Shadab Textile Expects an Extended Period Due to Market of Yarn and Rising Input Costs

Even as the Pakistan’s textile industry is upbeat after receiving GSP Plus status from European Union, there are some firms like Shadab Textile Mills which are expecting an extended period of low profitability due to depressed local and international market of yarn and rising input costs.

Shadab Textile, engaged in the business of manufacturing, selling, buying and dealing in yarn of all types, said it has been facing uphill task coping with prolonged power outages and energy shortfalls at a time when cotton prices have risen to Pk Rs 7,000-7,200 per maund and rupee has depreciated sharply against the US dollar. The company management expressed pessimism towards profitability in coming quarters due to such factors and to a great extent as yarn market remains weak.

After reporting over five-fold jump in profit after tax during financial year ended June 2013, the company saw its bottom-line growth moderating to 10 per cent in the first quarter (Jul-Sep) of current fiscal year. Production was also hampered by the rising input costs as well as power outages. Shadab Textile Mills produced 3.211 million kg of blended yarn in Jul-Sep 2013 period as compared to 3.409 million kg during the corresponding period based on 20/s count.

The management of the company, however, expects to revive the growth momentum on back of its BMR program to make the project more viable. Shadab Textile has already invested Rs 74 million in the previous fiscal year for BMR of the existing facilities to make the operations more viable and improve production capacity and now, machinery worth Rs 65 million is in the process of shipment.