Small and Medium Enterprise of Pakistan Lasani Fiber Industries (SMC) Pvt Ltd.

Submitted to: Sir Imran Ali Submitted by: Emad Muhammad Iqbal Ciit/Sp07-BBA-016/Lhr Dated: 11-12-2009 Abstract SMEDA defines Small & Medium Enterprises (SME), as an enterprise that has up to 250 employees, or a paid up capital of 25 Million PK Rupees, or an annual sale o f up to 250 Million PK rupees. International business is a term used to collectively describe all commercial tr ansactions (private and governmental, sales, investments, logistics, and transpo rtation) that take place between two or more nations. Usually, private companies undertake such transactions for profit; governments undertake them for profit a nd for political reasons. As we know Textile industry is the backbone of Pakistans economy therefore govern ment must analyze the opportunities that lies in the international business and must provide all due compensations and facilities to SMES to go for international business but it is also responsibility of SME S to foresee challenges and oppor tunities ahead. Government should facilitate all the SMEs to make up the economy as they are the major contributors of economy. More flexible procedures and more flexible loan structures should be developed to increase entrepreneurship in Pakistan.

Table of Contents Abstract 1 INTRODUCTION 2 What is meant by SME? 2 International Business: 3 Significance of SMEs 4 SMEs IN PAKISTAN 4 ANALYSIS 5 Introduction to Lasani Fiber Industries (SMC) Pvt Ltd.: 5 Their Products: 6 SWOT ANALYSIS 6 Strengths: 6 Weaknesses: 6 Opportunities: 7 Threats: 7 CONCLUSION AND RECOMMENDATIONS 7 REFERENCES 8

INTRODUCTION SME is abbreviated as Small and Medium Enterprise. SMEs definition is different i n almost all the countries. What is meant by SME? Different agencies in one country may have different definitions of SME. Some ar e as follows: Federal Bureau of Statistics (FBS) defines Small Enterprises as entities having less than 10 employees. The FBS does not define Medium enterprises. State Bank (SME Prudential Regulations) : An entity , ideally not being a public limited company, which does not employee more than 250 persons ( manufacturing) and 50 persons (trade / services) and also fulfills one of the following crit eria: (i) A trade / services concern with total assets at cost excluding land and buil dings up to Rs 50 million. (ii) A manufacturing concern with total assets at cost excluding land and buildi ng up to Rs 100 million. (iii)Any concern trade (manufacturing or services) with net sales not exceeding Rs 300 million as per latest financial statements. The Punjab Small Industries Corporation (PSIC) defines medium enterprises as ent ities which have a fixed investment up to Rs. 20 million excluding the cost of l and and building; it does not recognize small enterprises. The Punjab Directorate of Industries (PDI) defines a small unit as one fixed ass ets worth Rupees 10 million of less, excluding the cost of land. The Punjab Smal l Industries Corporation (PSDI) sets this limit as Rupees 10 million. According to PDI, all enterprises with assets excluding land, valued between Rupees 10 mil lion and Rupees 100 million are medium scale units. PSDI defines medium scale un its as enterprises with assets excluding land valued between Rupees 20 million a nd Rupees 100 million. All enterprises employing less than 10 persons are catego rized as small or medium sized enterprises. SMEDA defines Micro Enterprises are those who have less than 10 People as their employees, and who have Productive assets limit of Rs. 2 million, Small Enterpri ses are those who have between 10-35 people and whose productive assets limit of Rs. 20 millions, and the Medium Enterprises have between 36-99 Employees and ha ve Productive assets limit of Rs. 40 millions. Sindh Industries Department (SID) defines SME as an Entity engaged in handicraft s or manufacturing of consumer or producer goods with fixed capital investment u p to Rs.10 million including land & Building. International Business: The economic system of exchanging good and services, conducted between individua ls and businesses in multiple countries. If any firm is engaged in international trade or investment then it is also call ed international business. The private companies do international business for t he sake of profit whereas government does it for profit seeking as well as for t he political purposes. The conduct of international operations depends on compan ies objectives and the means with which they carry them out. The operations aff ect and are affected by the physical and societal factors and the competitive en vironment. Significance of SMEs SMEs are considered the engine of economic growth in both developed and developi ng countries, as they:

Provide low cost employment since the unit cost of persons employed is lower for SMEs than for large-size units. Assist in regional and local development since SMEs accelerate rural industriali zation by linking it with the more organized urban sector. Help achieve fair and equitable distribution of wealth by regional dispersion of economic activities. Contribute significantly to export revenues because of the low-cost labor intens ive nature of its products. Have a positive effect on the trade balance since SMEs generally use indigenous raw materials. Assist in fostering a self-help and entrepreneurial culture by bringing together skills and capital through various lending and skill enhancement schemes. Impart the resilience to withstand economic upheavals and maintain a reasonable growth rate since being indigenous is the key to sustainability and self-suffici ency. SMEs IN PAKISTAN Small & Medium Enterprise (SME) sector is a predominant organ of Pakistan econom y. The sector constitutes about 90% of all private enterprises and employs 99% o f non- agriculture labor force. SMEs contribute over 30% to GDP,US$2.5 billion i n exports and 25% in manufacturing sector s export earnings besides sharing 35% in manufacturing value addition. In addition to formal sector there is a sizeabl e presence of SMEs in the informal sector. Another peculiar characteristic of SM Es is that they are labor intensive and encompass a wide range of activities, si ze, structure, productivity and input use. The statistics mentioned above clearl y indicate that SMEs are at the heart of economic activity. They have tremendous potential to adapt to the changing economic situations due to their flexible na ture and generate employment in the economy thereby eliminating poverty. The Government recognizes that SME-led private sector development needs further strengthening of the regulatory environment, adjustment in prudential policies, and the provision of support services for enterprise establishment, development, quality improvement and export /local marketing in the short to medium term. Th e Small And Medium Enterprise Development Authority SMEDA is a Premier instituti on of the Govt. of Pakistan under Ministry of Industries and Production. SMEDA i s actively developing programs for managerial skill development, technical and i nformative support to SMEs. SMEDA has also developed strategies for a large numb er of sectors and facilitates SMEs in the documentation for financial institutio ns, providing free technical, managerial and marketing advice. By looking at the above statistics we can say that in Pakistan SMEs plays an imp ortant role in building the economy as well as giving support to it. ANALYSIS Introduction to Lasani Fiber Industries (SMC) Pvt Ltd.: Lasani Fiber Industries is located at Sundar Industrial Estate, Raiwind road, La hore, Pakistan. This SME mainly deals in production of regenerated staple fiber. The company has gained enormous growth during last five years and is expanding its production and marketing strategy. Their vision of business is to get share in the production of regenerated Staple Fiber, Siliconized Staple Fiber, Wadding Sheets and end user products like Quilts, Cushions, Pillows, Bed Covers, and Fu rniture Filling. Their aim is to provide customers with high quality products wi th low prices. They are successful in maintaining a good quality of its products . Their long term plan is to create a handsome amount of good will in this indus try. Their Products: Following are the products in which they deal: Staple Fiber White 30 mm to 100 mm Staple Fiber White Siliconized 30 mm to 100 mm Staple Fiber Cream 30 mm to 100 mm Staple Fiber Cream Siliconized 30 mm to 100 mm Staple Fiber Green 30 mm to 100 mm

Wadding Sheets Bed Covers Quilts Mattresses Pillows & Cushions Furniture Fillings.

SWOT ANALYSIS Strengths: They have High quality Machinery Acquisition of High Quality Raw materials i.e., Quality of cotton used is the be st in the world. Proper Planning and Supervision of Production Process (Skilled Management) Effective Quality Control at every process Availability of cheaper labor Weaknesses: If they wanted to go to international market then following would be the weaknesses which should be overcome before going to international market. Cost of production overseas is too high mainly because of transportation costs. China has almost monopolized this field by its products so, its difficult to ente r into international market and compete with China. Energy costs are high Opportunities: To conquer markets where there are fewer competitors. To do research and development To get facilities from SMEDA and chamber of commerce to make position in interna tional markets To get up to mark and compete in domestic and international markets To expand globally. Threats: Chinese producers Quality control Attractive and controlled prices To handle other external factors Risks of entering to new markets CONCLUSION AND RECOMMENDATIONS From all of the above facts and figures and the analysis of SMEs in Pakistan I w ould conclude that SME helps in building the economy. It has a major influence o n the economy. Without SMEs a countrys economy cannot be built. The Government sh ould help more in encouraging more and more people to start from the small and m edium enterprises so that economy is much more strengthened. I would recommend that everyone in this country should at least try once to star t an SME. This would be very helpful in developing the country and economy would be strengthened. The other recommendations would be that these SMEs should capt ure the global market and should make position in the global market. One thing i s always present which is the risk. But no risk no gain. Thats what I have got an idea about SMEs.

REFERENCES http://www.smebank.org/SME%20Sector.htm#top http://en.wikipedia.org/wiki/International_business http://siteresources.worldbank.org/PAKISTANEXTN/Resources/293051-1147261112833/S ession-3-2.pdf

http://www.smeda.org.pk/downloads/AR03-04_2.pdf http://www.smeda.org.pk/main.php