2.5 Km off Manga, Raiwind Road, Pakistan

Website: www.AZGARD9.com; Phone: +92 (0)42 111-786-645; Fax: +92 (0)42 538 3591

Acknowledgement

At first we are thankful to Almighty ALLAH and the Holy Prophet (P.B.U.H), who has given us wisdom to depict the topic and

bring its virtual dynamic in front of you. We are also thankful to Azgard9 management for helping us to prepare and share their

official documents for the preparation of this presentation.

AZGARD NINE LTD group was started as a family business over four generations ago by 'Shaikh' family - now they are one of the

oldest business families in the sub-continent since 1886 with experience in many different sectors in Pakistan and having a proven

track record of successful leadership in four continents and in Denim field they started in 1995 and established as Denim giants

today.

The concept behind the Group's Textiles ambitions was to be a fully vertical composite apparel solution provider, AZGARD NINE

LTD has 'Italian Technology Partners', the shortest lead time to supply any Denim product and quick replenishment of product to

the European markets

Today 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 Absolute best value provider of

Denim products anywhere in the world with largest R&D and Production facility in Pakistan having sales turnovers of

Rs.6,628,341,926 (663 cores).

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. Today we have over 8358 million spindles

installed , 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.

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. The industry also tops, as an earner of foreign exchange and exported goods

worth US $ 4.9 billion last year and this amount is about 60% of the total national exports. It share in total GDP 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. 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. The 1.7 million tons per annum of lint cotton, “the silver fiber” that forms

a natural and sound base for a viable textile industry. We should product more value-added products because if we see the value

addition chain the prices of cotton US$ 1.33, yarn US$ 2.33, cloth US$ 5.41, garments US$ 6.71, towels US$ 4.05, bed

wear US$ 5.51 are per Kg respectively. Thus we can earn additional foreign exchange by exporting value-added products.

2.3 Denim Industry

The denim component has been developing the fastest in the last decade – with Pakistan touching almost 600 million sq meters of

denim fabric production per annum. There are about 40 major players in the denim industry of Pakistan with Azgard9 as major

exporter.

Azgard is a vertically specialized tex tile company who manufacture virgin fibers to retail ready products. Itis about 100 million

US $ company with sales offices in five countries. Their business includes Specialized - Yarns, Denim Fabrics and Denim Garments.

The Origins and the Inception of Azgard; „A place at the centre of the universe inhabited by the GODS‟

Azgard is represented and embodied by the LOGO they 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 protects well as

nurture it as it is contained in the centre of the „WOMB‟ of the universe in a fetal position.

The significance of nine for the members of Azgard;

The number „NINE‟ is considered to be an auspicious and important number in Indian, Chinese, Japanese, and Greek,

cultures for various different reasons.

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 Azgard

They 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 they expanded their American operations to Mexico where they 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

3.3 Company Mission “To retain a leadership position as the largest value added denim Products Company in Pakistan”

3.4 Core Values

Respect For All Integrity y Hard Work Ethics

Work Ethics

Productivity Cooperation Respect Character Communication Attendance Teamwork Appearance Attitude

3.5 Corporate Philosophy

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

3.6 Code of Business Principle

AZGARD9 is an equal opportunity employer and safe guards the; Rights of gender Religion Race

3.7 Products Manufactured: Specialized Yarns Denim Fabrics Denim Garments

3.8 Development of Services Police station Road construction till plant Educational facility in company.

3.9 Name of the Department Marketing Department

3.10 Name of the Unit Garment Business Unit (GBU) 3.11 Structure of GBU Unit

3.12 Organizational 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 (Azgard-9‟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

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

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

4.2 Spinning Process

4.3 Denim Fabric Division 4.4 Denim Fabric Process Flow Chart

The department of denim division started its production in 1995 producing

14.4 million meters of fabric.

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

and air jet weaving technology. With 26 million linear meters by year‟s end 2005.

4.5 Garment Division

The department of garment division started its production in 1996

with 7000 pieces.Now the total production is 12000 pieces.

5.1 Departmental Flow Chart of GBU

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, as follows;

1. Customer specification A/W sheet.

2. Cutting & Packing details.

3. Approved trim cord B/W and A/W.

4. Original sample which is valid for styling.

5. 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.

5.2.2 Product Development Flow Chart (PD) 5.2.3 Production Planning Control (PPC)

The main functions of PPC are:

1. Potential Planning

2. Departmental Goals

3. Time and Action Plan

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.; 1) With Garment 2) Without Garment

5.2.6 Flow Chart of The Marketing Department

5.2.7 Sampling Department 5.2.8 Flow Chart of Sampling Department

Flow of Sub Departments, Flow of work in CAD

5.2.9 Cutting Process

5.2.7 Sampling Department

5.2.10 Flow Chart Of Cutting Department 5.2.11 Flow Chart Of Stitching Department

5.2.12 In-Depth Look over the Flow of Work

5.2.13 Washing Flow Chart 5.2.14 Finishing & Packing

5.3 Organizational Structure and Design

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?

How to get direct dialing from operator for official works?

How to create E-mail account?

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

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.

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.

5.6 Controlling Authorities Managing Director (MD) and General Manager (GM) are the controlling authorities over there.

5.7 Control Approaches Used

1. Personal observation

2. Statistical Reports

6.1 Divisions and Groups of its businesses

Specialized Yarns Denim Fabrics Denim Garments

6.2 Azgard Other Businesses Include

Fertilizer plant acquired by 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.

Centralization: It‟s 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.

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.

7.1 Competitive Strategy

1) Better performance 4) Providing value added products

2) Providing on demand washing effects 5) Adopted pull and push strategy

3) Providing better products at lower rates

7.2 Marketing Strategy

1) Firstly improving own product 4) Reasonable price against market

2) Better research & development 5) Smart and excellent outlook of garments

3) Product innovation 6) Using price strategy for youngsters

7.3 SWOT Analysis

Strengths:

1. Vertical Composite Unit

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

3. Unique washing and dying

4. Two power supply units

Weaknesses:

1. Health and safety Environment problems

2. Manual cutting

Opportunities:

1. Company is going to launch a new local brand in 2009

2. TQM Implementation is one of its big opportunities.

Threats:

1. Competitors ( CBL, US Denim)

2. Political instability in Pakistan

7.4 Financial Analysis and its impact on Stakeholders or owners

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 ( 1,031.8 core )

Production reached 5 million tons, approximately.

Sales Rs. 10,113,499,351 ( 1,011.34 core ) which is 53% change as compared to last year

Profit after tax is Rs. 897,283,923 ( 89.72 core ) which is 17% change as compared to last year

Having total assets of Rs. 29,600,032,254 (2,960.0 core )

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

For Marketing and Business Development, this project is really fruitful for those who are interested in denim marketing.

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

1. International Market

2. Local Market

8.1 Hierarchy of Marketing Department

Hierarchy structure if the marketing department is as follows:

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% to3% according to the amount of the

invoice. The percentage depends upon the profit margin which is given by customers.

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, note dispatches orders, maintain all records in Customers

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 suppliers ends 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.

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.

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

Name of issuing bank Form of LC Revocable of irrevocable Date of issue

Buyer’s name Supplier’s name Currency code Amount

Payment terms Shipments Loading 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.

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.

MIS Reports Balance order instructions reports are updated periodically. Balance order list is updated fortnightly for their

information.

Quota Restriction

In some countries quota system is imposed. 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.

Place:-

Azgard-9 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;

Price Delivery Time

Place etc Seller Name

Product Specifications

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.

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 depts.

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.

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.

There should be separate equipment for Training room.

There should be separate cafeteria for female employees.

There should be proper mosque for employees.

Here we would like to mention that Azgard-9 has provided us a great opportunity to learn practical knowledge.

Azgard-9 is a well reputed and a big garment company in the textile sector. We really learned a lot while getting

formats, marketing and system information. Company team members of concern departments helped and guided us a

lot. One thing which we found missing over there i.e. strong communication between departments. Politics exists

everywhere.

Denim is a high end earning business, so I hope this will give an idea to explore denim buying offices which can give

you can extension to understand future successful business in Pakistan.