Textile Study

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Textiles An Overview

Se tember 2012

Textile SomeFacts

Importance of

Textile inPakistan

World Textile Demand &

SupplyDynamics

Performance CompetitivenessOutlook on the

Sector


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Sna shot1. Profile

ext e ome acts

Importance of Textile in Pakistan

2. Risks

World Textile Demand and Supply DynamicsPerformance

Competitiveness

Textile SomeFacts

Importance of

Textile inPakistan


SupplyDynamics


Sector


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Textile Some facts

Textile means to weaveth

cottonrd

1

capacity in Asia and 5%

of the global spinningcapacity

Largest industrial sector

2

3

Sufficient availability ofraw material

Textile SomeFacts

Importance of

Textile inPakistan


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Pakistan Agricultural Land use 4

Textile Some

Facts

Importance of

Textile inPakistan


SupplyDynamics


Sector


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44%

Textile Some

Facts

Importance of

Textile inPakistan


SupplyDynamics

Performance Competitiveness

Outlook on the

Sector


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15%

Textile Some

Facts

Importance of

Textile inPakistan


SupplyDynamics


Outlook on the

Sector


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Textile Some

Facts

Importance of

Textile inPakistan


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Textile Some

Facts

Importance of

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Pakistan's Textile SectorYear

Installed

Capacity

(Looms)

Working

Capacity

(Looms)

2004-05 9 000 5 000FY12 (P) FY11 FY10 FY09 FY08

Pakistan & Textile Industry Exports

5

6

2005-06 9,000 4,000

2006-07 8,000 4,0002007-08 8,000 4,000

2008-09 8,000 4,000

2009-10 7 000 4 000

Pakistan Exports (USD mln) 24.6 24.8 19.3 17.7 19.1

Textile Exports (USD mln) 12.3 13.8 10.2 9.6 10.6%age of Textile Exports 50% 56% 53% 54% 55%

P: Provisional

2010-11 7,000 5,000

2011-12 7,000 5,000

6KHYBER TOTAL

I

MUnits

Spindles

000 Units

Spindles

000 Units

Spindles

000 Units

Spindles

000 Units

Spindles

000 Units

Spindles

000

2004-05 307 6,998 118 2,512 17 781 10 99 6 93 458 10,483

PAKHTUNKHWA PAKISTAN

Year

.

PO

R

T

- , , ,

2006-07 309 7,349 119 2,132 17 812 10 127 6 94 461 10,514

2007-08 309 7,349 119 2,132 17 812 10 127 6 94 461 10,514

2008-09 309 7,349 119 2,132 17 813 10 127 6 94 461 10,515

2009-10 316 7,606 118 2,056 17 745 9 125 6 94 466 10,6262010-11 316 7,841 116 2,188 17 712 9 130 6 94 464 10,965

A

N

CE

Textile Some

Facts

Importance of

Textile inPakistan


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Pakistans Textile Sector Composition

Pakistans textile industry consists of large scaleorganized sector and highly fragmented

cottage/medium and small unitsOrganized sector : Large number of spinning units(464) and a small number of weaving units (60)

The rest of the downstream industry chain finishing,

7

ma eups, garmen s, owe an os ery av ng a greaexport potential, is largely segmented in un-organized

.

Textile Some

Facts

Importance of

Textile inPakistan


SupplyDynamics


Outlook on the

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Pakistans Textile Sector at KSE

180 listed textile companies constituting threesegments: A) Spinning, B) Weaving, and C)

Composite.Textile Paidup Capital as at end-June Textile Market Capitalization as at end-June

3.8%

5.0%

6.3%

7.5%

15

20

25

30

Rin

mln

1.0%

1.5%

2.0%

2.5%

3.0%

30

45

60

75

90

KRin

mln

0.0%

1.3%

2.5%

0

5

10

2006 2007 2008 2009 2010 2011 2012

P

0.0%

0.5%

0

15

2006 2007 2008 2009 2010 2011 2012

P

Weaving

Weaving

SpinningComposite%age of total KSE Capital

Composite

%age of total KSE Capitalization

Textile Some

Facts

Importance of

Textile inPakistan


SupplyDynamics


Outlook on the

Sector


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Top Listed Spinning PlayersPKR in mln

31-Mar-12 30-Jun-11

PROFIT SHARESHARE IN SHARE IN

PROFIT

8

1 Fazal Cloth Mills Limited 14,183 1,101 18,934 8.0% 825 6.5% A- (PACRA) 98.9

SALES

.

NO.

AFTER

TAXATION

SALES

RATING PRICE

(PKR)SEGMENTSALES

SEGMENTPROFIT

NAME OF COMPANY (SPINNING) AFTER

TAXATION

n us ye ng anu ac ur ng ompany m e , , . , . .

3 Gadoon Textile Mills Limited 9,834 265 15,638 6.6% 2,156 17.1% Not Rated 69.3

4 Gulistan Textile Mills Limited 5,521 (413) 9,678 4.1% 250 2.0% Not Rated 17.5

5 Fatima Enterprises Limited 5,914 (305) 9,288 3.9% 116 0.9% Not Rated 14.3

. . p nn ng s m e , , . . o a e .

7 Din Textile Mills Limited 5,467 (668) 7,709 3.2% 851 6.8% Not Rated 17.4

8 Saif Textile Mills Limited 3,845 14 7,361 3.1% 608 4.8% Not Rated 10.0

9 Fazal Textile Mills Limited 3,347 100 5,607 2.4% 354 2.8% Not Rated 196.8

a man o on s m e , , . - . o a e .

Total 106,998 45.1% 7,656 60.7%

Total Spinning - Net of losses 237,196 100.0% 11,363 100.0%

, . , .

Source: KSETextile Some

Facts

Importance ofTextile inPakistan


SupplyDynamics


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Top Listed Weaving Players

c PKR in mln

30-Jun-1131-Mar-12 8C

1 Prosperity Weaving Mills Limited 4,024 7 5,952 22.3% 139 19.3% A- (PACRA) 10.4

TOTAL

SALES

WEAVINGSEGMENT

RATING

SHARE

PRICEWEAVINGSEGMENT

SR.

NO. NAME OF COMPANY (WEAVING)

AFTERTAXATION

TOTAL

SALES

AFTERTAXATION

2 Shahtaj Textile Limited 3,017 69 4,040 15.1% 205 28.5% Not Rated 30.0

3 Yousaf Weaving Mills Limited 1,790 (140) 3,829 14.3% 61 8.4% Not Rated 1.7

4 Zephyr Textiles Limited 2,347 37 3,574 13.4% 89 12.3% Not Rated 3.7 x , , . . .

6 Feroze1888 Mills Limited * 2,246 167 2,913 10.9% 151 21.0% Not Rated 36.1

7 ICC Textiles Limited 1,380 (66) 2,246 8.4% (99) -13.8% Not Rated 2.18 Ashfaq Textile Mills Limited 729 54 1,036 3.9% 30 4.1% Not Rated 10.5

*Formerly Nakshbandi Industries Limited

Total Weaving 26,687 100.0% 720 100.0%

Total Weaving - Net of losses 26,687 100.0% 621 100.0%

Source: KSETextile Some

Facts



SupplyDynamics


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Top Listed Composite PlayersPKR in mln

30-Jun-11

PROFIT

31-Mar-12

SHARESR. NAME OF COMPANY TOTAL TOTALPROFIT COMPOSITECOMPOSITE

8

1 Nishat Mills Limited 32,513 2,526 48,565 14.9% 4,844 26.1% AA- (PACRA) 58.5

2 Gul Ahmed Textile Mills Limited 18,069 (279) 25,435 7.8% 1,196 6.4% Not Rated 26.7

TAXATIO

PRICENO. (COMPOSITE) SALES SALES

TAXATION

PROFIT

SALES

, , . , . .

4 Nishat (Chunian) Limited 13,380 298 20,322 6.2% 1,459 7.8% A- (JCR) 20.6

5 Masood Textile Mills Limited 14,157 537 18,525 5.7% 730 3.9% Not Rated 29.0

6 Azgard Nine Limited 8,129 (4,417) 17,603 5.4% (4,702) N.A. D 6.1, , . , . .

8 Mahmood Textile Mills Limited N.A N.A 15,098 4.6% 1,123 6.0% Not Rated 101.8

9 The Crescent Textile Mills Limited 8,995 (293) 14,759 4.5% (119) N.A. Not Rated 13.7

10 Quetta Textile Mills Limited 8,262 7 14,344 4.4% 584 3.1% D 27

Total 213,041 65.3% 8,647 N.MTotal Composite - Net of losses 326,065 100.0% 8,458 N.M

Total Composite 326,065 100.0% 18,581 100.0%

Textile Some

Facts



SupplyDynamics


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Cotton Demand and Supply9

Chinacarrying

Millions of 480 lb.

Bales

Aug 08 - July

09

Aug 09 - July

10

Aug 10 - July

11

Aug 11 - July

12

Aug 12 - July

13

September*

World Cotton Ending Stocks

recor eveending

China 22.4 15.2 11.6 30.6 35.5

India 10.6 9.4 9.9 7.7 8.2Brazil 5.0 4.4 7.9 8.0 6.0

United States 6.3 2.9 2.6 3.4 5.3

Austrailia 1.0 0.7 2.6 3.3 3.5

consumed

raduall

Pakistan 3.4 3.0 2.7 3.1 3.4

Turkey 1.7 1.9 1.7 1.7 1.8

Rest of World 12.2 10.2 10.5 12.2 12.9

World Total 62.5 47.8 49.5 69.9 76.5* Estimated

Huge worldstocks

Point to note: Due to sufficient,

in the current prices is expected

Textile Some

Facts



SupplyDynamics

Performance Competitiveness Outlook on the

Sector


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10

300

350

12,000

14,000

Country Wise Cotton Price ComparisonHighercotton

200

250

8,000

10,000

Cents

KR

pr ces nChina

100

150

4,000

6,000 US

support

rice00

,

Aug-10

Sep-10

Oct-10

Nov-10

Dec-10

Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Pakistan (PKR/Maund) USA (Cts/Lb)

China (Cts/Lb) India (Cts/Lb)

Pakistan (Cts/Lb)

Textile Some

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Textile and Clothing Supply11

Sr. #

2006 2007 2008 2009 2010

World Textile (USD bln) 220.4 240.4 250.2 209.9 250.7

Top 10 Leading Exporters of Textile (%age share in World Textile Trade)Increasingshare of

1 China * 22.3 23.5 26.1 28.3 30.7

2 European Union 32.6 33.9 32.1 29.5 26.8

3 India 4.3 4.0 4.1 4.3 5.1

na an

reducingshare of the . . . . .

5 Korea 4.6 4.4 4.1 4.3 4.4

6 Taipei 4.5 4.1 3.7 3.7 3.9

7 Turkey 3.5 3.7 3.8 3.7 3.6

EU

Stagnant8 Pakistan 3.4 3.1 2.9 3.1 3.1

9 Japan 3.2 3.0 2.9 2.9 2.8

10 Indonesia 1.6 1.6 1.5 1.5 1.8

Total 85.8 86.5 86.2 86 87.1

performanceof Pakistan

*Including Hong Kong

Textile Some

Facts



SupplyDynamics


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Textile and Clothing Supply

Sr. #

2006 2007 2008 2009 2010

Top 10 Leading Exporters of Clothing (%age share in World Clothing Trade)

na eleader in theworld textile

or ex e n . . . . .

1 China * 30.6 33.4 33.2 34.0 36.92 European Union 26.8 29.9 31.1 30.7 28.1

3 Ban ladesh 2.8 2.9 3.0 3.4 4.5

and clothingexports

4 Turkey 3.8 4.1 3.8 3.7 3.6

5 India 3.3 2.8 3.0 3.6 3.2

6 Veit Nam 1.7 2.1 2.5 2.7 3.1

ang a esstrengthening

its resence in7 Indonesia 1.8 1.7 1.7 1.9 1.9

8 USA 1.6 1.2 1.2 1.3 1.3

9 Mexico 2.0 1.5 1.4 1.3 1.2

the worldclothing trade

. . . . .

Total 75.8 80.8 82.1 83.8 85.0

*Including Hong Kong

a stan not aprominent

la er

Textile Some

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Textile and Clothing Demand

Sr. #

2006 2007 2008 2009 2010

Top 10 Leading Importers of Textile (%age share in World Textile Trade)The EU andthe USA

. . . . .

2 USA10.2 9.6 8.8 8.6 8.8

3 China* 7.1 6.7 6.2 6.7 6.7

4 Japan 2.7 2.5 2.6 3.0 2.7

majordemand

5 Turkey 2.0 2.4 2.1 2.1 2.5

6 Viet Nam 1.4 2.0 - 2.7 2.3

7 Mexico 2.6 2.3 2.0 1.9 1.9

Slow

economic ang a es - - - - 1.99 Korea 1.7 1.7 1.6 1.6 1.8

10 Indonesia - - 1.2 - 1.6

activityhurting the

. . . . .

*Including Hong Kongex edemand

Textile Some

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Textile and Clothing Demand

11

Sr. #

2006 2007 2008 2009 2010

Top 10 Leading Importers of Clothing (%age share in World Clothing Trade)

Reducingshare of the

1 European Union 43.6 45.5 47.3 48.5 44.7

2 USA 25.6 23.7 22.0 21.8 22.33 Japan 7.4 6.7 6.9 7.7 7.3

4 Canada 2.1 2.1 2.3 2.3 2.3

USA

5 Russia 2.5 4.1 5.7 2.2 2.0

6 Switzerland 1.4 1.4 1.5 1.6 1.4

7 Austrailia 1.0 1.0 1.1 1.2 1.3

8 Korea 1.2 1.2 1.1 1.0 1.2

9 Turkey 0.7 - 0.6 0.7 0.8

10 U.A.E 0.6 1.4 1.5 0.8 0.7

Total 86.1 87.1 90.0 87.8 84.0

Textile Some

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12

QuantityValue YoY Quant. YoY Rate

QuantityValue

QuantityValueCommodity Units

FY12 FY11 FY10

34%

Raw Cotton 000 Kgs 264,076 470,133 57.0% -21.8% 168,210 383,151 177,947 215,954

Cotton Yarn 000 Kgs 572,047 1,794,575 6.7% -23.6% 536,128 2,201,405 625,418 1,433,094

Cotton Cloth 000 Sq Mtrs 1,971,757 2,454,701 -15.7% 10.9% 2,337,804 2,623,195 1,787,659 1,800,055

Yarn Other than Cotton Yarn 000 Kgs 12,214 41,520 -11.6% -1.4% 13,819 47,632 13,646 35,693

Knitwear 000 Doz 97,520 1,974,228 -22.2% 10.1% 125,351 2,305,554 108,669 1,764,959

Bed Wear 000 Kgs 248,912 1,748,327 -19.1% 3.5% 307,734 2,088,898 324,025 1,744,250Towels 000 Kgs 143,922 684,183 -17.2% 8.4% 173,786 762,308 192,490 668,239

Tents,Canvas & Tarpulin 000 Kgs 28,593 98,826 86.6% 12.8% 15,323 46,954 20,741 61,527

Readymade Garments 000 Doz 25,437 1,634,593 -26.0% 24.5% 34,353 1,773,661 27,661 1,269,338

, , , - . . , , , ,

Madeup Articles 584,772 N.A. N.A. 624,955 537,237

Other Textile Materials 328,738 N.A. 322,592 245,216

-

Textile Some

Facts

Importance ofTextile in

Pakistan


SupplyDynamics


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Textile - Credit Behavior13

PKR in bln

Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 CAGR

Total Loans 3,567.6 3,518.5 3,714.3 3,717.4 3,776.7 3,666.5 3,746.2 3,846.4 15%

Total Loans Excluding Textile Loans 2,963.9 2,928.8 3,009.2 3,012.2 3,109.0 3,068.9 3,065.9 3,161.0 15%

Pakistan's Banking Sector Loans

Textile Loans 603.7 589.7 705.2 705.2 667.7 597.6 680.3 685.4 16%

Share in Total Loans 17% 17% 19% 19% 18% 16% 18% 18% -

PKR in bln

Pakistan's Bankin Sector Non-Performin Loans

Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 CAGR

Total NPLs 459.8 494.0 547.8 573.5 579.2 613.2 607.1 608.8 19%

Total NPLs Excluding Textile NPLs 319.5 345.7 376.3 396.9 396.2 424.8 413.0 407.3 16%

ex e s 140.4 148.4 171.5 176.6 183.0 188.4 194.2 201.4 21%

Share in Total NPLs 31% 30% 31% 31% 32% 31% 32% 33% -

Pakistan's Banking Sector Infection Ratio

Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12

Total Infection Ratio 13% 14% 15% 15% 15% 17% 16% 16%

Total Infection Ratio Excluding Textile Infection Ratio 11% 12% 13% 13% 13% 14% 13% 13%

Textile Infection Ratio 23% 25% 24% 25% 27% 32% 29% 29%

Textile Some

Facts


Pakistan


SupplyDynamics


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FACTORS FRAMEWORKRISK

Competitiveness

High capital requirement to enter in theindustry

New Entrants

spinning and weaving segment Cost and/or quality advantages areen o ed b the existin la ers

Low

Substitute of

May have substitute Addition of quality and branding

sense robabilit of customer Mediumswitching gets lower

Bargaining China - supplier of choice

ower oBuyers

(Demand

Increasing competitive pressure fromBangladesh, Vietnam and Turkey in

High

cenar o .

Textile SomeFacts


World Textile

Demand &SupplyDynamics

Performance Competitiveness Outlook on theSector


26/30

FACTORS FRAMEWORKRISK

Competitiveness

Bargaining

Power of

Numerous players with varied size andpower.

Suppliers

(SupplyScenario)

, ,

spinning units and 50 composite units Low threat of forward integration

Low

Degree of

Rivalry among

Strong commitment of the participants

Price competition (or respond to such HighCompetitors share and to cover fixed costs is high

InventoryRisk eav y epen en on co on Government intervention ow -Medium

Textile Some

Facts


Pakistan


SupplyDynamics


Sector


27/30

uc ua on n co on pr c ng: e y o rema n arge y a

the current level

prevailing slowdown in the major importing economies

continue to pose a threat

Textile Some

Facts


Pakistan


SupplyDynamics


Sector


28/30

Business Risk:

Spinning and weaving Segments: Low

Value Added Segments: Medium

Whats the outlook | Stable

Textile Some

Facts


Pakistan


SupplyDynamics


Sector


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Bibliography

1. Pakistan Economic Survey 2010-11: Manufacturing and Mining | Section 3.2

2. Pakistan Textile Journal | February - 2010 | Pakistan: The third largest spinner country in Asia byDr.Noor Ahmed Memon

3. Contributes 46% of the total manufacturing: Pakistan Economic Survey | 2011-12|Manufacturing and

Mining | Section 3.24. Pakistanpaedia : http://www.pakistanpaedia.com/maps/maps-of-pakistan.html

5. State Bank of Pakistan : Economic Data | Export Receipts by Commodity | Archive Monthly

6. All Pakistan Textile Mills Association: http://www.aptma.org.pk/Pak_Textile_Statistics/Gctipw.asp

7. All Pakistan Textile Mills Association: Member Directory

8. Karachi Stock Exchange: Downloads | Analysis Reports

9. United States Department of Agriculture: http://www.fas.usda.gov/cotton/Current/

10. All Pakistan Textile Mills Association

11. World Trade Organization : International Trade Statistics 2011, 2010, 2009, 2008, 2007

12. All Pakistan Textile Mills Association

13. State Bank of Pakistan: Statistics of the Bankin S stem editions: Se 10 Se 11 Dec11 and Mar12


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Analysts Aisha Khalid Omaira Amjad M. Shahnawaz A. Khanzada

[email protected]

[email protected]

[email protected]

DISCLAIMERPACRA has used due care in preparation of this document. Our information has been obtainedfrom sources we consider to be reliable but its accuracy or completeness is not guaranteed.The information in this document may be copied or otherwise reproduced, in whole or in part,

prov e e source s u y ac now e ge . e presen a on s ou no e re e upon asprofessional advice.

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