uk/free-accounting-essays/textile-processing-sector/
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 by including 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
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 the projected 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
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-ofpakistan-textile-industry)
130,296 spindles, 223 wide width air jet looms, and a state of the art processing and finishing unit.
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
Meezan Bank Limited National Bank Of Pakistan Nib Bank Limited The Royal Bank Of Scotland Limited Standard Chartered Bank (Pakistan) Limited United Bank Limited
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
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)
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. (Kohinoor Textile Mills2008. http://www.kmlg.com/kmlg/history.php)
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. 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 total output 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)
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 interest rates, 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/2008/04/17/contribution-insight-into-the-problemsfacing-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
KTM
Total Assets
Fixed
2,587,9362,473,7962,660,3643,079,6933,555,4114,520,4544,807,2335,933,390
KTM
1,390,9332,592,8793,033,0675,388,6405,645,5517,400,5729,936,9887,758,101
Current Liabilities:
Years
2001
2002
2003
2004
2005
2006
2007
2008
Total
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
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)
Ratio Analysis
2001
2002
2003
2004
2005
2006
2007
2008
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 was with 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
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.
Ratio Analysis
2001
2002
2003
2004
2005
2006
2007
2008
Acid Ratio(KTM)
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.
Ratio Analysis
2001
2002
2003
2004
2005
2006
2007
2008
Inventory Ratio(GUL)
Turnover
Inventory Ratio(KTM)
Turnover
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.
Ratio Analysis
2001
2002
2003
2004
2005
2006
2007
2008
Days
Sales
Outstanding(GUL)
7.0612569.33896311.379347.7538379.3974392.170204
Days
Sales
Outstanding(KTM)
49.9062853.5426542.4824457.0825 34.7143725.1324422.3708632.53823
Explanation
In 2001 gul ahmed collection period was 89 days which was not good in terms of industry standards 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.
Ratio Analysis
2001
2002
2003
2004
2005
2006
2007
2008
Days Purchases Outstanding 58 days44 days53 days29 days42 days41 days38 days42 days (GUL)
Days Purchases Outstanding 54 days52 days38 days25 days36 days31 days23 days32 days (KTM)
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 years which 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.
Ratio Analysis
2001
2002
2003
2004
2005
2006
2007
2008
Fixed
Asset
Turnover(GUL)
1.9305052.33071 2.0925192.1644681.6527661.7922262.0382491.963488
Fixed
Asset
Turnover(KTM)
1.7783951.6672081.6603310.9984520.8121350.93285 0.7185440.974249
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.
Ratio Analysis
2001
2002
2003
2004
2005
2006
2007
2008
Total
Total
Explanation:
The total assets turnover has dropped below 0.5 last year of KTM, primarily due to greater indulgence 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 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.
Ratio Analysis
20012002200320042005200620072008
Debt Ratio (GUL) 20% 14% 17% 24% 21% 18% 21% 20%
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 asset management ratios so KTM needs to look at their asset utilization which can effect increase its efficiency in terms of its asset management.
Ratio Analysis
2001
2002
2003
2004
2005
2006
2007
2008
Times
Times
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.
Ratio Analysis
2001
Explanation
The 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
Ratio Analysis
20012002200320042005200620072008
Ratio Analysis
2001
2002
2003
2004
2005
2006
2007
2008
Return On Assets (KTM)8.88% 7.29% 8.12% 6.98% 3.64% 7.08% 3.97% 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.
Ratio Analysis
2001
Explanation:
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 both the companies have decreased disastrously.
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 oscillated between 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.
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 )
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 Engineering Sector)
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
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 are there, only change in environment is need.
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.
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.
8.6 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 suppliers interested 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.
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)
It is recommended to general public that the investment in the securities of these companies is not risk free.