ASHRAF SILK AND GENERAL MILLS
In mid October 2002, Khawaja Fawad Kalim, Director, Ashraf Silk and General Mills (ASGM), Gujranwala, Pakistan was faced with the difficult choice of whether or not to reemploy the two weavers who had left his company earlier. Fawad also realised that he had to take some long term measures to attract, retain and motivate weavers, to optimise the benefit from the already installed automatic looms.
At the time of the partition of India in 1947, Khawaja Mohammed Sadiq, Fawad’s grandfather (see Exhibit 1) emigrated from Amritsar, India, to Gujranwala, Pakistan. The newly formed Government of Pakistan gave him some shares in the Okara Textile Mills, in lieu of his looms left at Amritsar. In 1979, because of disagreements with the other partners, Sadiq left Okara Textile Mills. He formed Ashraf Silk and General Mills at Gujranwala, in collaboration with his son, Khawaja Mohammed Kalim, (Fawad’s father).
In 1965 ASGM had only one main competitor. ASGM produced silk- velvet cloth for products like bed-covers, prayer rugs, and suiting for men and women. The product mix changed with time to accommodate changes in demand. Sadiq or Kalim would either modify the existing looms or replace them with new ones to meet the market requirements. Before 1974 all the looms at ASGM were manually powered (handlooms), with the operator himself pushing the shuttle through the warp. In 1974 ASGM imported four power looms from Japan and started producing ‘shaneel’ (a kind of velvet). In 1993, Khawaja Zarar Kalim joined ASGM after completing his MBA from the University of the Punjab. Mohammed Kalim then thought about expanding his business. The existing facilities of ASGM were in a crowded part of Gujranwala, and permitted no room for expansion. Even if any of the neighbouring factories were ready to sell their space, Mohammed Kalim did not want to expand the existing facility for fear of losing control over the labour force. Many labour laws, including provisions for a labour union, became applicable at the mill with its work-force of 35 or more. To avoid these problems Mohammad Kalim bought a piece of industrial land on the Grand Trunk Road in Rahwali (a town eight kilometres north of the existing facility in Gujranwala).
This case was written by Research Associate, Arif I Rana under the supervision of Professor James Erskine and Professor Zafar I Qureshi to serve as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. This material may not be quoted, photocopied or reproduced in any form without the prior written consent of the Lahore University of Management Sciences.
©1989 Lahore University of Management Sciences
Mohammed Kalim also ordered four looms from Gusken in Germany and with their arrival in 1995 set up a sister company of ASGM under the name of Ashraf Textile Mills (ATM) in Rahwali to produce velvet cloth.
In 1999 he bought a finishing unit from Mortamate in France for the Rahwali plant. This gave velvet cloth a very special finish which made it possible to sell it as a high quality cloth at a higher price. In 2000, four more looms were bought for ATM from Gusken, and four looms with jacquards were imported from Vamatex in Italy. The jacquard looms had a capability of inserting a third pattern in the background, a facility that no other velvet producer had in Pakistan.
In 2001, Mohammed Kalim purchased 16 automatic looms from the mayor of Gujranwala who had already sold 24 such looms to his own brother. The mayor had bought 173 of these looms from a bankrupt company in Belgium but, because of his preoccupation with politics, he had decided not to utilize them himself. These looms were not very popular in the textile sector in Gujranwala because there was a shortage of weavers trained to operate them. The remaining machines were gathering dust in the mayor’s warehouse. The...
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