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Imported Cotton Pull Down Profitability And Cause Liquidity Issues Says GATM Management

admin-augaf by admin-augaf
November 1, 2021
in Business
Reading Time: 3 mins read
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Imported Cotton Pull Down Profitability And Cause Liquidity Issues Says GATM Management

Imported Cotton Pull Down Profitability And Cause Liquidity Issues Says GATM Management

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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.


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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.


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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.

Industrial Overview:

Large-scale manufacturing performance remained sluggish so far during the year. The closure of industrial activities during holidays, Eid-ul-Adhn and monsoon rains which spread over 15 days, further hampered growth. However, the exports posted a growth year-on-year of 27.32% to $6.967 billion in July-September 2021 against $5.472 billion over the corresponding months of last year. In September 2021, the exports posted a growth of 26.13% to $2,380 billion against $1.887bn over the last year.


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Pakistan's textile exports witnessed 27.41% percent growth during the first quarter of the current fiscal year and remained at $4.420 billion compared to $3.469 billion during the same period of the last fiscal year, as per statistics released by the Pakistan Bureau of Statistics, The textile exports on a month-on-month basis witnessed a 1,69% growth and remained at $1.487 billion in September 2021 compared to $1.462 billion in August 2021. On a year-on-year basis, the textile group exports witnessed a 25.01% increase in September 2021, when compared to $1.189 billion in September 2020.


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Tags: BUSINESSfinancePakistan
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