-house, have the capacity to meet the order requirements.

In getting approval of costing and review of customers requirements prices

are quoted to the customer for confirmation.

Confirmation of Sale Contract

If customer confirms the price offered, sale contract is issued to the customer

with complete details of price, quality, delivery, payments terms etc.

Letter of Credit (L.C)

In this supplier’s bank and customer’s bank are involved. Therefore payment

is done through banks.


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Procedure of Letter of Credit

1) LC Opening Bank

It is also called the bank of importing country.

2) LC Advising Bank

This bank provides LC to the suppliers. The supplier receives the LC

and starts the production.

3) Negotiating Bank

The supplier submits the required documents to this bank. Then this

bank provides the amount of LC to the supplier on certain terms and

conditions.

Elements of Letter of Credit

1. Name of issuing bank

2. Form of LC

3. Revocable of irrevocable

4. Date of issue

5. Buyer’s name

6. Supplier’s name

7. Currency code

8. Amount

9. Payment terms

10. Shipments

11. Loading

12. Transportation

Performa Invoice

After the negotiation on prices took place and both the parties agreed, then the

Performa invoice is formed in which all the conditions of LC and total quantity of

order and the total price of that order is mentioned. The invoice is faxed to the buyer

and after the confirmation and opening of LC production is started of that order.


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Description

Count 20/1 carded 100% cotton

Quantity 660 cartons

Packing sea worthy standard

Shipment July 3, 2000

Price US $ xxx per kg

Amount US $ xxx

Payment payment by confirmed irrevocable LC

Commission 2% to foreign agent 1% to local agent

Production Memo

Production memo is a statement in which all types of instruction about the

production of the given order are written.

Dispatch of Goods/ Yarn

Packed yarn is dispatched to the customers. If the shipment is to be custom

cleared from Karachi, goods are sent to Karachi on trucks with all necessary records.

Dispatched goods are detail noted in relevant registers.

Shipment

If the goods are to be custom cleared at Multan fry port, these are sent to dry

port for clearance. Documents are sent to clearing agent same day or next day and

followed up to ensure that these goods are custom cleared without any unnecessary

delay. In case of dry port, original bill of loading and 4th copy of shipping bills are

collected from shipment departments. Concerned staff follows up dispatch of goods

with Karachi office port to ensure on time shipment.


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Post shipment documents are received from Karachi office and after proper

recording, handed over to finance department for negotiation. Shipping details are

noted in relevant registers. If there is any delay in receiving payments, relevant

person sends telex/ fax to customer for timely payment. Order registers are updated

periodically.

MIS Reports

Balance order instructions reports are updated periodically. Balance order list

is updated fortnightly for their information. Sale comparison reports are updated in

computer networks on monthly basis, it comprises one month’s status of shipment,

invoice values, complaints and claims (if any).

Quota Restriction

There are some countries where the quota restriction is imposed by the

importing countries. This quota is fixed on the basis of past experience. In these

countries where there is no quota restriction you can export as much as you can.

This is distributed by export promotion bureau among different mills.

8.5 Production Mix

Product

Azgard9 produces high quality yarn. It exports in foreign markets, sells in local

markets and along with that uses a major portion of its yarn in its own garment

department. All products are produced according to the requirements of customer

orders.

Price

Pricing is an important factor in the marketing process for any company. The

price policy of the company should be in such a way that it should produce a

reasonable profit, for the company and should satisfy the customers.


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Place

Azgard9 is using two types of distribution channels

1) Direct

Azgard Nine Limited Customer

2) Indirect

Azgard Nine Limited Middle Man (agent) Customer

Promotion

As the yarn is an industrial product, middle man (agent) plays a major role in

selling the yarn. However on the other hand the marketing department personally

contacts the customers and sells the product. Therefore personal selling is a major

promotional tool for Azgard’s marketing department.

8.6 Local Sale Section

Local sale section deals with the sale of yarn in local market. Therefore

manager local sales deal with the local parties for product selling.

Execution of Sales Process

For the sale in local market first they check industry rates and then they

began bargaining with the customers. The manager sets the rates with the parties

and terms and condition also by both the parties so in this way a contract is signed.

Buyer Name

Seller Name

Product Specifications

Price

Delivery Time

Place etc


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Commission is also set by the company with agent if the agent is involved

here. Then order is given to the production unit confirming the date of destination

etc. So in this way local sale is done.

9. Conclusions

Being an HR internee in Azgard9, I would like to mention that Azgard9 provide us a

great opportunity to learn practical knowledge. Azgard9 is a well reputed and a big

garment company in the textile sector. I really enjoy a lot while doing work over

there. Supervisor and managers of the department help and guide me a lot. One

thing which I find missing over there i.e. strong communication between

departments. Politics exists everywhere.

10. Recommendations

There is a need of strong communication within each department and

between the departments.

Locate all the sub-departments of HR at same place. It will help to

increase coordination between departments.

There should be separate uniform for workers of each department within a

specific business unit.

Attendance procedure should be more appropriate. Finger prints should be

taken from the employees.

Internees should be free to visit all departments.

There should be proper equipment provided to employees and workers to

prevent noise pollution and dusty areas. The workers should be strictly

bound to use these equipments.

Stipend should be given to internees.

There should be separate equipment for Training room.

There should be separate cafeteria for female employees.

There should be proper mosque for employees.


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11. Bibliography

http://www.azgard9.com/html/financial-information.htm

http://www.azgard9.com/html/Security-Analyst.htm

http://www.azgard9.com/html/financial-

info/2008/Security%20Analys_g%20-%20Q1.pdf

http://www.js.com/pakistan-financial-news-latest_75.asp

http://www.pacra.com/

http://www.brecorder.com.pk/index.php?currMIndex=16&currPageNo=1

12. References

Saqib Hussain (Business Development Manager, Azgard9)

Tahir Munir (Business Unit Manager, Azgard9)

Shah Bano (Deputy Manager Marketing, Azgard9)

Bilal Afzar (Business Manager, Moody International)


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14. Glossary

A/W After Wash

Azgard9 Azgard Nine Limited

B/W Before Wash

CAD Computer Aided Design

CEO Chief Executive Officer

COO Chief Operating Officer

E-mail Electronic Mail

FPR Ferozpur Road Site

HOD Head of Department

IT Information Technology

LC Letter of Credit

MD Managing Director

MMC Merchandiser Material Control

MS Merchandising Sheet

OCS Order Confirmation Sheet

PAFL Pak American Fertilizers Limited

PCR Production Check Runner

PD Product Development

PPC Product Planning Control

R & D Research and Development

SMS Sales Man Sample

T & D Training & Development

WIP Work In Process