AIRLINK 62.48 Increased By ▲ 2.05 (3.39%)
BOP 5.36 Increased By ▲ 0.01 (0.19%)
CNERGY 4.58 Decreased By ▼ -0.02 (-0.43%)
DFML 15.50 Increased By ▲ 0.66 (4.45%)
DGKC 66.40 Increased By ▲ 1.60 (2.47%)
FCCL 17.59 Increased By ▲ 0.73 (4.33%)
FFBL 27.70 Increased By ▲ 2.95 (11.92%)
FFL 9.27 Increased By ▲ 0.21 (2.32%)
GGL 10.06 Increased By ▲ 0.10 (1%)
HBL 105.70 Increased By ▲ 1.49 (1.43%)
HUBC 122.30 Increased By ▲ 4.78 (4.07%)
HUMNL 6.60 Increased By ▲ 0.06 (0.92%)
KEL 4.50 Decreased By ▼ -0.05 (-1.1%)
KOSM 4.48 Decreased By ▼ -0.09 (-1.97%)
MLCF 36.20 Increased By ▲ 0.79 (2.23%)
OGDC 122.92 Increased By ▲ 0.53 (0.43%)
PAEL 23.00 Increased By ▲ 1.09 (4.97%)
PIAA 29.34 Increased By ▲ 2.05 (7.51%)
PIBTL 5.80 Decreased By ▼ -0.14 (-2.36%)
PPL 107.50 Increased By ▲ 0.13 (0.12%)
PRL 27.25 Increased By ▲ 0.74 (2.79%)
PTC 18.07 Increased By ▲ 1.97 (12.24%)
SEARL 53.00 Decreased By ▼ -0.63 (-1.17%)
SNGP 63.21 Increased By ▲ 2.01 (3.28%)
SSGC 10.80 Increased By ▲ 0.05 (0.47%)
TELE 9.20 Increased By ▲ 0.71 (8.36%)
TPLP 11.44 Increased By ▲ 0.86 (8.13%)
TRG 70.86 Increased By ▲ 0.95 (1.36%)
UNITY 23.62 Increased By ▲ 0.11 (0.47%)
WTL 1.28 No Change ▼ 0.00 (0%)
BR100 6,944 Increased By 65.8 (0.96%)
BR30 22,827 Increased By 258.6 (1.15%)
KSE100 67,142 Increased By 594.3 (0.89%)
KSE30 22,090 Increased By 175.1 (0.8%)

It would be remiss to not recognize the recent relief to the ailing textile industry of Pakistan - as of March 2016, textile mills have been getting RLNG and their energy needs are being fulfilled. There was also a recent drop in the electricity tariff to Rs12.5, a source in APTMA Punjab told BR Research. Despite these measures, the recent export numbers for April 2016 do not paint a very optimistic picture. Whatever little improvement is observed is at the value-added end - and that too, on a volumetric basis.

For the ten months ended FY16, we can start off by seeing nosedive in the basic cotton and cotton yarn segments. It's no surprise that raw cotton exports have almost halved (in volume and value) owing to the massive production shortfall last season that has left the country reliant on imports. As for cotton yarn, the spinners have been capturing the local market rather than exporting, ever since the imposition of 10 percent regulatory duty on cheap Indian yarns in November last year. Cotton cloth exports were up four percent year-on-year by volume, but lower by 10 percent in terms of dollars earned.

Coming to the value-added segment, there are some signs of improvement, but only in terms of volumes - knitwear export volumes are up 10 percent year-on-year, though lower prices indicate a two percent fall in export earnings; towel exports are up by four percent year-on-year volumetrically, but the export earnings are flat; bed wear exports are flat by volume but brought in four percent less earnings year-on-year. These exports seem to be getting lower prices relative to last year, perhaps due to the strict competition.

The only category to have performed well is the readymade garments sector, which saw a five percent increase in dollars earned on a four percent increase in quantity exported. Optimus Capital Management was of the view that the better margins from readymade garments could be related to the fact that Pakistan has been successful in capturing the EU markets where it gets a better price, at a time when its share in the US has been declining due to inability to compete. More importantly, the superior prices could be due to quality improvements from the recent influx and widespread use of Indian cotton and yarn, which is of a finer quality and has higher counts.

Despite addressing the energy shortage, the government has a long way to go to restore viability to the textile industry.

textile-exports-1(1)textile-exports-2(1)

Presently, the government is sitting on Rs100 billion of the textile industry in shape of pending refunds from export rebates and sales tax claims etc., Rs50 billion of which belong to the spinners. Nothing from the initiatives in Textile Policy 2014-19 has been delivered either, and rumours are circulating that the budget will bring even more taxes rather than zero-rating.

Comments

Comments are closed.