Textile industry output declines 50%

[RafaleTyphoon]

Textile industry output declines 50%

FAISALABAD: As the government remains unable to chalk out a comprehensive gas load management plan acceptable to all stakeholders, industrialists claim that textile products output has reduced by 50% due to the four-days a week gas outages.
This ratio was 35% during the gas suspension of three-days a week. The industrialists are concerned about
the government’s continuous indifference towards industry’s problems despite the fact it is the largest foreign exchange earning sector of the country.
The textile industry is sustaining massive losses due to the four-days a week closure of the factories, they said.
In the winter season, Sui Northern Gas Pipelines Limited (SNGPL) has recommended a cut in gas supply to the industries in Punjab to ensure the uninterrupted gas supply to residential consumers, said a SNGPL official.
The government should divert gas from CNG stations to the textile industry, said Waseem Latif, Chief Executive Officer of Latif International.
Sheikh Mukhtar, a leading exporter, said the international buyers are moving towards the other countries because “we cannot deliver the consignment on time”.
Pakistan Textile Exports Association Chairman Rana Arif Tauseef told The Express Tribune that all the industrialists, including exporters, are much concerned over the continued four-day suspension of gas to the textile sector.

Textile industry output declines 50% – The Express Tribune

 

[Faiez]

so either pakistani awam can have a good standard of life or pakistani business men and foreign awam can have a good standard of life..

 

[Adnan Faruqi]

Its a very sad as textiles are labor oriented industry and it effects jobs more then revenues.

 

[SBD-3]

Textile industry output declines 50%

FAISALABAD: As the government remains unable to chalk out a comprehensive gas load management plan acceptable to all stakeholders, industrialists claim that textile products output has reduced by 50% due to the four-days a week gas outages.
This ratio was 35% during the gas suspension of three-days a week. The industrialists are concerned about
the government’s continuous indifference towards industry’s problems despite the fact it is the largest foreign exchange earning sector of the country.
The textile industry is sustaining massive losses due to the four-days a week closure of the factories, they said.
In the winter season, Sui Northern Gas Pipelines Limited (SNGPL) has recommended a cut in gas supply to the industries in Punjab to ensure the uninterrupted gas supply to residential consumers, said a SNGPL official.
The government should divert gas from CNG stations to the textile industry, said Waseem Latif, Chief Executive Officer of Latif International.
Sheikh Mukhtar, a leading exporter, said the international buyers are moving towards the other countries because “we cannot deliver the consignment on time”.
Pakistan Textile Exports Association Chairman Rana Arif Tauseef told The Express Tribune that all the industrialists, including exporters, are much concerned over the continued four-day suspension of gas to the textile sector.

Textile industry output declines 50% – The Express Tribune

This is all drama by the APTMA...I belong to Faisalabad and personally know many textile owners who have grown their textile units from just 1 to around 10+ ( and one known as MTM now has complete vertical integration and around 17 units just in Faisalabad, they started with a single kitting unit in late 90s). Just a hint for members would be that have any of the textile owner every declared himself insolvent? or any textile mill actually closed down?....These guys get money at 50% of the market rate via ExRFS and long term funding at just 4 to 5% via LTFF for expension...they do all this drama to keep pressure on the government to keep them subsidized...

 

[Rafael]

This is all drama by the APTMA...I belong to Faisalabad and personally know many textile owners who have grown their textile units from just 1 to around 10+ ( and one known as MTM now has complete vertical integration and around 17 units just in Faisalabad, they started with a single kitting unit in late 90s). Just a hint for members would be that have any of the textile owner every declared himself insolvent? or any textile mill actually closed down?....These guys get money at 50% of the market rate via ExRFS and long term funding at just 4 to 5% via LTFF for expension...they do all this drama to keep pressure on the government to keep them subsidized...

Hasnain,

Knowing Faisalabad and its textile industry a little too well, I can tell you that what you have mentioned above is far from reality.
A lot of textile mills have gone bankrupt in the recent past including one, that was owned by a very close relative. Faisalabad's industry was already facing gas load shedding of 3 days in a week and now this additional day will turn out to be the last nail in the coffin. Without going into any details, just think about an industry having to survive without any fuel to run on, 4 days a week.


No wonder a lot of industrialist are moving to Bangladesh these days.

 

[Areesh]

Default Textile industry output declines 50%

OK. Now why I am not surprised.

 

[Pioneerfirst]

Gas load shedding and expensive loans are destroying our industry.

The industrial sector should be given priority over CNG sector for solving gas problem.
Corruption and power subsidies(theft+transmission losses) should be lessen to reduce our interest rate,

if we take above two steps we can earn 30 billion $ from textile export only.

 

[STEELMAN]

For theft of electricity I think distribution should be given to private sectors.

 

[Pioneerfirst]

For theft of electricity I think distribution should be given to private sectors.

the biggest hurdle in this step are the thousands of employees of distribution companies,who are the real culprits for electricity theft.

 

[SBD-3]

Hasnain,

Knowing Faisalabad and its textile industry a little too well, I can tell you that what you have mentioned above is far from reality.
A lot of textile mills have gone bankrupt in the recent past including one, that was owned by a very close relative. Faisalabad's industry was already facing gas load shedding of 3 days in a week and now this additional day will turn out to be the last nail in the coffin. Without going into any details, just think about an industry having to survive without any fuel to run on, 4 days a week.


No wonder a lot of industrialist are moving to Bangladesh these days.

Nishat Has its own Power Plant which not only fullfills the needs of itself but also localities, Ibrahim group have their power plants, Sitara Group Have their own power plants....but you know what is the problem? these people have converted them on Gas for making cheaper electricity....While the cost of electricity produced by these units is lower with Gas, but when Gas is out? what's the purpose of these plants? didn't these guys know that eventually Gas will get short somewhere in future? for an industry which is totally reliant on Gas (i.e. Fertilizer) it makes sense, but for those who have unnecessarily made this their need is something what is grim. Just to share the "strategic insight" of these people, do you remember the famous debt swaps by State Bank to save them? to make the description concise, when in expansion in around 2000s when interest rates were very low, these people were offered USD Vs PKR swaps by a foriegn bank (SCB) the hinch was that they will pay the bank the PKR/USD depriciation along with short term rate while receive a fixed rate. The owners went into the gamble, it paid off well for them initially but when rates started to rise and dollar depreciated it was the bank with all smiles (remember, bank will never offer you something which puts itself on loss). Then these guys suddenly started crying and forced State Bank to assume their foolies by offering them a debt swap and take the bleeding. This was just one example of their lack of vision. While a small loom owner may go out of business, but the big players are still making a lot of money...Had the electricity and gas been an issue then why did our textile exports increased by more than 3 Billion USD Last year?

 

[Pioneerfirst]

Nishat Has its own Power Plant which not only fullfills the needs of itself but also localities, Ibrahim group have their power plants, Sitara Group Have their own power plants....but you know what is the problem? these people have converted them on Gas for making cheaper electricity....While the cost of electricity produced by these units is lower with Gas, but when Gas is out? what's the purpose of these plants? didn't these guys know that eventually Gas will get short somewhere in future? for an industry which is totally reliant on Gas (i.e. Fertilizer) it makes sense, but for those who have unnecessarily made this their need is something what is grim. Just to share the "strategic insight" of these people, do you remember the famous debt swaps by State Bank to save them? to make the description concise, when in expansion in around 2000s when interest rates were very low, these people were offered USD Vs PKR swaps by a foriegn bank (SCB) the hinch was that they will pay the bank the PKR/USD depriciation along with short term rate while receive a fixed rate. The owners went into the gamble, it paid off well for them initially but when rates started to rise and dollar depreciated it was the bank with all smiles (remember, bank will never offer you something which puts itself on loss). Then these guys suddenly started crying and forced State Bank to assume their foolies by offering them a debt swap and take the bleeding. This was just one example of their lack of vision. While a small loom owner may go out of business, but the big players are still making a lot of money...Had the electricity and gas been an issue then why did our textile exports increased by more than 3 Billion USD Last year?

it is always good to export a product with most of inputs from your own country,for developing countries especially.
We have our cotton,labor and energy so textile will be an independent industry,It is a economic rule through put the world that they provide exporting industry with subsidy,in our case its natural gas,
Nishat,Sitara,Ibrahim,interloop all have gas power generation,they can generate from HFO and diesel too but it will cost them 17 PKR/unit whereas gas 4.5 PKR/unit.By using HFO or diesel their product will not remain competitive price wise against Indian and Bangladesh.

Last year the price of Cotton has almost doubled internationally so the price of finished product has increased too so our exports saw an increase too but if you go by Volume then you will see that our exports have decreased.

 

[SBD-3]

it is always good to export a product with most of inputs from your own country,for developing countries especially.
We have our cotton,labor and energy so textile will be an independent industry,It is a economic rule through put the world that they provide exporting industry with subsidy,in our case its natural gas,
Nishat,Sitara,Ibrahim,interloop all have gas power generation,they can generate from HFO and diesel too but it will cost them 17 PKR/unit whereas gas 4.5 PKR/unit.By using HFO or diesel their product will not remain competitive price wise against Indian and Bangladesh.

Last year the price of Cotton has almost doubled internationally so the price of finished product has increased too so our exports saw an increase too but if you go by Volume then you will see that our exports have decreased.

Then the point remains what are they doing there if everything for competitiveness from inputs to funds have to be subsidized by the government?

 

[Rafael]

Nishat Has its own Power Plant which not only fullfills the needs of itself but also localities, Ibrahim group have their power plants, Sitara Group Have their own power plants....but you know what is the problem? these people have converted them on Gas for making cheaper electricity....While the cost of electricity produced by these units is lower with Gas, but when Gas is out? what's the purpose of these plants? didn't these guys know that eventually Gas will get short somewhere in future? for an industry which is totally reliant on Gas (i.e. Fertilizer) it makes sense, but for those who have unnecessarily made this their need is something what is grim. Just to share the "strategic insight" of these people, do you remember the famous debt swaps by State Bank to save them? to make the description concise, when in expansion in around 2000s when interest rates were very low, these people were offered USD Vs PKR swaps by a foriegn bank (SCB) the hinch was that they will pay the bank the PKR/USD depriciation along with short term rate while receive a fixed rate. The owners went into the gamble, it paid off well for them initially but when rates started to rise and dollar depreciated it was the bank with all smiles (remember, bank will never offer you something which puts itself on loss). Then these guys suddenly started crying and forced State Bank to assume their foolies by offering them a debt swap and take the bleeding. This was just one example of their lack of vision. While a small loom owner may go out of business, but the big players are still making a lot of money...Had the electricity and gas been an issue then why did our textile exports increased by more than 3 Billion USD Last year?

What you are saying is probably true for the huge textile groups such as Sitara, Ibrahim, Nishat etc but not for the majority of small and medium scale units (both weaving and exports). These SMEs are dependant on Wapda and Sui Northern for their power and gas supplies and these are the units who have been suffering due to the energy shortage in the country. Let me tell you something, the cost of production for one weaving unit running on diesel generator is atleast 3 times more expensive then that of a similar unit running on Wapda provided electricity. Such is the difference that this load shedding makes to the small size unit. Now imagine that these units face 8-12 hours of electricity load shedding during peak summers.

As for the increment in textile exports, it was due to the hike in cotton prices in international market and not due to the volume increase.

 

[Rafael]

Also don't forget that then their are commercial exporters who do not have all in-house machinery and they depend on larger units to provide them with printed/dyed fabric. So if the larger units are running for only 3 days a week, they will have hard time meeting their own demand/ requirements, let alone the requirements of these commercial guys.

 

[R0H1T]

the biggest hurdle in this step are the thousands of employees of distribution companies,who are the real culprits for electricity theft.

So true, even in this part of the world(IND) electricity theft can be a third of the total bills that an avg consumer has to pay but for the commercial sector the premium(their per unit tariffs are already twice/thrice that of domestic rates) is over & above this making them highly uncompetitive !