Business News

Karachi November 1 2021: According to Pakistan’s Cotton Crop Assessment Committee, overall cotton production is estimated at 8.5 million, which is substantially short of the textile sector’s requirement, as per management of Gul Ahmed Textile Mills Limited (GATM). The import of cotton which on one side erodes export proceeds, but on the other side, requires the textile sector to make uneconomical and longer investments in imported cotton which in turn pulls down profit and causes liquidity issues. Gul Ahmed Textile Mills Limited performed well in the first quarter of financial year 2021, its bottom line remained lower than expectations, as per management of the company. Despite having sufficient export and local orders, optimal capacity utilization, etc., the bottom line was dented by higher and continuously rising imported and local raw material prices, increase in gas charges, larger and undesired investment in imported cotton, unpredictable changes in PKR value and days and working hours’ restrictions on retail outlet. Key initiatives during the period which helped trigger profit when compared with the similar period of last year, included tapping new customers and marketing zones, the introduction of a new line of product, commissioning of further capacities, balancing of additional line of production, reducing energy requirements by investment in new and extra efficient machineries and power generation equipment. Considering the textile sector, a few challenges, if not addressed, may damage production as well as exports. These include curbing unusual and sudden changes in PKR value, ensuring the smooth availability of utilities, taking on an of agenda, lowering local cotton availability as well as deteriorating quality, timely release of refunds and incentives. GATM strongly feel that at this stage of a better and mature economic recovery, a greater emphasis is needed to ensure appropriate policies to protect longevity of growth, keep inflation expectations anchored, and maintain the current account deficit by policymakers.