Strategy for Amtex Limited

BUS 489 TG13 Group 2

Agenda

Overview

Current Issues

Appendix 1 - SWOT Analysis

Appendix 2 - Financial Analysis

Appendix 3 - Environmental Analysis

Proposed Strategy

Timeline

Conclusion

OverviewAmtex Limited is a leading Pakistan based and owned textile manufacturing company, founded in year

1991 and expanded internationally in 1993.

Aspiring to be a one stop shop, Amtex has production facilities in all sectors of the textile industry.

They offer a diversified range of products consisting mainly of: fabrics, home textiles and garments

Current Issues

1Suffered a net loss of PKR 3,270 million

(USD 23.5 million) in 2018

2 Weak financial performance

3Competitive countries

4 High operation cost

Understanding the Business

Appendix 1 - SWOT Analysis

S - Strength

W - Weakness

O - Opportunities (industry as a whole not solely Amtex)

T - Threats (industry as a whole not solely Amtex)

Appendix 1 - SWOT Analysis

Strength:A diversified portfolio of products and service to cater to all of customers’ needs.

Weakness:Cost of operations is too high.Inefficiency in managing finances.

Opportunities:Rising demand in non-Chinese made textiles due to trade wars between China and United States.

Threats: China’s increasing cotton exportation.

Statement of Profit or Loss (FY2018) for the year ended 30 June 2018.

Appendix 2 - Financial Analysis

Decreasing trend persists for the overall sales:

● Decrease of 49% (vs FY2017)

● High cost of goods sold (COGS) pose

problems in investing in processes and

technology for better product quality.

Details of sales (FY2018) as at 30 June 2018

Appendix 2 - Financial Analysis

Decrease in sales figures were attributed by:

● Decrease in export sales amounting to PKR 291 million and

● Decrease in local sales of yarn / cloth amounting to PKR 350

million during the year.

Balance Sheet (FY2018) as at 30 June 2018

Property, plant and equipment (PPE) saw a sharp decrease in 48.33% as compared to FY 2017, amounting to approximately PKR 1.6 billion.

This decrease consist of a transfer of both freehold land and building amounting to PKR 1.02 billion to Abwa Knowledge Village (Pvt) Ltd.

Provision for doubtful debts amounted to PKR 7 billion as compared to PKR 4.5 billion during FY2017.

Appendix 2 - Financial Analysis

Appendix 3 - Environmental Analysis

Political landscape

Economic Situation

Technological Advances

Appendix 3 - Environmental Analysis

Political Landscape

Pakistan Tehreek-e-Insaf (PTI) , a centrist political party founded in 1996 by current Prime Minister Pakistan Imran Khan had caused political uncertainty in the country.

High Corruption Burden in Pakistan

Pakistan scored scored 32/100 on the corruption perceptions index 2017, with 100 being the cleanest.

Economic Situation

China - Pakistan Economic Corridor (CPEC) in 2013, a framework of regional connectivity that aims to increase trade

Appendix 3 - Environmental Analysis

Technological Advances

Challenges:

● Ever changing economic landscape and consumer’s taste, suggest an urgent need to improve the level of competitiveness.

● Competitors such as Korea and Indonesia have been investing in machineries such as water jet weaving machines where a diverse range of fabric qualities are possible for manufacture.

Considerations:

● Upgrade their technology with establishing a Garment Technology Center and Knitting Technology Center at the National University

of Textiles ● Strengthen their existing R&D departments

Proposed Strategy

1 Joint venture with China

2 Focus Strategy - Streamline

processes to target specific

markets

Joint Venture with China

● China’s interest in Pakistan’s textile industry

● Combining expertise and funding

● Opportunities to enter new markets

Proposed Strategy

1

Streamline Processes to optimise efficiency

Narrow down products and servicesto focus on raising output productivity

Proposed Strategy

2

● A transformation from one stop shop to a process specialist.

● Offload under utilised machines to pay off debts.

● Identify specific clientele to created targeted marketing campaigns.

Stage 1

Streamline Processes to optimise efficiency

Proposed Strategy

2

● Working with high end brands creates value for AMTEX.

● Creating high value products expands profit margin.

● Going global through fashion partnerships.Target high end fashion housesas manufacturer

Stage 2

Timeline

2019

Analyse which department to close down. Conduct meetings to ensure proper communication. 2019

July

Search for potential investors and secure suitable joint venture relationship

2020 Jan

Source to work with fashion houses to manufacture apparels 2020

July

Purchase new machineries and equipment

2021

Explore more joint venture opportunities in different aspects

Conclusion

01

Relook into its current operations to phase out non value-adding departments.

02

Reduce further losses by selling off the machinery to repay part of its debts to the banks.

03

Embark on a joint venture and continue to explore other opportunities while monitoring current business.

TeamBUS 489 (JAN 2019)

TG 13 - Group 2

K1591159Chen Shiyin Shirley

N1611159Kathy Ching Ser Lee

E1411284Darren Teo Dai RongCheong Wee Kee

Q1580971

Q & A