Din Textile Analysis

8/13/2019 Din Textile Analysis

1/30

2013

ANALYSIS OF

FINANCIALSTATEMENTS

DIN TEXTILE MILLS LTD

Submitted to:

Sir Maqbool-ur-Rehman

Submitted by:

Muhammad Faiq Aqil

ID:12170

MBA (FRM)


2/30

Table of Contents

1. Economy of Pakistan ................................................................................................................................. 6

1.1. Growth and Stabilization ................................................................................................................... 7

1.2. Commodity Producing Sector ............................................................................................................ 7

1.3. Agriculture Sector .............................................................................................................................. 7

1.4. Inflation .............................................................................................................................................. 8

1.5. Subsidiaries Surpassing ...................................................................................................................... 9

1.6. Manufacturing Sector ........................................................................................................................ 9

1.7. Consumption .................................................................................................................................... 10

1.8. Per Capita Real Income .................................................................................................................... 10

1.9. Real Investment ............................................................................................................................... 10

1.10. Foreign Direct Investment ............................................................................................................. 10

1.11. Workers Remittances .................................................................................................................... 10

1.14. Capital Markets .............................................................................................................................. 10

1.15. Trade and Payments ...................................................................................................................... 11

1.16. Energy ............................................................................................................................................ 11

1.17. Environment................................................................................................................................... 11

2. Industry Analysis ..................................................................................................................................... 12

2.1. Overview of Textile Industry ............................................................................................................ 12

2.2. Categories ........................................................................................................................................ 14

2.2.1. Spinning ..................................................................................................................................... 14

2.2.2. Weaving .................................................................................................................................... 14

2.2.3. Textile Made-Up Sector ............................................................................................................ 15

2.2.4. Processing ................................................................................................................................. 15

2.2.5. Printing ...................................................................................................................................... 15

2.3. World Cotton Production ................................................................................................................. 16

2.4. World Cotton Consumption ............................................................................................................. 16


3/30

2.5. Top Exporters of Textile (% Share in the World) .............................................................................. 17

2.6. Global Recession Impact .................................................................................................................. 17

2.7. SWOT Analysis of Textile Industry ................................................................................................... 18

2.7.1. Strength ..................................................................................................................................... 18

2.7.2. Weakness .................................................................................................................................. 18

2.7.3. Opportunities ............................................................................................................................ 20

2.7.4. Threats ...................................................................................................................................... 21

3. DIN Textile Mills Overview: ..................................................................................................................... 22

3.1. Mission Statement: .......................................................................................................................... 22

3.2. Vision Statement: ............................................................................................................................. 22

3.3. Products Portfolio: ........................................................................................................................... 23

3.4. Din Product Range: .......................................................................................................................... 23

3.5. Marketing Activities: ........................................................................................................................ 24

3.6. SWOT Analysis of DIN Textile Mills .................................................................................................. 24

3.6.1. Strengths ................................................................................................................................... 24

3.6.2. Weakness .................................................................................................................................. 24

3.6.3. Opportunities ............................................................................................................................ 25

3.6.4. Threats ...................................................................................................................................... 25

3.7. Contribution To National Exchequer: .............................................................................................. 25

3.8. Operational Review:......................................................................................................................... 25

3.8. Graphical Representation of Balance sheet ..................................................................................... 26

3.9. Graphical Analysis of Financial Ratios .............................................................................................. 27

4.0. Conclusion: ........................................................................................................................................... 29

References: ................................................................................................................................................. 30


4/30

LETTER OF TRANSMITTAL

Dear Sir. Maqbool-ur-Rehman,

I feel immense pleasure in presenting to your good self, the term report as part of my courserequirement. I found this report to be truly challenging in many aspects, indeed very interesting

in relation to various financial analysis. Writing this report itself was truly comprehensive

learning experience for me.

I have tried my level best to complete the report with respect to desired requirements.

However, if any explanation is required, I would be honored to oblige.

Yours sincerely,

Muhammad Faiq Aqil

ID:12170

MBA (FRM)


5/30

PREFACE

The present study deals with the research on economy of Pakistan, factors that have severe

impact on the economy, contribution of textile sector in the economy of Pakistan. The textile

sector of Pakistan is considered to play a central role in the economy of the country. Pakistan is

the 8th largest exporter of textile products in Asia. This sector contributes 9.5% to the GDP and

provides employment to about 15 million people i-e 30% of the 49 million work force of the

country .The study highlights the economic effects of the textile industry in the country as a

whole. The performance of textile sector production and revenue generation has been

compared with that of the neighboring countries.

Finally the study also an attempt to analyze the financial position of DIN Textiles Mills by

calculating some important ratios which will help gain an understanding into reasons for and

effects of the trends followed in various financial statements which will help us in generatingoperating results and determining the financial position of the company. The study also

includes strength and weakness of both textile industry and Din Textiles Mills.


6/30

1. Economy of Pakistan

Pakistans economy witnessed a modest improvement in FY12 real GDP grew by 3.7 percent

during the year, compared with 3.0 percent in FY11. Although the economy underperformed

compared with the growth target of 4.2 percent, this outcome was expected given the energy

shortages; security concerns; and floods in two consecutive years. Nevertheless, growth was

more broad-based compared to FY11, as it was evenly distributed across agriculture, industryand the services sector.

The demand side was more insightful, as the growth in FY12 was primarily driven by private

consumption. Strong worker remittances, a vibrant informal economy and higher fiscal

spending, supported consumption growth during the year. On the other hand, investment

remained sluggisha continuing trend over the past several years.


7/30

1.1. Growth and Stabilization

The economy is now showing signs of modest recovery. GDP growth for 2011-12 has been

estimated 3.7 percent as compared to 3.0 percent in the previous fiscal year 2011. The

Agriculture sector recorded a growth of 3.1 percent against 2.4 percent last year. The Large

Scale Manufacturing (LSM) growth is 1.1 percent during July-March 2011-12 against 1.0 percent

last year. Overall, the commodity producing sectors and especially the Agriculture sector have

performed better. The Services sector recorded growth of 4.0 percent in 2011-12.

1.2. Commodity Producing Sector

The commodity producing sector has performed better in the outgoing fiscal year as compared

to last year. Its growth rate this year was 3.3 percent against 1.5 percent during last year.

1.3. Agriculture SectorIt is a key sector of the economy and accounts for 21 percent of GDP. The supportive policies of

the government resulted in a growth of 3.1 percent against 2.4 percent last year. Major Crops

registered an accelerating growth of 3.2 percent compared to a negative growth of 0.2 percent

last year. The major crops including Cotton, Sugarcane and Rice witnessed growth in production

of 18.6 percent, 4.9 percent and 27.7 percent respectively. However, preliminary estimates of

wheat production showed a negative growth due to late receding of flood waters in lower

Sindh which hampered the timely cultivation of the wheat crop. Livestock has witnessed a

marginally higher growth of 4.0 percent against the growth of 3.97 percent last year. Fisheries

sector showed a growth of 1.8 percent. Forestry recorded a growth of 0.95 percent ascompared to the contraction of 0.40 percent last year.


8/30

1.4. Inflation

Price stability remained the priority of the government. The Government has constituted a

National Price Monitoring Committee headed by the Finance Secretary with representatives of

Federal Ministries and Provincial departments. The Committee meets every month. In addition,

the Cabinet and the Economic Committee of the Cabinet monitors the prices of essential items

and take corrective measures to ensure that prices remain under check. These efforts have

yielded results. Inflation has declined for the third consecutive year. CPI was 10.8 percent

during July-April, 2012 from a high of 25 percent in October 2008. It was in single digit in

December 2012. This has been achieved despite sharp increase in international oil prices, effect

of upward adjustment in the administered prices of electricity and gas, supply disruptions due

to devastating floods of 2010 and heavy rains of 2011 and bank borrowings. Food and non-food

inflation averaged 11.1 percent and 10.7 percent respectively against 18.8 percent and 10.8

percent in the same period of last year.


9/30

1.5. Subsidiaries Surpassing

Besides the low investment rate, the increase in the budget deficit has also emerged as a key

challenge to the macroeconomic stability of the country. For FY12, the government had

envisaged a significant fiscal consolidation, but the actual outcome was a sizeable expansion.

Subsidies turned out to be more than three times the target, but this included Rs 391 billion

that was spent to consolidate the PSE debt, especially in the power sector.3 Excluding subsidies,

the fiscal deficit narrows to 6.0 percent of GDP. This reflects higher-than-target expenditures

including debt servicing, and the fact that fiscal devolution has not been as smooth as

anticipated. Furthermore, provinces were expected to run budget surpluses, but they ended up

contributing Rs 39.1 billion to the overall deficit.

1.6. Manufacturing Sector

The growth of the manufacturing sector is estimated at 3.6 percent compared to 3.1 percent

last year. Small scale manufacturing maintained its growth of last year at 7.5 percent and

slaughtering growth is estimated at 4.5 percent against 4.4 percent last year. Large Scale

Manufacturing (LSM) has shown a growth of 1.1 percent during July-March 2011-12 against 1.0

percent last year. The Construction Sector has shown 6.5 percent growth as compared to

negative growth of 7.1 percent last year. Mining and Quarrying sector recorded a positive

growth of 4.4 percent during July-March of the fiscal year 2011-12 against negative growth of

1.3 percent last year. Electricity and gas distribution witnessed a negative growth of 1.6 percent

against - 7.3 percent last year.


10/30

1.7. Consumption

Real private consumption grew at 11.6 percent in fiscal year 2011-12 as compared to 3.7

percent growth last year and real government consumption grew at 8.2 percent as compared to

5.2 percent last year. Private consumption expenditure has reached 75 percent of GDP;

whereas public consumption expenditures are 13 percent of GDP. Private consumption has

increased on the back of sustained growth in remittances. Total consumption has reached 88.4

percent of GDP in fiscal year 2011-12 as compared to 83 percent last fiscal year. Furthermore,

increase in rural income due to higher production of crops and sharp increase in commodityprices also supported the consumption demand.

1.8. Per Capita Real Income

Per capita real income grew at 2.3 percent in 2011-12 as compared to 1.3 percent growth last

year. In dollar terms, it increased from $ 1258 in 2010-11 to $ 1372 in 2011-12.

1.9. Real Investment

Real Investment has declined from 13.1 percent of GDP last year to 12.5 percent of GDP in

2011-12; fixed investment has declined to 10.9 percent of GDP in 2011-12 from 11.5 percent of

GDP last year. Similarly Private investment also contracted to 7.9 percent of GDP in 2011-12 as

compared to 8.6 percent of GDP last year. Public investment as a percent of GDP is 3.0 percent

in 2011-12 against the 2.9 percent last year. National savings are 10.7 percent of GDP in 2011-

12 as compared to 13.2 percent in 2010-11.

1.10. Foreign Direct Investment

It stood at $ 668 million during July-April 2011-12 as against $ 1293 million last year. The capital

flows were affected because of global financial crunch and euro zone crisis. Oil and Gas

Exploration remained the major sector for foreign investors. The share of Oil and Gas

Exploration in total FDI during July-April 2011-12 stood at 70 percent.

1.11. Workers Remittances

Witnessed a strong growth of 25.8 percent in 2011 over the previous year 2010. During July-

April 2011-12, workers remittances grew by 20.2 percent at $ 10.9 billion. The buoyancy in

remittances is largely attributed to the governments efforts to divert remittances from

informal to formal channel. Data on remittances suggests that the monthly average for the

period of July-April 2011-12 stood at $ 1.09 billion compared to $ 0.90 billion during the

corresponding period last year. The upsurge in the remittances is attributed to the

governments efforts of redirecting these flows from informal to formal channels.

1.14. Capital Markets

The KSE 100 index stood at 12,496 on June 20, 2011. It crossed the barrier of 14,000 and closed

at 14,618 on 7th May, 2012, the highest level seen in last four years showing a growth of 17

percent over the closing index of last financial year. The Government has now levied Capital

Gain Tax on securities. The net investment by the foreign investors in Pakistans Stock Markets

during July-March, 2011-12 reflected a net outflow of US$176 million. This indicates that bullish

trend observed in Pakistani equity market is due to the restoration of the confidence of local


11/30

investors and institutions. During fiscal year 2011-12, the leading stock markets indices of the

world observed mixed trends with negative growth of 18.1 percent in China to 19.03 percent

positive growth in case of Philippines. Pakistani Stock market performed well as compared to

markets of the world during the current fiscal year. This was mainly due to the steps taken by

the government to boost the confidence of the equity market investors which included reforms

in the Capital gains tax, etc.

1.15. Trade and PaymentsThe Government pursued vigorously to secure concessional duties package on 75 items from

the European Union. The World Trade Organization approved the package this year. It is

expected that this will boost Pakistans exports to EU, one of the major trading partner of

Pakistan. Exports witnessed a strong performance last year attaining the highest level ever of $

25 billion showing a growth of 30 percent. It reflected both the price and quantity effect.

Despite euro zone crisis, impacting the demand for Pakistan goods, Pakistan has successfully

maintained its exports at last years until April this year. Exports during July-April 2012 were $

20.5 million compared to $ 20.46 billion last year. The Afghan Transit Trade Agreement (APTTA)

has encouraged formal trade between Pakistan and Afghanistan and the volume has risen to

around $ 2.5 billion annually. Efforts are underway to formalize Free Trade Agreements and

Preferential Trade Agreements with many countries. It will help boosting Pakistans exports.

Efforts are also in hand to normalize trade relations with India.

1.16. Energy

Energy is considered to be the lifeline of economic development. Pakistans economy has been

growing at an average growth rate of almost 3 percent for the last four years and demand of

energy both at the production and consumer end is increasing rapidly. The Energy Committee

headed by the Finance Minister presented a well articulated Energy Recovery Plan to the

Cabinet in November 2011 which was approved after due deliberations.

1.17. Environment

Pakistan continued to face challenges to achieve environmentally sound development. This has

become increasingly difficult to achieve in the backdrop of back to back flooding and rains

across the country as well as other exogenous and endogenous factors. The quality of the

natural environment is not only an extremely important issue from the point of view of

individual survival but it will also emerge as one of the principal human security issues in

Pakistan. The environmental challenges include climate change impacts, loss of biological

diversity, deforestation and degradation of Air and Water quality.


12/30

2. Industry Analysis

2.1. Overview of Textile Industry

Pakistan is the 4th largest producer of cotton and contributes 5% to the global spinning capacity

after China and India. Pakistans textile industry consists of large scale organized sector and

highly fragmented cottage/medium and small units. Organized sector includes large number of

spinning units (471) and a small number of composite units (50). The rest of the downstream

industry chainfinishing, made ups, garments, towel and hosieryhaving a great exportpotential, is largely segmented in unorganized sector. Apart from being the mainstay of

Pakistans exports, the sector also represents the principal employment-generating avenue in

the organized and large scale industrial segment.

A textile or cloth is a flexible woven material consisting of a network of natural or artificial

fibers often referred to as thread or yarn. Yarn is produced by spinning raw fibers of wool, flax,

cotton, or other material to produce long strands. Textiles are formed by weaving, knitting,

crocheting, knotting, or pressing fibers together.

Textiles have an assortment of uses, the

most common of which are for clothing and

containers such as bags and baskets. In the

household, they are used in carpeting,

upholstered furnishings, window shades,

towels, covering for tables, beds, and other

flat surfaces, and in art. In the workplace,

they are used in industrial and scientific

processes such as filtering. Miscellaneous

uses include flags, backpacks, tents, nets,

cleaning devices such as handkerchiefs and

rags, transportation devices such as

balloons, kites, sails, and parachutes, in

addition to strengthening in composite

materials such as fiberglass and industrial

geo textiles. Children can learn using

textiles to make collages, sew, quilt, and toys.


13/30

Textiles used for industrial purposes, and chosen for characteristics other than their

appearance, are commonly referred to as technical textiles. Technical textiles include textile

structures for automotive applications, medical textiles such as implants, geotextiles

(reinforcement of embankments), agro textiles (textiles for crop protection), protective clothing

(e.g. against heat and radiation for

fire fighter clothing, against molten

metal for welders, stab protection,

and bullet proof vests).

Textiles can be made from many

materials. These materials come

from four main sources: animal

(wool, silk), plant (cotton, flax, jute),

mineral (asbestos, glass fiber), and

synthetic (nylon, polyester, acrylic).

In the past, all textiles were made

from natural fibres, including plant,

animal, and mineral sources. In the

20th century, these were

supplemented by artificial fibers

made from petroleum.

The textile sector of Pakistan is

considered to play a central role in

the economy of the country. Increase

in the cotton production and

expansion of textile industry hasbeen impressive in Pakistan since

1947. Cottonbales increase from

1.1 million bales in 1947 to 10 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.


14/30

2.2. Categories

The textile industry in Pakistan can be broadly categorized in two divisions, a large scale

organized sector and a fairly disjointed cottage / small-scale sector. The different sectors that

form part of the textile value chain are:

2.2.1. Spinning

This segment is the most important segment in the hierarchy of textile production. At present,

it is comprised 521 textile units (50 composite units and 471 spinning units)7 with installed

capacity of 10.9mln spindles and 160 thousand rotors8. Province wise overview of the installed

spindles across the country is given

Pakistan's textile industry enjoys several advantages over those of many other countries as far

as the production of quality yarn is concerned. The country is a leading exporter of cotton yarn,

including coarse, medium and fine varieties. Spinning is in the beginning of value chain since

the effect of a sub-standard yarn production would go right across the entire value chain.

2.2.2. Weaving

There are two different sub-segments in weaving A) Mill segment (Integrated and Independent

Weaving Units), and B) Non mill segment (Power Loom Units). The mills segment captured

momentum in the late fifties with the development of First Five-Year Plan. At that time,

Pakistan Industrial Development Corporation was established with an objective of industrial

sector's development. As a consequence, by mid sixties, the number of units of textiles

bleaching, printing and processing reached to 180.


15/30

2.2.3. Textile Made-Up Sector

Being value added segment, this comprises different sub groups namely A) Hosiery & Knitwear,

B) Readymade Garments including Fashion

Apparels, C) Towels D)Tents & Canvas E) Bed Wear, and F) Cotton Bags.

2.2.4. Processing

The processing sector, comprising dyeing, printing and

finishing sub-sectors, only a part of this sector is operating

in an organized state, able to process large quantities while

the rest of the units operate as small and medium sized

units.

2.2.5. Printing

The printing segment dominates the overall processing

industry followed by textile dyeing and fabric bleaching.


16/30

2.3. World Cotton Production

With the advancement in the crop technology over the years, worlds cotton production has

also increased despite reduction in the cultivation area. In spite of decline in the cotton crop

during last few years, China continues to contribute highest proportion in the total world

production and consumption followed by India.

2.4. World Cotton Consumption


17/30

2.5. Top Exporters of Textile (% Share in the World)

During 2010, China while continuing its lead in clothing exports also became the worlds major

exporter of textiles. This also increased its share in the worldsclothing and textile exports to

34% (2009: 32%). The second largest contributor in combined exports of clothing and textile

exports was EU with a share of ~28% (2009: 30%). Among the other players, India while

observing a 40% increase in textile exports assumed the position of third largest exporting

country, whereas in clothing exports, Bangladesh emerged as the third biggest nation45%

rise on YOY basis.

2.6. Global Recession Impact

At present Pakistan's textile sector has been passing through difficult times these days as higher

input cost, rising interest rates and intense competition in the export market have brought the

sector on its toes.

The recent spike in gas prices will have a spiraling effect of 15% to 20% on textile sectors cost

of production. Most of the textile companies are operating their mills on captive power plants,

for which gas is the major input. It is estimated that gas accounts for 65% to 70% in the total

fuel and energy component of textile sectors cost of production. The profit margins, which are

already dwindling, would be further squeezed, denting their profitability in the coming days.

Though, the effect of gas rate hike would be varying for different industries of the textile sector,the badly hit would be spinning, weaving and value-added garment industry.


18/30

2.7. SWOT Analysis of Textile Industry

2.7.1. Strength

1. Raw Material

Pakistan has high self sufficiency in raw materials and is the 4th largest cotton producing

country in the world.

2. Labor

Cheap labor has always been the backbone of the economy of Pakistan. Cheap and ample

supply of labor strength both the industrial and agricultural sector. Around 39 % of the labor

force works in textile industry. This low cost of labor leads to low cost of production which gives

a competitive advantage to the textile industry of Pakistan.

3. Rich Heritage

Due to cultural diversity and rich heritage designers come up with new different and attractive

designs which are appreciated worldwide. Our culture comprises of Punjabi, Balochi, Sindhi and

Pashto values. We are also influenced by Indian and other foreign cultures such as India, USA

etc through media exposure which gives Pakistani designers an inspiration and tastes of newdesigns and fusion of these designs, to give their best in terms of style creativity and designs.

4. Domestic market

The trend of urbanization has increased income levels, coupled with increase in population the

domestic demand has increased, which means more population more demand and labor.

2.7.2. Weakness

1. Research and Development

Developed countries are using biotechnology and genetic engineering to increase the quality and

quantity of their cotton production. They are able to grow colored cotton, organic cotton and severaldifferent varieties cotton to add value to the textile chain.

In Pakistan, there is some research done on small scale by private companies to invent modified cotton

fibers. Practically no efforts are being made by the APTMA in the R&D of the textile industry to enhance

the quality of its products, upgrade the technology used, and encourage effective methods of

production in order to compete internationally.

Instead the industry suffers lack of latest means of production and falling cotton crop output every year.

Due to low quality of cotton crop, profitability decreases and the farmer switch to the other crop such as

sugar cane, maize and thus the cotton production decreases.

2. More dependence on cotton

As the textile sector is heavily dependent on cotton production, low cultivation of cotton will deteriorate

the textile industry. On the other hand, Pakistan lacks expertise in the development, production and

marketing of synthetic products and fabrics required for items like swimwear, skiwear and industrial

apparel. So far Pakistan has been unable to diversify in the export of textiles and is heavily dependent on

single fibre that is cotton and its blends.


19/30

3. Labor productivity

Despite of the abundant supply of the labor, productivity of the labor is very low. According to a study

by Federal Adviser on textiles, the regional competitors of Pakistan take 75 minutes to complete and

produce one piece of cloth whereas we take 133 minutes for the same work.

We also waste 30% in finishing and 12% in washing. European buyers recommended that we should cut

our costs up to 45% in sewing by getting more efficient.

Labor productivity can be improved by giving the labor appropriate training with the advancement of

technology so as to make them more efficient and with lower wastage of resources. In China an average

70 hours of training are given to labor to enhance their expertise.

4. Poor infrastructure

The important resources and infrastructure, such as adequate of supply of water, continuous supply of

electricity and gas, efficient logistics and transportation, tax structure, raw material supply are all basic

requirements for the development of industrial base, which are not adequate for competing with

foreign competitors.

However, on the other hand, the industry is faced with rising charges of the energy sector, which

increases the cost of production, making it difficult to compete with the other regional rivals.

5. Poor quality standards

With the exception of big and leading units who comply with global quality standards in textiles, most of

the medium and small sized units cannot ensure the reliable and consistent quality standards.

Some of these textile units import second hand machinery from China, India, Korea, and Taiwan with no

checks and balances on the quality of the machinery parts and tools. Preference is only given to the

cheap and workable machinery with no concern of the quality of the machine, therefore, resulting in

poor quality of the end product.

The industry can generate more profit by adding more value to the product, as value can be measured interms of quality, increased per unit price, etc. Pakistans textile industry should focus on latest material

handling techniques and should train workers. The inability to timely modernize the equipment,

machinery and labor has led to the decline of Pakistani textile competitiveness.

6. Unstable political situation

Political unrest, strikes and terrorism have critically affected the economy of Pakistan. Frequent

changing of the government has adversely maligned the policies of the textile sector. According to the

World Trade Review Pakistan has failed to take necessary steps needed to meet post MultiFiber

Agreement (MFA) challenges for its textile industry owing to lack of political will by the successive

governments.

In 1978 World Bank surveyed the Pakistan textile industry and reported many deficiencies in this sector.

It also gave certain measures to resolve these issues, but unfortunately all these problems still persist

and the industry is still unable to keep its pace with the international market. Successive governments

lacked the will to reform human resources and adapt the marketing techniques that resulted present

scenario in this industry.


20/30

2.7.3. Opportunities

1. Pakistan Textile City:

Pakistan Textile City in Port Qasim, Karachi with an area of 1250 acres, will be completed in 2011 as a

private public sector joint venture. The main purpose of the textile city is to provide the textile industry

with the world class infrastructure to meet the global competitiveness and challenges and as to provide

value added textile industrial zone. Its main features include one way window operation, constant

supplies of gas and water, and uninterrupted power supply.

2. Marketing

Targeting the unexplored export markets with the help of aggressive sales and marketing will pave the

way for the textile growth. Its all about hunting your opportunities with the handful of colorful lollipops.

If we make investment in our Sales force and train them in the fine art of marketing textile products; we

can capture a much bigger market share from other smaller competitors.

3. Collaboration with foreign companies

By making partners with the foreign companies, we will be able to learn a lot from them in terms system

orientation, supply chain and it would be feasible to import latest technology. We can also reduce our

costs, comply with the international standards, and add value to our products, easiness in marketing our

products in different foreign regions, improved labor and thus catching up with our regional

competitors.

4. Producing high value products

Its better to export yarn than raw cotton. Similarly its better to export finished fabric than to export

grey fabric. Furthermore its very much feasible to export

Readymade garments than to only fabrics. What makes the latter better is the value added and

subsequent increase in per unit price. Therefore, the textile industry should focus on the finished

products so as to create more value in their products and reap larger margin of profits.

The industry should also diversify into other areas such as technical textiles and non wovens in order

decrease its dependence on conventional and commodity textiles, which is highly sensitive to per unit

price and volume for the profit margin.

5. Reducing the cost of business

China and India are much cheaper in labor, raw material and utilities as compared with Pakistan. Rising

inflation also increase the cost of production. We have to control these unnecessary costs if we have to

survive in the middle of the two giants of the textile sector in the world.


21/30

2.7.4. Threats

1. New competitors

Pakistan is facing new competitors in textile sector such as Bangladesh, Vietnam and Turkey. Though we

cannot avoid competition but we can always stay ahead of them by reforming our strategies and

educating our entrepreneurs so as to move one step forward in every aspect.

2. Phasing out of quota system

As the quota system is ruled out by WTO, there is a threat by the Chinese and Indian manufacturers to

gain most of the market share. We have high costs, low labor productivity and inefficient production

processes.

3. Fashion life cycle

Fashion changes day by day these days. Media has so much penetrated in our daily lives that we easily

adapt ourselves as it wants us to. This has resulted in shortening the fashion lifecycle thus increasing the

fashion risk.

Now the buyer does not want to wait long for his consignment because he is insecure that by the time it

will reach to him he will lost its demand due to change in fashion. Therefore, they prefer to buy from

neighboring countries even at higher cost to get their products instantly rather than to wait weeks ormonths for their consignments to reach them.


22/30

3. DIN Textile Mills Overview:

Din Textile has been constantly striving to achieve excellence and generate highest value for all

of its stakeholders. Today Din Textile holds an unchallenged position at forefront of industry,

within the country and overseas for its groundbreaking developments and innovative products

line, Din Textile has gained immense trust for delivering superior quality products for exceeding

the customer expectations. This is a testimony to Din's unwavering commitment to total

satisfaction of its customers.

Under the dynamic leadership of the Group and strong Human Resource, Din Textile Mills Ltd.

was founded in 1987 and in a very short time become an icon for the spinning industry in

Pakistan. With four state-of-the-art spinning units and 1 dyeing unit located at Chunian and

Lahore having annual production capacity of yarn 26.72 million Kgs. and dyeing of Fiber and

Yarn 2.8 million Kgs.

3.1. Mission Statement:

The company should secure and provide a rewarding return on investment to

its shareholders and investors, quality products to its customers, a secured and

friendly environment at place of work to its employees and present itself a

reliable partner to all business associates.

3.2. Vision Statement:

We aim at transforming Din Textile Mills Ltd. ( DTML) into a complete textile

unit to further explore international market of very high value products. Ouremphasis would be on product and market diversification, value addition and

cost effectiveness. We intend to fully equip the company acquire pioneer role in

the economic development of the country.


23/30

3.3. Products Portfolio:

Din Group was established in 1954 with a small venture in Leather Industry. But today it is a

major player in the economy of Pakistan, with exports worth over $100 million per annum and

annual sales turnover in excess of $130 million. This speaks volumes about our standing and

strong financial profile.

Under the dynamic leadership of the Group

and strong Human Resource, Din Textile

Mills Ltd. was founded in 1987 and in a very

short time became an icon for the spinning

industry in Pakistan.

With 3 state-of-the-art spinning units and 1

dyeing unit located at Chunian & Lahore,

Din Textile is producing premium quality

yarn to meet individual customers needs in

the domestic and international market.

Right from its inception, Din Textile has

been constantly striving to achieve

excellence and generate highest value for

all stakeholders. Today it holds an

unchallenged position at the forefront of industry, within the country and overseas, for its

groundbreaking developments and innovative product line. Din Textile has gained immense

trust for delivering superior quality products far exceeding the customers expectations. This is

a testimony to Dins unwavering commitment to total satisfaction of its customers.

3.4. Din Product Range:

Combed Compact YarnFrom Ne. 30 up to Ne. 120/1 for Weaving Core Spun Lycra Yarn(Carded & Combed) From Ne. 10 up to Ne. 80/1 for Weaving Slub Lycra Yarn(Carded) From Ne. 10 up to Ne. 40/1 for Weaving Slub Yarn(Carded) From Ne.10 up to Ne. 40/1 for Knitting Weaving Dyed Yarn(Carded & Combed) From Ne. 8 up to Ne. 80/1 for Knitting & Weaving Melange Yarn(Carded & Semi Combed) for Knitting, Weaving & Socks Ply YarnNe. 8 / 2, 8 / 3 - 80 / 2 for Knitting & Weaving Gassed Yarn8 / 2, 12 / 3 - 100 / 2 for Knitting, Weaving & Socks Bleached CottonWeb for surgical & cosmetic use


24/30

3.5. Marketing Activities:

The Pakistani textile industry has had a golden opportunity to capture markets lost by Chinese

producers because of rising wage pressure in China and the appreciation of the Yuan. But

according to the Pakistan central banks latest annual economic report, the local industry hasnt

been able to seize the advantage. Instead, Bangladesh and Cambodia have increased sales of

apparel as Pakistani manufacturers struggle with energy shortages, the report says. Powerblackouts last as long as 20 hours at a stretch, while shortages of natural gas, which powers the

industry, can go on for three to six days at a time. Demand for gas exceeds supply by as much

as 15 percent .10 percent of the spinning mills and fabric printing units have shut down, and

half of the remaining plants are struggling to survive. Pakistans $13.8 billion textile industry is

struggling to survive a critical shortage of energy to run its plants.

The slowdown in Chinese textiles would provide a boost to the Pakistani textile exports,

particularly the cotton yarn segment. The high cotton prices in China have forced Chinese

textile manufacturers to import more cotton yarn from neighboring countries including

Pakistan, with the country importing record high yarn in Jul12. In this regard, we flag domestic

textile plays with a focus on yarn to be clear winners from the current scenario.

3.6. SWOT Analysis of DIN Textile Mills

3.6.1. Strengths

Self reliance Manufacturing flexibility Abundance of raw material production Design expertise Availability of cheap labor Growing economy and domestic market Progressive reforms

3.6.2. Weakness

Highly fragmented sector High dependence on cotton Lower productivity Declining mill segment Technological obsolescence Nonparticipants in trade agreements


25/30

3.6.3. Opportunities

End of quota regime Shift in domestic market to branded readymade garments Increased disposable income Emerging mall culture and retail expansion

3.6.4. Threats

Stiff competition from developing countries; especially China and India. Pricing pressure Locational disadvantage International labor and environmental laws

3.7. Contribution To National Exchequer:Despite of difficult business conditions and having loss for the year, Din Textile contributes

towards the national economy on account of taxes and other levies. During the year under

review your company paid Rs. 427.998 million as cost of finance , contribute to the foreign

reserves of the country US$ 31.799 million as direct exports. It is heartening to note that being

a true patriot Din textile accrued to government in term of Tax payment amounting to Rs.

63.606 million as compare to Rs. 88.092 million last year.

3.8. Operational Review:According to the industry sources, local garment exports came down by 140 million dollars in

2011-2012, and its share in the countrys total exports has also drastically reduced. Textile and

clothing exports could have touched the figure of 22 billion dollars by end June 2012 but due to

energy shortages, the exports could not fetch even the 2010-11 years export, they added.

During the year under review, Your company renew the agreement with Brothers Textiles Ltd.

under Lenience to operate having installed capacity 17,280 Spindles to explore and capture

new markets locally as well as of exports and your management have intention to continue it

for the next Year. During the Year your company produced Million 21.943 Kg's of Yarn as

against production of 21.882 Million Kg's during the last year; thereby achieving an averagecapacity utilization of 82.13% as against 89.32% during previous year. 77,587 out of 80,569

spindles remained operational during the year which attained 96.30% utilization of installed

capacity as against 76,973 working spindle having 97.42% utilization of installed capacity in last

year.


26/30

3.8. Graphical Representation of Balance sheet


27/30

3.9. Graphical Analysis of Financial Ratios


28/30


29/30

4.0. Conclusion:

Pakistans textile industry is going through one of the toughest periods in decades. The global recession

which has hit the global textile really hard is not the only cause for concern. Serious internal issues such

as the hike in electricity tariff, the increase in interest rate, energy crisis, devaluation of Pakistani rupee,increasing cost of inputs, political instability, removal of subsidy & internal dispute. also effected

Pakistans textile industry very badly. The high cost of production resulting from an instant rise in the

energy costs has been the primary cause of concern for the industry. Depreciation of Pakistani rupee

during last year which has significantly raised the cost of imported inputs.

Furthermore, double digit inflation and high cost of financing has seriously affected the growth in the

textile industry. All factor increase the cost of production which decreases the exports consequently

increasing unemployment level. Pakistans textile industry is lacking in research & development (R &

D).The production capability is very low due to obsolete machinery & technology.

Our textile sector needs to capitalize on the new emerging opportunities by adhering to global best

practices, adapting rapidly changing technologies, better supply chain management while trying to reach

global value chains.


30/30

References:

Articles:

Khan, Aftab A., Khan Mehreen, Pakistan Textile Industry Facing New Challenges,Euro Journals,

http://www.eurojournals.com/rjis_14_04.pdf (accessed Dec 21, 2011).

Yaseem Ahmed, Textile Industry of Pakistan, Horizon Securities SMC, Pvt.Ltd.

Pakistan Credit Rating Agency, Sector Study- Textile Sector FY2012

Websites:

http://www.dingroup.com.pk/index-textile.php

http://www.google.com.pk/

http://www.wikipedia.org/

http://textilesource.com/textile-industry-news-articl/
http://www.dingroup.com.pk/index-textile.phphttp://www.dingroup.com.pk/index-textile.phphttp://www.google.com.pk/http://www.google.com.pk/http://www.wikipedia.org/http://www.wikipedia.org/http://textilesource.com/textile-industry-news-articl/http://textilesource.com/textile-industry-news-articl/http://textilesource.com/textile-industry-news-articl/http://www.wikipedia.org/http://www.google.com.pk/http://www.dingroup.com.pk/index-textile.php

Date post:	04-Jun-2018
Category:	Documents
Upload:	zainab-abizer-merchant
View:	219 times
Download:	0 times

Din Textile Analysis

Documents