Pakistan-based Kohinoor Mills has been intensifying its marketing efforts while focusing on costs rationalization these days, courtesy increased competition from China and other emerging markets which is weighing upon its flagship dyeing division.
The company reported a net profit of Rs 51 million for quarter ended September 30, 2013 as compared to Rs 52 million in the corresponding quarter of previous year. Sales of the company also fell to Rs 1,941 million from Rs 2,001 million in the same quarter a year ago.
Competition from markets such as China, India weighed upon sales and margins of Kohinoor Mills’ dyeing division. Total sales from Dyeing division fell to Rs 1,437.8 million in the quarter ended September 30, 2013 from Rs 1,675 million in the quarter ended September 30, 2012.
On the other hand, weaving division of the company performed remarkably well during the quarter despite rising yarn prices. During the period, most of the Pakistan’s weaving mills witnessed surge in grey cloth sales especially in the European market.
However, this could not save Kohinoor Mills’ gross margins from declining during the September quarter. Gross margin was at 16.1 per cent compared to 16.3 per cent in the corresponding period last year.
Shifting of non-value added business of yarn and grey cloth from China to South Asian markets resulted in improvement in the profitability of the Pakistan’s textile sector. However, competition in value-added sector from China, India, Bangladesh and other regional players continued to impinge the bottom line.
The management of the company has devised a counter-strategy for increased competition from markets including China and India. Being at the value-added end of the fabric business, it plans to intensify its marketing efforts and focus on product development for increasing revenues and margins.
