Textile Processing Sector
Transcript of Textile Processing Sector
-
8/2/2019 Textile Processing Sector
1/32
http://www.businessteacher.org.uk/free-accounting-essays/textile-processing-sector/
Textile processing sector
CHAPTER 1
1.0 History/Background
Textile Processing Sector has been operative virtually since the very inception of Pakistan in
1947. With the sudden upsurge of Textile industry in Pakistan during the fifth and sixth decades
when quite a few Textile Spinning and Composite Units started picking up roots and Power
Loom Units sprang up like mushroom in Pakistan in the unorganized sector, in every nook and
corner, whose number rose to about 0.3 million plus. As out of necessity, a proportionatenumber of Processing Units was required for dyeing, bleaching, printing, sunforising, finishing,
packing and packaging of the raw-fabric which was being mass-produced by the unorganized
Power Loom Sector. And this was the occasion when the entrepreneurs and pioneers of the
Processing Sector rose to the occasion and, remarkably enough, came out with flying colours.
Despite their meager resources, they succeeded not only in making the country self-sufficient in
dress and apparel, but also in providing quality fabrics to the International Export Market while
their quality was second to none.( All Pakistan Textile Processing Mills Association
(APTPMA),2008. http://www.sana.cc/aptpma/)
Increase in the cotton production and expansion of textile industry has been impressive in
Pakistan since 1947. Cotton - bales increase from 1.1 million bales in 1947 to ten million bales
by 2000. Number of mills increased from 3 to 600 and spindles from about 177,000 to 805
million similarly looms and finishing units increased but not in the same proportion. It employs
50% of industrial labor force and earns 65% foreign exchange of total exports. Pakistan's textile
industry experts feel that Pakistan has fairly large size textile industry and 60-70% of machines
need replacement for the economic and quality production of products for a highly competitive
market. But unfortunately it does not have any facility for manufacturing of textile machinery of
balancing modernization and replacement (BMR) in the textile mills which need to think about
joint ventures for the production of complete spinning units with china, Italy and production of
shuttle less looms (Projectile) with Korea, Taiwan and Italy.
Cotton textile industry has been premier industry in Pakistan and a major source of export
earning and employment. It also helps in value addition to the manufacturing sector of the
economy. During the six years between 1993 and 1998, production of yarn (in quantity terms)
http://www.businessteacher.org.uk/free-accounting-essays/textile-processing-sector/http://www.businessteacher.org.uk/free-accounting-essays/textile-processing-sector/http://www.businessteacher.org.uk/free-accounting-essays/textile-processing-sector/ -
8/2/2019 Textile Processing Sector
2/32
registered a steady annual growth rate of 302% in Bangladesh and 405% in India. On the
contrary, Pakistan registered a growth rate of 101% per annum in yarn production although it
ranked third after China and India in the global yarn production during the same six years. In
exports, while Taiwan, India and the republic of Korea registered an annual increase of 18.1%,
27.7% and 5.4% respectively during 1993-1998, Pakistan registered a negative growth of 4.8%one important development was that till 1997, Pakistan was the world's largest exporter yarn
followed by India. However, in 1998, India gained the NO 1 position, leaving Pakistan at NO 2 In
the case of cotton cloth production, a number of Asian countries have been emerging in the
international market to compete with Pakistan. These countries are Bangladesh, India, Taiwan,
Indonesia, Thailand, Turkey, Sri Lanka and Iran. Notwithstanding the above fact, current
stagnation in the local textile industry can be overcome through efforts, consistent with charges
occurring in the international market. It must be appreciated that all successive governments
since the birth of cotton textile industry in Pakistan have been encouraging the textile exporters
to penetrate into new market and also to broaden the base of exportable commodities byincluding value added textile goods so that reliance on exports of cotton, cotton yarn and coarse
fabrics gradually become minimal.
Reflecting on the state of affairs, Abid Chinoy, Pakistan cloth merchants Association (PCMA)
Chairman, Appreciated government's efforts to encourage new exports and finding new
markets, which need aggressive export marketing. The steps taken on the monetary front, such
as the frequent devaluation of Pak rupee in terms of dollar could not improve the cost
competitiveness of exportable products due to increase in prices of the local and imported
inputs of the local textile industry, and also due to inelastic demand for the Pakistan's exports. It
has been rightly mentioned in the latest stage bank of Pakistan's annual report (FY01) that,
Over the years Pakistan's exports receipts have been vulnerable on account of the narrow
base of exportable items, concentrated
markets and low value addition this indicated that the growth in the country's overall exports,
including textile products which contributed more then 60% of total export receipts each year,
could to be related some cosmetic and ad hoc measure like devaluation of Pak rupee and
concession export credits. The first textile commission, which was constituted by the first
material law government in 1960 had, inter-alia, recommended that an economic size textile unit
should preferably have 25,000 spindles and 500 looms. No new mill with only 12,500 spindles
and without looms should be sanctioned. However, no need was paid to the advice by the
sanctioning authorities with the result that an excess capacity had tented to build up in the
spinning sector.
During the period 1973 to December 1992, some 71 spinning units with 1,136, 835 spindles,
6,600 rotors ands 7,329 looms were closed down. In 1992, a foreign consultant form was hired
-
8/2/2019 Textile Processing Sector
3/32
by the government to look into the stagnating conditions in the local textile industry. One of the
observations of the foreign consultant was Pakistan has failed to make real progress in the
international market and is being over taken by many of the neighboring competitor countries.
The spinning sector, traditionally the core of the industry, is already in the crisis with many
spindles lying idle and mills being forced to close. Worse still, this sector will be hit by theprojected decline of its major markets in Japan and Hong Kong in the coming years.
Another important strategic recommendation given by the foreign consultant very much relevant
to the current conditions: It is vital that companies play very positive role in the markets, which
each one having its own marketing activity, whose job is to understand the need of the
customers and the ever changing competitive dynamics of the markets. In order to improve
exports, Pakistan's Readymade Garments Manufacturers and Exporters Association (PRGMEA)
has urged the commerce minister Abdul Razzak Dawood to set up an Apparel Board for the
promotion of export of woven and kit garments which fetch US$ 2.5 billion foreign exchange for
the country. The industry experts are of the opinion that in the order to have a strong industrial
base, Pakistan economy need investment upswing. Pakistan's economic growth performance
during recent years has been dismal: as against the average growth rate of 6.1% in the 1980s,
the half and 4.0% in the 2nd half of the 1990s. The major micro-economic instability factors like
high inflation rate, budgetary deficit, continuous depreciation of rupee, economic sanctions, etc.
could not help the investment process. Such an environment cannot be conducive to investment
and growth. Exporters of textile products have found the target of US$ 10.4 billion set by the
government for the year 2002-2003, as achievable and termed it a realistic approach. The
textile sector which constituted 69% of total export during 2001-2002, believes that enhanced
quota by the European Union and Turkey would make this possible to fetch another US$1 billion
this year.
The rise in export of value-added products from Pakistan was another point of encouragement
for the textile sector. The export of value-added products rose to 57.4% from 53.9% last year-a
clear sign that we are moving in the right direction, said the Chairman of all Pakistan textile
mills association. The trade policy is considered an acceptable paper, but in the industry does
not fine anything that could lead to a high level exports achievement and remove trade
imbalance. Pakistan's textile sector earned US$5.77 billion during the outgoing year, compared
with US$5.577 BILLION OF 2000-2001 indicating a growth of 0.69%. Textile vision 2005 has
identified the present status and opportunities to make in roads in conventional and hew
markets and has developed sectoral recommendations, hence the sectoral committees set up
by the federal textile Board (FTB) would play an important role be ensuring the availability of
quality raw materials on competitive prices and improvement in designing, and would adopt
quality standards and increase productivity levels. It would attract foreign brands and promote
-
8/2/2019 Textile Processing Sector
4/32
Pakistani brands with world-class standers. With such a positive trend, Pakistan's textile sector
is getting rid of old impediments and gearing itself up for the new opportunities in the new trade
regime. (History of Pakistan Textile
Industry.2008.http://www.textileguides.com/merchandising/22-merchandising/94-history-of-
pakistan-textile-industry)
1.1 Contribution Of Textile Industry In PakistanEconomy
The share of textile industry in the economy along with its contribution to exports, employment,
foreign exchange earnings, investment and value added makes it the single largest
manufacturing sector for Pakistan. It contributes around 8.5 percent to GDP, employs 38
percent of the total manufacturing labor force, and contributes between 60-70 percent to total
merchandise exports. Indeed, with exports reaching about $8.6 billion in 2004-05, Pakistan is
one of the largest textile exporters in the world.
The variety of products ranges from cotton yarn to knitwear. Garment made-ups and bed wear
are the most important export products with an export value of about $1.35 billion each.
Knitwear, ready made garments and cotton yarn also have important shares in total exports.
Overall, the US and the EU are Pakistan's largest trading partners accounting for 25 percent
and 20 percent share of Pakistani exports respectively. Other major importers include China,
UAE and Saudi Arabia. Textile trade is classified into two broad categories i.e. textile which
include yarn, fabric and made-ups, and clothing which represents readymade garments.(TextileSector- Overview,2004-2005, http://www.pakboi.gov.pk/word/Textile.doc)
CHAPTER # 2
2.0 GUL Ahmed Textile
2.1 Company History
The story of textiles in the subcontinent is the story of Gul Ahmed. The group began trading in
textiles in the early 1900's. With all its know-how and experience, the group decided to enter the
field of manufacturing and Gul Ahmed Textile Mills Ltd. was incorporated as a private limited
company, in the year 1953. In 1972 it was subsequently listed on the Karachi Stock Exchange.
Since then the company has been making rapid progress and is one of the best composite
textile houses in the world. The mill is presently a composite unit with an installed capacity of
http://www.textileguides.com/merchandising/22-merchandising/94-history-of-pakistan-textile-industryhttp://www.textileguides.com/merchandising/22-merchandising/94-history-of-pakistan-textile-industryhttp://www.textileguides.com/merchandising/22-merchandising/94-history-of-pakistan-textile-industryhttp://www.textileguides.com/merchandising/22-merchandising/94-history-of-pakistan-textile-industryhttp://www.textileguides.com/merchandising/22-merchandising/94-history-of-pakistan-textile-industryhttp://www.textileguides.com/merchandising/22-merchandising/94-history-of-pakistan-textile-industry -
8/2/2019 Textile Processing Sector
5/32
130,296 spindles, 223 wide width air jet looms, and a state of the art processing and finishing
unit.
2.2 Corporate Profile - Business Activities
2.2.1 Textiles
In the textile field, activities start from the spinning of cotton as well as man made fibers and
extend to weaving, processing and finishing of all types of cotton and blended fabrics, bed linen,
home furnishings, garment manufacturing, etc.
2.2.2 Management
Management of the group is professionally qualified and broadly experienced. The directors
have held top positions in various textile bodies, export committees and have also assisted the
Government of Pakistan in some of the major trade talks with EC and USA authorities.
2.2.3 Bankers
Main bankers of the group are:
Allied Bank Limited
Bank Al Habib Limited
Barclays Bank Plc, Pakistan
Citi Bank, N.A.
Faysal Bank Limited
Habib Bank Limited
Habib Metropolitan Bank Limited
Hsbc Bank Middle East Limited
-
8/2/2019 Textile Processing Sector
6/32
Meezan Bank Limited
National Bank Of Pakistan
Nib Bank Limited
The Royal Bank Of Scotland Limited
Standard Chartered Bank (Pakistan) Limited
United Bank Limited
2.2.4 List Of Membership Of Trade Bodies And
Organization
The Karachi Stock Exchange (Guarantee) Limited.
Lahore Stock Exchange (Guarantee) Limited.
All Pakistan Textile Mills Association.
Pakistan Cotton Fashion Apparel Manufacturers & Exporters Association.
All Pakistan Bed sheets & Upholstery Manufacturers Association.
Karachi Cotton Association.
Chamber of Commerce & Industry, Karachi.
Employees Federation of Pakistan.
All Pakistan Textile Processing Mills Association (Corporate Profile,2008.http://www.gulahmed.com/html/sec_1024/corp.html)
2.3 Products
-
8/2/2019 Textile Processing Sector
7/32
Gul Ahmed's fine textile products represent a unique fusion of the century old traditions of the
east and the latest textile technology of the west. The purest of cotton fibers, produced from the
fertile lands of the Indus Valley, are spun, woven and processed into the finest quality cotton
and blended products through a combination of latest technology, skills and craftsmanship of
this traditional industry.
2.3.1 Bed-Linen
Quilt covers ,duvet covers, flat and fitted sheets, pillow covers, valance sheets, bolster case with
all sorts of fancy confectioning, embroidery and embellishments, packed to buyers' specific
requirement.
2.3.2 Curtain
Ready made curtains lined, un-lined and tap top curtains, plain or fully accessorized with
tiebacks, pelmets, cushion covers, in different styles of confectioning and embroidery, packed to
buyers' specific requirement.
2.3.3 Fabric
Running meter fabrics, packed to specific requirement.
2.3.4 Yarn
1. Gul Ahmed specializes in medium-to-fine-count cotton yarns and is also capable of producing
yarns using a wide variety of synthetic fibers including polyester, rayon and other man-made
fibers (Products,2008,http://www.gulahmed.com/html/sec_1024/product.html)
CHAPTER # 3
3.0 Kohinoor Textile Mills
3.1 Company History
Founded in the early 1950s in Pakistan, Kohinoor is a dynamic and efficient manufacturing
company. We aim to be the preferred partner of business in all of the markets we serve by
http://www.gulahmed.com/html/sec_1024/product.htmlhttp://www.gulahmed.com/html/sec_1024/product.htmlhttp://www.gulahmed.com/html/sec_1024/product.htmlhttp://www.gulahmed.com/html/sec_1024/product.html -
8/2/2019 Textile Processing Sector
8/32
anticipating the needs of our customers and building value for our stakeholders. (Kohinoor
Textile Mills2008.http://www.kmlg.com/kmlg/index.php)
The Kohinoor Maple Leaf Group was born from the trifurcation of the Saigol group of companies
and is a reputable and leading manufacturer of textiles. Kohinoor Textile Mills limited (KTML)
incorporated in Pakistan and are listed on three stock exchanges of the country. (KohinoorTextile Mills2008.http://www.kmlg.com/kmlg/history.php)
3.2 Mission Statement
The Kohinoor Textile Mills Limited stated mission is to achieve and then remain as the most
progressive and profitable Company in Pakistan in terms of industry standards and stakeholders
interest. The Company shall achieve its mission through a continuous process of having
sourced, developed, implemented and managed the best leading edge technology, industry
best practice, human resource and innovative products and services and sold these to itscustomers, suppliers and stakeholders. (Kohinoor Textile
Mills2008.http://www.kmlg.com/kmlg/mission.php)
3.3 KTML Textiles
KTML was established in 1953 at Rawalpindi and is one of the oldest companies of Pakistan
with over 50 years experience in textile manufacturing. It was initially set up as a spinning and
weaving project with 25,000 spindles and 600 looms. However, after decades of aggressive
expansion and modernization KTML has emerged into a fully vertically integrated home textilescompany with state of the art capabilities for spinning, weaving, dyeing, printing and stitching.
The company has a diverse customer base with sales in both the local and export markets. The
main international markets include Asia, Europe, USA and Australia. (Kohinoor Textile
Mills2008.http://www.kmlg.com/kmlg/textiles.php)
CHAPTER#4
4.0 CONTRIBUTION OF TEXTILE INDUSTRY INECONOMY
The share of textile industry in the economy along with its contribution to exports, employment,
foreign exchange earnings, investment and value added makes it the single largest
manufacturing sector for Pakistan. It contributes around 8.5 percent to GDP, employs 38
http://www.kmlg.com/kmlg/index.phphttp://www.kmlg.com/kmlg/index.phphttp://www.kmlg.com/kmlg/index.phphttp://www.kmlg.com/kmlg/history.phphttp://www.kmlg.com/kmlg/history.phphttp://www.kmlg.com/kmlg/history.phphttp://www.kmlg.com/kmlg/mission.phphttp://www.kmlg.com/kmlg/mission.phphttp://www.kmlg.com/kmlg/mission.phphttp://www.kmlg.com/kmlg/textiles.phphttp://www.kmlg.com/kmlg/textiles.phphttp://www.kmlg.com/kmlg/textiles.phphttp://www.kmlg.com/kmlg/textiles.phphttp://www.kmlg.com/kmlg/mission.phphttp://www.kmlg.com/kmlg/history.phphttp://www.kmlg.com/kmlg/index.php -
8/2/2019 Textile Processing Sector
9/32
percent of the total manufacturing labor force, and contributes between 60-70 percent to total
merchandise exports.
The Pakistan textile industry contributes more than 60 percent to the country's total exports that
sum around 5.2 billion US dollars. The industry contributes approximately 46 percent to the totaloutput produced in the country. In Asia, Pakistan is the 8th largest exporter of textile products.
The contribution of this industry to the total GDP is 8.5 percent. Moreover, it provides
employment to 38 percent of the work force in the country, which amounts to a figure of 15
million. .(Textile Sector- Overview,2004-2005,htp://www.pakboi.gov.pk/word/Textile.doc)
4.1TEXTILE INDUSTRY IN THE CURRENT ECONOMICSCENARIO
The All Pakistan Textile Mills Association (APTMA) needs to enhance the quality of its products,upgrade the technology used, and encourage effective Research and Development (R&D) in
order to compete internationally. However, APTMA argues other factors such as high interest
rates and cost of inputs, non conducive government policies, and non-guaranteed energy
supplies hinder their competitiveness.
Critics argue that the indolent attitude of the industrialist in the 1990s has led up to the current
crisis. If the textile industrialist had worked with the government towards implementing policies
that prepared for the current international scenario, Pakistan textile industry would have
boomed. Instead, the industry suffers from severe technological obsolescence,' insufficientR&D, falling cotton crop, and an unclear path forward.(Govt not fully conversant with problems
of textile industry,2009,http://jang.com.pk/thenews/jul2009-weekly/busrev-06-07-2009/p7.htm)
The lack of R&D in the cotton sector of Pakistan has resulted in low quality of cotton in
comparison to rest of Asia. Because of the subsequent low profitability in cotton crops, farmers
are shifting to other cash crops, such as sugar cane. In Punjab alone, the cotton area sown this
season was less by 1.14 percent as compared to the last year. Textile owners argue that
although the Cotton Vision 2015 targets 20 million bales till 2015, it is an ambitious target as in
reality cotton production is decreasing each year. It is the lack of proper R&D that has led to
such a state. They further accuse cartels, especially the pesticide sector, for hindering proper
R&D. The pesticide sector stands to benefit from stunting local R&D as higher yield cotton is
more pesticide resistant.
Moreover, critics argue that the textile industry has obsolete equipment and machinery. The
inability to timely modernize the equipment and machinery has led to the decline of Pakistani
-
8/2/2019 Textile Processing Sector
10/32
textile competitiveness. APTMA has highlighted that the Pakistan textile industry faces tough
competition from the Indian, Bangladeshi and Chinese textile industries and local policies have
resulted in Pakistani textiles facing a critical condition.
For instance, Bangladesh, India and China enjoy comparatively low interest rates than Pakistan.The prevailing rates are as following, 8.5 to 9.0 per cent in Bangladesh, 5.25 per cent in India
(market rate is 10.25 per cent, however exemption of 5 percent is provided to the textile
industry) and 5.58 per cent in China. Meanwhile, in Pakistan, the last three to four years has
seen the interest rates to have risen more than 150 percent, to 13.25 percent. The increase has
essentially crippled the small time textiles owner, while seriously hindering growth of the textile
tycoons. This has led to textile owners accusing the government and banks for maintaining
detrimental policies. I believe that it is imperative that the new government takes actions that
have a positive impact on the industry as textile provides employment to approx 38 per cent of
our working class. A coherent plan should be devised by the Pakistani government that allows
some sort of exemption/concession such as in India; the Export-Import Bank was set up for the
purpose of financing and facilitating the industries, especially textile.
Industrialists also argue that the non-guaranteed supply of power by WAPDA (Water and Power
Development Authority) is another problem that negatively affects the textile industry. Although,
some textile units have built their own energy generating plants to cut cost (these units run on
gas), small units production depends entirely on the electricity supply of WAPDA. The textile
industry suffered heavy financial losses in Dec, Jan and Feb quarter, because of the
inconsistent electricity supplies. The lack of production subsequently resulted in the industry not
meeting its target for the quarter, massive financial losses were borne by textile owners and
sadly, it hit the most vulnerable: workers on daily wages. Their frustration was observed
recently, when the WAPDA and MEPCO (Multan Electricity Power Company)offices in Multan,
were torched by daily wage workers, [see related post]. Textile owners as well as workers
passionately assert that the inconsistent supplies have and are destroying business across
Pakistan. They also highlight that the high cost of the utilities has making Pakistani textile
uneconomical in the international market.
All things considered, it is apparent that the Pakistani Textile Industry is facing an uncertain
environment. The increase in input cost of minimum wage by 50 percent, increasing interestrates, non-guaranteed energy supplies, lack of R&D and reduction in cotton production has had
a negative impact on the industry's competitiveness internationally. In order to sustain the
Textile Industry, the new Pakistani government has a tough task ahead and needs to urgently
implement a suitable long-term strategy that provides a level-playing field against their regional
competitors. (Insight into the Problems Facing Pakistan's Textile Industry,2008,
http://changinguppakistan.wordpress.com/2008/04/15/power-cuts-incite-violence-in-multan/http://changinguppakistan.wordpress.com/2008/04/15/power-cuts-incite-violence-in-multan/http://changinguppakistan.wordpress.com/2008/04/15/power-cuts-incite-violence-in-multan/http://changinguppakistan.wordpress.com/2008/04/15/power-cuts-incite-violence-in-multan/ -
8/2/2019 Textile Processing Sector
11/32
http://changinguppakistan.wordpress.com/2008/04/17/contribution-insight-into-the-problems-
facing-pakistans-textile-industry-by-abida-mukhtar/)
CHAPTER # 5
FINANCIAL ANALYSIS
5.0 ABSOLUTE FIGURE ANALYSIS
5.0.1 Balance Sheet Of GUL & KTM:
Current Assets
Years 2001 2002 2003 2004 2005 2006 2007 2008
Total Current
AssetsGUL3,373,537 2,950,889 3,176,273 5,536,244 5,707,753 5,497,495 5,277,007 6,464,312
KTM 1,331,025 2,121,847 2,563,232 3,169,575 3,170,105 3,939,417 4,547,065 5,757,221
Non Current Assets:
Years 2001 2002 2003 2004 2005 2006 2007 2008
Total Fixed
Assets2,587,9362,473,7962,660,3643,079,6933,555,4114,520,4544,807,2335,933,390
KTM 1,390,9332,592,8793,033,0675,388,6405,645,5517,400,5729,936,9887,758,101
Current Liabilities:
-
8/2/2019 Textile Processing Sector
12/32
Years 2001 2002 2003 2004 2005 2006 2007 2008
Total Current
Liabilities 3,282,1432,871,5833,102,7685,385,7785,432,0215,481,3915,555,2177,151,112
KTM 1,510,2892,304,5402,868,9372,780,6933,106,5443,855,5964,231,0495,477,572
ABSOLUTE FIGURE ANALYSIS
5.0.2 Income Statement Of GUL & KTM
Sales:
Years 2001 2002 2003 2004 2005 2006 2007 2008
Net
Sales(GUL)4,996,0235,765,7015,566,8626,665,8985,876,2618,101,6739,798,33811,650,143
Net
Sales(GUL)2,473,6284,322,8685,035,8945,380,2984,584,9526,903,6257,140,1677,558,322
Cost Of Goods Sold:
Years 2001 2002 2003 2004 2005 2006 2007 2008
Cost of Goods
Sold(GUL)3,781,7874,534,7454,498,0775,621,0844,912,8886,937,0208,372,4379,951,072
-
8/2/2019 Textile Processing Sector
13/32
Cost of Goods
Sold(KTM)2,142,8423,824,5874,353,7904,664,7254,025,8315,881,8186,094,6416,395,622
Gross Profit:
Years 2001 2002 2003 2004 2005 2006 2007 2008
Gross
Profit(GUL)1,214,2361,230,9561,068,7851,044,814963,3731,164,6531,425,9011,699,071
Gross
Profit(KTM)330,786 498,281 682,104 715,573 559,1211,021,8071,045,5261,162,700
5.1 Ratio Analysis
5.2 CATEGORIES OF FINANCIAL RATIOS
The accounting ratios can be grouped in to five categories:
1. Liquidity Ratios shows the extent to which the firm can meet its financial obligations.
2. Asset Management Ratios shows that how effectively the firm is managing its assets.
3. Debt Management Ratios shows the extent to which a firm uses debt financing or Financial
leverages.
4. Profitability Ratios relates profits to sales and assets.
5. Market Value Ratios are a measure of the return on investment.
5.2.1 LIQUIDITY RATIOS
-
8/2/2019 Textile Processing Sector
14/32
5.2.1.1 Current Ratio
Current Ratio shows a firm's ability to meet current liabilities with its current assets.
Formula:
Current Ratio = Current Assets / Current Liabilities
Ratio Analysis 2001 2002 2003 2004 2005 2006 2007 2008
Current Ratio(GUL) 1.0278461.0276181.02369 1.027938 1.05076 1.0029380.949919 0.903959
Current Ratio(KTM)0.8813050.9207250.8934431.139851 1.02046 1.02174 1.07469 0.972872
Analyses
1:1 ratio is usually considered satisfactory because the entity will be able to meet its current
liabilities if the realization of the assets is slightly deteriorated. Looking into the year of 2001 and
2002 we have observed that current assets fluctuate from year 2001 upto 2008 as in 2002
current assets were PKR 2950889 where as in 2001 it was PKR 3373537 same situation waswith the liability that liability was decreased in 2002 as compared in 2001 so both the equations
were fabricated same rule was applied till 2006 where as in 2007 current assets were increased
up to PKR 5277007 and in 2008 the current assets were 6464312 which shows constant
increase in 2007 to 2008 approximately 23% on the other hand the current liabilities of the
company shows increase of approximately 29% from year 2007 to 2008. In current liabilities
Trade and other payables show an increase of 29% approx while short term borrowing of the
company Increase 30% as compared to the year 2007.
In the same composite textile industry we looked at gul ahmed textile and now we focus on
Kohinoor textile mill for comparison. In 2001 to 2003 current ratio of the company shows slight
fluctuation and was not up to the bench mark and the reason being is that in 2001 the current
liabilities of the company stood at 1,510,289 and shows the increase of 52% approx where as
the current asset of the company was in increased by 59% approx in 2002 than in 2001 which
shows its affect on current ratio of the company. In 2004 the current assets of the company rise
approximately 24% while the current liabilities of the company were decreased by 3% approx
-
8/2/2019 Textile Processing Sector
15/32
which shows its affect on the current ratio of the company.Whereas from 2005 to onwards
current ratio of the company fluctuated normally from year to year. According to our analysis we
come to know that Gul Ahmed management shows much intention towards its current ratio as
compared to KTM.
5.2.1.2 Acid Test Ratio
Acid Test Ratio or Quick Ratio shows a firm's ability to meet current liabilities with its most liquid
assets.
Formula:
Quick Ratio = Current Assets - Inventories
Current Liabilities
Ratio Analysis 2001 2002 2003 2004 2005 2006 2007 2008
Acid Test Ratio(Gul) 0.6438570.59639 0.6440040.5822410.545051 0.4762160.474434 0.428298
Acid Test
Ratio(KTM) 0.4916340.594163 0.4895260.6852580.51302 0.4743110.592699 0.614318
A 1:1 Ratio Is Usually Considered Satisfactory
Analysis
Acid test ratio shows companies true picture towards its obligations. Gul Ahmed textile mill
current ratio in the year 2001 was 1:1.03 while when we subtract its stock from current assets
we come to know that the company tight its cash in stock the value of the stock of the company
is approx 39% of total where as the situation remains the same in 2002 and 2003. In 2004 the
acid test ratio of the company shows simultaneously decrease up to 2008 which shows its
management focus more towards stock.
-
8/2/2019 Textile Processing Sector
16/32
Whereas if you look at KTM in 2001 the company have invested less in stock whereas in 2002
the company's stock was increased as compare to 2001 which shows slightly change in acid
test ratio and there was a normal fluctuation from 2003 to onwards. If you look in the year of
2004 its current assets were increase as compared to 2003 and
the reason being is that it has invested more in Advances deposits, prepayments & other
receivables approx of 44% where as its current liabilities were decrease by approx 3.1% as
compared to 2003 which reflects its effect on companies acid test ratio. In 2005 there was not
much increase in the current assets as compared to 2004 but there was an increase in current
liabilities of the company approx 12% which had an net effect on acid test ratio.
Over all KTM performance in terms of management is not upto the standard as compared to
gulahmed they have not been able to utilize there resources efficiently. Gul Ahmad Textile acid
test ratio is not satisfactory as companies immediate cash resources are not sufficient to meet
its current obligations.
If you look from 2001 onwards the company's cash resources are decreasing almost every year
and in 2006 onwards it is decreased even more. There was a slight improvement in 2003 but
after that its cash resources again goes on decreasing. Whereas if you look at KTM despite of
the fact that its values are below the bench mark but still KTM position in 2002 was much better
than in 2001. If you look at the eight year in glance you will find that KTM after every successful
year there is a downward trend. In 2004 company was in much better position but from 2004
onwards its current liabilities was more than its obligations.
5.2.2 ASSET MANAGEMENT RATIO
5.2.2.1 Inventory Turnover Ratio
The ratio indicates in number of times per period, at which the inventories are sold. The number
of day's sales in inventory indicates the average time taken to sell the inventories.
Formula:
Inventory Turnover Ratio = Cost of Goods Sold
Inventory
-
8/2/2019 Textile Processing Sector
17/32
Ratio Analysis 2001 2002 2003 2004 2005 2006 2007 2008
Inventory Turnover
Ratio(GUL) 0.75678 0.93833 0.62849 0.54601 0.43599 0.62738 0.69275 2.92549
Inventory Turnover
Ratio(KTM)3.6889814.523274 4.1569213.788318 2.487056 3.327056 3.56711 3.848415
Bench Mark
A 3 days is usually considered satisfactory
EXPLANATION
If you look at KTM performance with reference to bench mark it was not so good in beginning
years as enterprise was selling its inventory in more than three days which later it was
increased by four days but if you look at 2004 up to 06 the enterprise performance was good
and inventories was sold in less number of days than prior years
where as in 2007-08 again companies inventory turnover ratio was above the bench mark which
was not satisfactory. Where as if you look at gulahmed its conversion was remarkable they were
converting there inventories into cash less than a day which is an healthy sign for the company
where as if you look at 2008 the companies faces problem in selling there products due to many
reasons.
5.2.2.2 Average Collection Period: Receivable
The average collection period ratio represents the average number of days for which a firm has
to wait before its debtors are converted into cash.
Formula:
Days Sales Outstanding = Accounts Receivables X 365
Sales
-
8/2/2019 Textile Processing Sector
18/32
Ratio Analysis 2001 2002 2003 2004 2005 2006 2007 2008
Days Sales
Outstanding(GUL) 0 0 7.0612569.33896311.37934 7.7538379.397439 2.170204
Days Sales
Outstanding(KTM)49.9062853.54265 42.4824457.0825 34.71437 25.1324422.37086 32.53823
Explanation
In 2001 gul ahmed collection period was 89 days which was not good in terms of industrystandards and as we compare it with the year 2002 we found that the management did a
remarkable job and reduce its collection period to 47 days despite of the fact that there sale was
much more approx 15.4% increase than the prior year which shows improvement in there
working capital where as if you look in 2004 the sales of the company shows upward movement
as compared to 2003 on the other end collection period also increases which reflects that the
management may offer more credit period to there customers to boast there sales as shows in
the financial statement. Where as from 2006 onwards we found that the management did a
remarkable job and reduce its collection period to 83 days despite of the fact that there sale was
approx 38 % more than in prior years.
In 2001 KTM collection period was 44 days which was satisfactory as we compare it with the
year 2002 we found that the management did a remarkable job and reduce its collection period
to 41 days despite of the fact that there sale was much more approx 75% increase than the
prior year which shows improvement in there working capital where as if you look in 2003
onwards sales also increases but not as much as it was increased in 2002 as compared to
2001. If you look in 2005 the sales of the company was decreased approx 15% and the same
trend was followed onwards.
Over all KTM's collection period reflects that companies strategy was to boost there sales via
increase credit periods in order to attract customers, as sales increases collection period also
increases and as sales decreases collection period also decreases as shown in there financial
statements.
5.2.2.3 Average Collection Period: Payable
-
8/2/2019 Textile Processing Sector
19/32
Formula:
Days Sales Outstanding = Accounts Payable X 365
CGS
Ratio Analysis 2001 2002 2003 2004 2005 2006 2007 2008
Days Purchases Outstanding
(GUL)
58 days44 days53 days29 days42 days 41 days38 days42 days
Days Purchases Outstanding
(KTM)
54 days52 days38 days25 days36 days 31 days23 days32 days
Gul Ahmed payable days in 2001 is 58 days as shown above which means we are paying our
creditors in 58days on the other hand companies receivable collection period is 89days which
shows other companies management do not perform up to the mark this leads to the cash flow
problem to the company and also affect the working capital of the company. If you look onwards
you will find that companies number of days have been decreased more than in previous yearswhich means that company is allowing more credit period to boost their sales as shown in the
figure.
Ktm management's intention toward cash flow management and working capital is more than
gulahmed in years 2001 up to 2003 they were receiving debts in less days and paying to their
creditors in more days which strengthen there working capital. In 2004 and 05 the sales of the
company shows downward stream because companies tight there credit period to there
customers which reduces there sales which shows in
the figure, from 2006 to 2008 companies management shows there interest to boost the sales
by allowing more credit to there credit period and increase there sales on the other hand it
affects the company's cash flow and working capital.
5.2.2.4 Fixed Asset Turnover
-
8/2/2019 Textile Processing Sector
20/32
Formula:
Fixed Asset Turnover = Sales
Fixed Assets
Ratio Analysis 2001 2002 2003 2004 2005 2006 2007 2008
Fixed Asset
Turnover(GUL)1.9305052.33071 2.0925192.1644681.652766 1.7922262.038249 1.963488
Fixed Asset
Turnover(KTM) 1.7783951.667208 1.6603310.9984520.812135 0.93285 0.718544 0.974249
Analysis
Fixed turnover of the gulahmed company shows positive intention of the management towards
there asset usage they generate revenue two times from their assets by using efficient means. If
you look onwards the company's management perform more efficiently and from the same
assets they generate more sales. Where as in 2006 the companies sales were increased by
38% and their assets were increase by 27% but the assets were not increased as rapidly as
sales and affects the company's asset turnover.
Fixed turnover of the KTM shows negative intention of the management towards there asset
usage. If you look onwards the company's management perform more inefficiently and from the
same assets they generate less sales. So KTM needs to look at their asset utilization so that
their efficiency increases and that affects the company's performance.
5.2.2.5 Total Asset Turnover
Formula:
Total Asset Turnover = Sales
Total Assets
-
8/2/2019 Textile Processing Sector
21/32
Ratio Analysis 2001 2002 2003 2004 2005 2006 2007 2008
Total Asset
Turnover(GUL) 0.8380521.062864 0.9537790.7736710.634369 0.8087160.971649 0.939702
Total Asset
Turnover(KTM)0.9087680.916886 0.8998610.6286710.520092 0.6087860.492967 0.559241
Explanation:
The total assets turnover has dropped below 0.5 last year of KTM, primarily due to greaterindulgence in research activities by the company. This increased the acquisition of plants and
equipment and simultaneously the research and evaluation assets of KTM in 2008, adding to
the non-current assets. Side by side, the impact of an abnormal increase in cash and bank
balances was reflected in larger current assets.
Total asset turnover of the gulahmed company shows positive intention of the management
towards there asset usage they generate revenue two times from their assets by using efficient
means. If you look onwards the company's management perform more efficiently and from the
same assets they generate more sales. Where as in 2006 the companies sales were increasedby 38% and their assets were increase by
27% but the assets were not increased as rapidly as sales and affects the company's asset
turnover.
5.2.3DEBT MANAGEMENT RATIO
5.2.3.1 Debt Ratio
Formula:
Debt Ratio = Total Debts
Total Assets
-
8/2/2019 Textile Processing Sector
22/32
Ratio Analysis 2001 200220032004200520062007 2008
Debt Ratio (GUL) 20% 14% 17% 24% 21% 18% 21% 20%
Debt Ratio (KTM)11% 10% 10% 6% 7% 8% 7% 10%
This ratio is an indicator of the financial stability of the enterprise. The lower is the debt ratio
more comfortable the creditors will feel as regards security of their debts. Too excessive debt to
total assets may expose an entity to insolvency.
Bench Mark
15% is usually considered satisfactory
Gul ahmed debt ratio was high in 2001 as compared to bench mark but the enterprise did mark
ably well in 2002 and its debt ratio was lower which gives good confidence to the creditors but
later in 2003-04 it was again raised where as slight improvement was shown in 2005 and 06
which again was geared up in 2007 and 08 so over all except 2002 the companies debt ratio
was higher which was not a good sign for the creditors as well as for the enterprise.
The asset utilization of KTM is not so efficient which is effecting in all aspects of assetmanagement ratios so KTM needs to look at their asset utilization which can effect increase its
efficiency in terms of its asset management.
5.2.3.2 Times Interest Earned Ratio
Formula:
Times Interest Earned Ratio = EBIT
Interest Charges
Ratio Analysis 2001 2002 2003 2004 2005 2006 2007 2008
-
8/2/2019 Textile Processing Sector
23/32
Times Interest
Earned Ratio (GUL)2.5567722.00858 2.8661373.0258541.499705 1.0230471.550538 1.275555
Times Interest
Earned Ratio (KTM)1.1364681.192106 1.5814363.9215411.852153 1.7922480.953153 1.148249
Explanation
This ratio is also a measure of long-term solvency of the entity. The ratio indicates company's
ability to pay interest charges out of profits. The higher the rations the more confident are debt
holders to receive there interest
In 2001 gulahmed was in great position to give interests to the debt holders as there profit
margin was higher but after that from 2002 to 2006 the profit margin of the company goes on
decreasing where as in 2006 is almost 0% which was a great threat to the debt holders which
means company profit was near to zero later in 2007 and 2008 company was in much better
position but not as good as it was seven years back.
5.2.4 PROFITABILITY RATIO
5.2.4.1 Profit Margin
Formula:
Profit Margin = Net Income Available For Common Stock Holders
Sales
Ratio Analysis 2001 2002 2003 2004 2005 2006 2007 2008
Profit Margin (GUL) 10.38%6.94%6.86%3.76%2.07%0.15%2.68% 1.73%
-
8/2/2019 Textile Processing Sector
24/32
Profit Margin (KTM)1.17% 1.28%3.32%8.27%3.22%5.14%-0.40% 1.73%
ExplanationThe Profit Margin of both KTM and GUL Ahmed textile mills have decreased disastrously
because of increased in the prices of production activities e.g. increase in the price of electricity,
increase in the prices of gas, increase in the price of yarn.etc
5.2.4.2 Basic Earning Power:
Formula :
BEP = EBIT
Total Assets
Ratio Analysis 20012002 200320042005200620072008
Basic Earning Power (GUL) 14% 15% 10% 4% 4% 5% 7% 8%
Basic Earning Power (KTM)9% 7% 8% 7% 4% 7% 4% 7%
5.2.4.3 Return On Asset:
Formula:
ROA = Net Income
Total Assets
Ratio Analysis 2001 2002 2003 2004 2005 2006 2007 2008
-
8/2/2019 Textile Processing Sector
25/32
Return On Assets (GUL) 8.702%7.380%6.542% 2.909%1.316%0.124%2.600%1.628%
Return On Assets (KTM)8.88% 7.29% 8.12% 6.98% 3.64% 7.08% .97% 7.50%
Explanation
This is the basic ratio to measure profitability. In this ratio profitability is related to assets
employed.
Return on Assets and Return on Equity of the company can be brought up from its current
levels to that of its competitors, thus indicating the untapped potential of GUL AHMED TEXTILE
have shown a downward trend since year 2001 and are lacking behind the industry. GUL
AHMED is not utilizing the assets and equity to the maximum capacity. ROA can be brought up
to increase the profitability.
5.2.4.4 Profit Margin On Sales
Formula:
Pretax Margin Ratio = Net Profit before Taxes
Sales
Ratio Analysis 2001 2002 2003 2004 2005 2006 2007 2008
Pretax Margin Ratio (GUL) 10.38% 6.94%6.86%3.76%2.07%0.15%2.68% 1.73%
Pretax Margin Ratio (KTM)1.17% 1.28%3.32%8.27%3.22%5.14%-0.40% 1.73%
Explanation:
-
8/2/2019 Textile Processing Sector
26/32
Profit margin for both the companies have shown a downward trend because of increase in the
prices of byproducts used in the textile industry i.e. yarn etc. Also increase in the prices of
electricity, labor, gas, etc.
These things effect directly on the profitability of the companies that's why profit margin of boththe companies have decreased disastrously.
CHAPTER # 6
6.1 HORIZONTAL ANALYSIS OF GUL AHMED TEXTILE
EXPLANATION
This analysis show us the clear picture of GUL AHMED TEXTILE and gives us all the answers
of our questions that why the net income is decreasing disastrously because in the graph we
can see all the thing which have an impact on net income. Like cost of goods sold have
increased Administrative and selling expenses have increased financial charges have increased
so the income of the company have decreased .
6.3 HORIZONTAL ANALYSIS OF KOHINOOR TEXTILEMILLS
EXPLANATION
This analysis show us the clear picture of KOHINOOR TEXTILE MILLS and gives us all the
answers of our questions that why the net income is decreasing disastrously because in the
graph we can see all the thing which have an impact on net income. Like cost of goods sold
have increased Administrative and selling expenses have increased financial charges have
increased so the income of the company have decreased .
CHAPTER # 7
Textile Industry In The Current Economic Scenario
7.1 An analysis of the current situation and imperatives for developing a Long Term Textile
Policy
-
8/2/2019 Textile Processing Sector
27/32
Pakistan's economy is confronted with the problem of chronic negative trade balances. The
government wants to mobilize all its resources to establish a solid export base. The Textile
sector, being the major foreign exchange earner, can serve as a launch pad.
The textile sector exports have been stagnant for the past five years. Exports have oscillatedbetween US $4.5 - 5.5 billion. US $5 billion has been a psychological barrier for the textile
industry of Pakistan.
The Multi Fibre Arrangement (MFA) phase out in the year 2005 is likely to result in providing
level playing field with the removal of quotas and lowering of tariff barriers. It will be a threat to
textile manufacturers on one-hand and open news vistas of opportunities for efficient players on
the other hand.
7.2 Sector ObjectiveKeeping in view the above factors, a long term Textile Vision has been created to serve as a
broad target to revamp the textile industry of the country. The defined objective is:
An open, market driven, innovative & dynamic textile sector which is:
Internationally Integrated
Globally Competitive
Fully equipped to exploit the opportunities created by the MFA phase out
And which enables Pakistan to be amongst the top five textiles exporting countries in Asia.
(Sector Objective - Textile Vision,2009,http://www.smeda.org/publications/textile_vision.php)
7.3 Importance Of Textile Industry
According to the ECONOMIST intelligence report of August 2003 for Pakistan the following
observations have been made: Despite Government efforts to diversify exports and widen the
industrial base, the industrial sector remains dominated by the Textile sector. Textile Sector still
represents 46% of total manufacturing and provides 68% of Pakistan's Export receipts.
The strong performance stemmed from two factors :
http://www.smeda.org/publications/textile_vision.phphttp://www.smeda.org/publications/textile_vision.phphttp://www.smeda.org/publications/textile_vision.phphttp://www.smeda.org/publications/textile_vision.php -
8/2/2019 Textile Processing Sector
28/32
Increase in import quotas especially by U.S.A, EU and TURKEY
Textile industry has invested over US$1.5 billions in new technologies and modernization in
the last 3 years.
Efficiency and the innovation in textile is the only hope to get the country out of economic
problems.
CHAPTER # 8
PROBLEMATIC AREAS
8.1 Present Status Of Pakistan (Textile EngineeringSector)
The Pakistan Textile Engineering Sector is underdeveloped and under utilized. Mostly it caters
in the form of spares, components for modernization and machines used in cottage or small
scale industries.
A cursory look at the structure of Pakistan Textile Industry shows that most of them are cottage
industry, small/medium industrial units and few large integrated states of art units. The number
of units which fall under each category varies from sub-sector to sub-sector. Similarly the Textile
Engineering Units also vary from small, medium and large in size. The Textile Engineering
Industry comprises approximately 80% small work shops, 15% medium engineering Units and
5% large Engineering Units. It will not be out place to mention that the large engineering units
are in Public Sector. The small and medium Engineering Units work on reverse Engineering
principles, only few work according to Engineering Drawings and still fewer have Testing or
Quality Control facilities.
On the basis of initial survey of Textile Engineering Units (Not complete yet), approximately 500
units are engaged all over Pakistan, employing approximately 50000 work force which is mostly
skilled. Even under the present conditions and without any support, Pakistan Textile
Engineering Industry is providing import substitution worth around one billion US dollars. This
sector also exports to small and medium Textile Units in Bangladesh, Iran, Sri Lanka, etc.The
Textile Engineering Sector is throttled through taxes on raw material, import of components,
electronic and electrical parts.
Competition
-
8/2/2019 Textile Processing Sector
29/32
The present Textile Engineering Industry is up against competition from smuggled, under
invoiced, and mis-declared components, parts and accessories. For example, in case of second
hand machinery, there is little or no check and the competition mainly rests on lower price.
Machines smuggled especially from China, India, Taiwan are not better in quality but are selling
cheaper. A bold initiative is needed which can boost the production as capacity and markets arethere, only change in environment is need.
8.2 Finishing Look And Control Components
The products manufactured locally, when displayed against foreign goods - offer a poor look -
primarily because of the unsightly finishing of welding seams, electroplating, painting and other
surface treatments. In addition, the adoption of wrong design parameters, or the attempt to
reduce the cost of production, lead to the incorporation of under-sized electrical motors and
electric / electronic control panels.
Quality Control
There are very few units which have their own material testing facilities, or have an access to
any such service from out side. Although reverse engineering is practiced, yet this copying is
done without adequate material testing. This results in poor quality or in many cases in an
undue over - engineering. A great stress on quality control is being laid by all the major
importing countries, especially in the wake of ISO 9000 series. There is, therefore, a need of
assisting the local textile engineering the relevant institutions, such as PSI, NPC, CTL, etc.
8.3 Assistance Of Present Institutions
To encourage the local textile industry an access to the modern practices in the specialized
areas of manufacturing processes, productivity enhancement and quality control, an institutional
mechanism should be set up which provides the industry an adequate and industry-friendly
assistance from such organizations as MIRDC, PITAC, CTL and PSI, etc. In addition such
institutions as Pak-Swiss Training Centre and Pak-German Training Centre, as well as the
Small Scale Industrial Estates should be encouraged to provide the industry necessary
technical assistance and production aids such as tools, jigs, fixtures, gauges, etc. for
productivity improvement and quality control.
8.4 Employment Opportunities
-
8/2/2019 Textile Processing Sector
30/32
Keeping in view the linkage of the Engineering Sector to other sectors of economy, it can be
safely assumed that every one person employed in Engineering will add at least 2 more persons
in the over all economy. There is ample scope for qualified engineers in mechanical, electric
and electronics disciplines to boost this sector.
8.5 Need For Training Institutions
Diploma Level Courses on the pattern of Pak-Swiss Training Centre in Karachi should also be
opened in the Textile Institutions in Faisalabad and Karachi and more such courses should be
introduced in the Polytechnics in areas like Multan, Hyderabad, Lahore and Gujranwala.
8.6 Exhibitions
Most of these small workshops are shy or afraid of getting registered or displaying their
products, mainly from the fear of the revenue collection, labor controlling and other government
regulating agencies. This fear keeps them away from the mainstream Industry. This also leads
to the lack of interaction among the small scale, medium scale and higher level industry for a
purposeful vendor development.
National Exhibitions held annually can be very helpful in bringing out the skills, the range of
products and opportunities of group collaboration. It will help the planners and large scale
engineering industry in defining the way for developing skills in order to make this sector strong
and viable. This will culminate a Vendors List which can be recommended to foreign suppliersinterested in coming to this market and starting assembling / manufacturing on large scale.
The interaction between the foreign textile manufacturing industry could also be enhanced by
facilitating the indigenous Textile Engineering Industry to participate in the specialized
Exhibitions and fairs being held in those countries.
8.7 SE-Commerce Gateway MOU With Chinese Co.
The E-commerce Gateway has signed a memorandum of understanding (MOU) with a Chinesecompany Global Enterprise Consulting to launch a business a match making' service in
Pakistan and China.
According to E-commerce Gateway Pakistan. "This service includes seeking of agents,
distributors, buyers, suppliers or joint venture partners in Pakistan or Middle east for Chinese
companies that intend to do business in these markets".
-
8/2/2019 Textile Processing Sector
31/32
The service will include all kinds of facilitation required to help increase the Chinese exports to
the Middle East and South Asian markets. (Trends in Textile Engineering Industry of
Pakistan2009, http://www.ptj.com.pk/Web%202004/03-2004/trend.html)
CHAPTER # 9
FUTURE OUT LOOK
Pakistan textile industry is facing problems of low productivity due to its obsolete textile
machineries. To overcome this problem and to stand in competition, Pakistan Textile Industry
will require high investments. Pakistan is on the road to invest in processing sector, but
traditional sectors are also demanding high amount of investments. There is a continuous trend
of investing in spinning since many years. Although, trend towards investment in Air Jet weaving
segment is increasing day by day.
'Pakistan's textile industry estimates that around Rs1, 400 billion (US$32 billion) of investment
was required till 2010 in order to achieve the government's export target.'(Textile Industry:
Backbone of Country,2009,
http://www.streetdirectory.com/travel_guide/16592/business_and_finance/pakistan_textile_mac
hinery_industry.html)
9.1 Future Opportunities
Our main competitors in primary textile products with the advantage of large engineering sector
in this region are China and India. The only country in this region without strong engineering
base is Pakistan and our dependence upon outside Engineering Industry keeps our cost of
production higher with low engineering skills.
Looking into the future a strong competition from China and India for this market requirements
can be used to involve them to start assembly plants under their guidance and cooperation.
Some progress in the direction has led to the development of a Task Force in the Ministry ofIndustries and Textile Engineering is growingly lucrative for investors, local and foreigners.
CHAPTER # 10
RECOMMENDATION TO GENERAL PUBLIC:
-
8/2/2019 Textile Processing Sector
32/32
It is recommended to general public that the investment in the securities of these companies is
not risk free.