These pile towels weave by using terry motion in the plane looms. Due to formation of pile towel become absorbent, soft and silky smooth feels. These towels are made in India in largely.
In 1965 USSR showed great interest towards purchase of terry towels. This was starting point of terry towel industries in Pakistan. Discarded weaving machineries are converted into workable terry towel looms by local fitters and Masters. After devaluation of Rupees from Rs 4.76 to Rs 9 per US$ the export of terry towels geared up. A number of small towels came into existence.
NEW MARKET: During 1970 to 1980 mushroom of towel industries started production as the demand of terry towels increased from USA. The out break of Indo-Pak war in 1971 adversely affected our exports to USSR. The towel manufacturer's concerted effort to get new market and succeeded in getting various European countries, USA, Canada etc. In the 1960's the export of Towels was only worth of Rupees three million which was now grown to Rs 60= billion.
TOWEL ASSOCIATION: The association 1st started as a group in 1965, later on recognised by Chamber of Commerce & Industry, Karachi and converted into the full fledged Association in 1976. The formation of association become turning point of this industries as the trade was disciplined and all sorts of information technical or otherwise, were imparted to its members as well as non-members.
INTERNATIONAL TOWEL MARKET: Towel market divided into two blocks (1) those that purchase towel purely or institutional purposes (2) those that purchase towels for home consumption. Since the competition was increased sophisticated machineries started taking place in place of old auto machines. Now the towels were produce in different assortment, eye catching colors and in variety of patterns. The excellence craftsmanship, lovely colors and perfection of design of Pakistani terry towels have won the appreciation of customer all over the world.
INSTALLED CAPACITY: The existing installed capacity of auto looms of towels was about 10,000 with an estimated investment of R=2= billion. In addition to these auto looms shuttle less looms are about =1,500= with an investment of Rs 10= Billion. It is worthwhile to point out that except few all industries are installed without any support of Government or Financial institutions.
FUTURE OF TOWEL EXPORT: The future of towel industries is bright . Presently Pakistan exports towels to some 132 countries of the world.
THE REASONS FOR FORECASTING BRIGHT FUTURE OF TOWEL INDUSTRIES ARE AS UNDER:
1. There is no substitute of towel. As the leaving standard increases the demand of towels also increases.
2. Pakistan is cotton growing countries. Allah gives us marvellous short staple fibers which are the key material of towel industries. It is pertinent to say that short staple is the golden mine of Pakistan cotton.
3. The abundant source of labour is available needs skill development.
4. Free Trade Agreement has been sign with few countries and forecasted for other countries which may lead to inclined export of terry towel.
The table below shows the increasing trends of towels and made-up. From table it is clear that export has been increased several folds. For the last few years pace has been slow down due to international recession as well as impact of cost of doing business.
FINANCE: As other industries of textiles these towel industries are concerned, I am proud to say that at least in this industry 95% finance has been made by the small and medium entrepreneurs from their own resources. The industry is not benefited by banks, DFI's for its establishment and neither are there any banks loan defaulters in this industry. This industry is only industry which has exported 90% of their production and continuously trying to earn foreign exchange for our beloved countries.
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EXPORT REFINANCE RATE
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YEAR RATE
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1999-00 8.00
2000-01 13.00
2001-02 8.00
2002-03 3.50
2003-04 3.50
2004-05 8.00
2005-06 9.00
2006-07 7.50
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MANAGEMENT: The major problems with our manufacturers and exporters are that, now knowing the intricacies of the export documents or sales. The other problems lie with un-skilled labourers. But we thank Allah that this problems is now going to solve in near future as the Association running a institute as S.M.Rizvi Textile Institute going to contribute skilled high management of weaving, wet processing as well skilled labour.
Hope in future the quality may further improve and wastages may further minimise so, that cost of doing business from manufacturer's side can be minimised.
QUALITY PROBLEMS & SOLUTION: There are four major problems that the towel industry has to address to improve its quality standards.
1. ACCESS TO BETTER QUALITY YARN: This problem is not directly related to towel industry but is general to the textile industry. Spinning sector must be insuring to produce contamination free yarn which may lead to decrease wastages. Their should be need of a policy to address this issue so, that after producing towel rejection can be minimised. Few industries of towel now trying to go in spinning industry for their own production but this is not the solution. It is necessary that spinning & towel industry must sit together and focus to resolve this issue.
2. ACCESS TO WEAVING & PROCESSING TECHNOLOGY: Now a days towel industries using obsolete technology both in weaving and processing. It is hour of the need to change the technology with latest equipments. But few factors are hindrance in technology up gradation.
-- Non-available of fund on long term basis with low mark-up.
-- Non-availability of land for real manufacturers.
-- Non-availability of proper infrastructure.
3. MANAGEMENT LIMITATION IN THE PRODUCTION AREA: The standard of production management on the factory floor generally, is a problem for the towel industry as well as the whole textile industry. Responsible management would solve many of the manufacturing and cost disadvantages facing the industry. But, now this problems may be solved in near future as and when S.M.A. Rizvi Textiles trained and skilled labour join the production department.
4. UNDERSTANDING THE MARKET NEEDS: Most companies market neither themselves nor their products hence loosing market share. On the other hand side TDAP is also unable to find proper way to guide the export of towels. The commercial councillors also not playing very vital in the subjected countries. The real buyers also reluctant to visit Pakistan on various grounds. We have to face this situation and market our products at the door step of buyers.
EXPORT PERFORMANCE OF PAKISTAN VS ITS COMPETTTORS PERFORMANCE INDICATOR CAN BE JUDGED BY TWO WAYS:
1. By analysing the movement of variable with time.
2. By analysing the value of variable with competitors achieved.
Terry Towels and its allied products have performed well and have increased considerably over time. During the period 1995-2004 (quota phase out period) export of Terry Towel and allied products to the world market increased from US $6,447= to US $913,973=M After removal of quota it is further grown from US $501,642= to US $913,973=M Thus Terry Towels and its allied products achieved marvellous performance after removal of quota.
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Year Value (US$) 00 +/- (US$) 00 +/- %age Year Value (US$) 0 +/- (US$) 00 +/- %age
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1971-72 6,447 - - 1988-89 140,442 23,006 19.59
1972-73 15,435 8,988 139.41 1989-90 129,821 (10,621) (7.56)
1973-74 33,957 18,522 120.00 1990-91 129,404 (417) (0.32)
1974-75 15,576 (18,381) (54.13) 1991-92 136,746 7,342 5.67
1975-76 18,323 2,747 17.64 1992-93 139,011 2,265 1.66
1976-77 14,212 (4,111) (22.44) 1993-94 129,162 (9,849) (7.09)
1977-78 12,909 (1,303) (9.17) 1994-95 144,771 15,609 12.08
1978-79 21,177 8,268 64.05 1995-96 174,115 29,344 20.27
1979-80 26,505 5,328 25.16 1996-97 194,132 20,017 11.50
1980-81 44,971 18,466 69.67 1997-98 200,056 5,924 3.05
1981-82 42,855 (2,116) (4.71) 1998-99 177,661 (22,395) (11.19)
1982-83 39,108 (3,747) (8.74) 1999-00 195,627 17,966 10.11
1983-84 46,626 7,518 19.22 2000-01 241,688 46,061 23.55
1984-85 49,911 3,285 7.05 2001-02 269,823 28,135 11.64
1985-86 67,588 17,677 35.42 2002-03 374,838 105,015 38.92
1986-87 81,541 13,953 20.64 2003-04 406,500 31,662 8.45
1987-88 117,436 35,895 44.02 2004-05 501,642 95,142 23.41
1988-89 140,442 23,006 19.59 2005-06 531,981 30,339 6.05
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Below table shows how the Pakistani competitors achieving the share of world market after phase out of quota. We will also summarise the reason for slow achievement of Pakistani producers of Terry Towels and allied products.
COST OF PRODUCTION: If value of output increase than cost of inputs used. Naturally change in the price of inputs might lead a Terry Towel producers to change the mix of input used. To reduce cost of inputs the value of cost of production if decreases by any factor eg by increasing production make the firm viable. In this arena the more efficient the firm will be more competitor in the international market.
During quota period the rule of business is different as the quota holders has their supremacy over buyer. Now after the phased out of quota supremacy gone into the hand of buyer.
The firm which has right efficiency, able to produce right products, able to ship on right time becomes viable in the international market. But unfortunately Terry towels and its allied producers are not ready to control continuous increasing prices which are alternately increasing cost of production.
PRICE OF COTTON: The basic raw material is cotton and it's constituted about 70-75%. Although Pakistan is 4th largest producers of cotton but unfortunately there is a issue of price stability of domestic cotton. Fluctuation in cotton prices, carry over of stock, variation in transport charges etc leads un-stable cotton prices. By virtue of that producers of Terry towels and allied products always remain under pressure.
It is recommended that a system can be evolved which assures stability in the cotton prices. If we are able to achieve this by providing due share of each sector then the tug of war which was always erupt between cotton growers, ginners, spinners and other value chain of textile may settled.
COST OF UTILITIES: I is open secret for all that cost of utilities ie; electricity, gas, oil is a big problems.
ELECTRICITY: If we narrate a electricity bill of KESC we are able to find that energy charges remain same since 2001 ie Rs 1.29/KWH. But unfortunately tariff was loaded with Fuel adjustment surcharge & additional surcharge which is creating -ve impact on production of entire value chain.
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ELECTRICITY TARIFF FOR INDUSTRY RS./KWH
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YEAR Energy Charges Fuel Adjustment Charge Additional Surcharge
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1999 0.67 0.75 1.44
2000 0.67 0.75 1.57
2001 1.29 0.13 1.65
2002 1.29 0.20 2.01
2003 1.29 0.23 2.01
2004 1.29 0.13 2.01
2005 1.29 0.13 2.01
2006 1.29 0.13 2.01
2007 1.30 0.58 2.50
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Since the cost is increase due to different surcharge needs resolution at the earliest.
GAS: Gas is also another raw material for Terry Towel wet processing industry needs certain control. If we see below table it is surprise to note that since 2001 the gas prices has been increased to 68%.
DAM EXCUSE IS GIVEN BY GAS COMPANY WHICH IS AS UNDER:
(1) Gas well head prices are linked with the prices of oil.
(2) Guarantee return of 17% by SSGPL and 17 1/2% by SNGPL.
(3) The gas development surcharge (GDS) by Government.
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GAS
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YEAR RS. / MBTU GROWTH % IMPACT
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2001 157.90
2002 166.20
2003 172.30
2004 182.10
2005 208.60
2006 264.90
2007 240.00 (9.4) 52%
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To enhance production of Terry towels and its allied product it is necessary to take appropriate measure to reduce gas prices from above factors.
OIL: Petroleum prices also increased sharply which has made adversely effect on transportation charges. Total increase of 76% noted from 2001. It is no doubt that prices of oil control by Opec but unfortunately various types of taxes especially GST has affected largely.
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OIL
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YEAR RS. / LITRE GROWTH % IMPACT
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2001 32.80
2002 33.30
2003 30.80
2004 36.90
2005 45.50
2006 57.70 76%
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It is suggested that input taxes incurred on oil be refunded back or allow adjustment to producers and exporters of Terry Towels may certainly help the industry in great way.
WAGES: Wages of Labourers increased in budget keeping adverse effects to industry as the passage of time towel industry now started to showing declining trends. In table we can summarised how increase in wages make cost of production higher.
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Year 2003 2004 2005 2006 2007 IMPACT
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Wages 2,500 2,500 3,500 4,000 4,600
To Produced 9,000 Kg 40,417 40,417 56,583 64,667 74,367
Cost / Kg 4.49 4.49 6.29 7.19 8.26
%age increase - - 40.00 14.29 15.00 60.00
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High inflation is the main cause to increase in wages and salary. But now industry is unable to absorb these types of increase. It is recommended to decrease inflation by economics way so, that further increase in wages can be kept away.
CESSES: In the world all export oriented industries are kept par with taxation but unfortunately we are under tax regime. Increase in wages as well as increase in cessess keeping industry in crippling position. A large number of cessess collected was not proper utilised. It has been observed that 85% of cessess is used as administrative expenses rather than to expend on labour.
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Year 2003 2004 2005 2006 2007 IMPACT
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SESSI % 7 7 7 7 7
To Produced 9,000 Kg 2,829 2,829 3,961 4,527 5,206
EOBI % 5 5 5 6 6
To Produced 9,000 Kg 2,021 2,021 2,829 3,880 4,462
Cost / Kg 0.54 0.54 0.75 0.93 1.07
%age increase - - 40.00 23.81 15.00 99.33
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It is suggested that charges of cesses as well as collection of cessess will be capped on wages of 2004.
RECOMMENDATION: The above discussion shows that growth in production of Terry Towel is vital in entire chain ie from Cotton growers to end product. Following measures can improve as well as reduce the pressure which is now facing Terry Towel producers.
1. Adaptation of advance technology by replacing old obsolete machines. Government & DFI's support needed on low mark-up and long term basis.
2. Improvement in Human resource management. S.M. Rizvi Textile institute now ready and can produce or trained required human resource as and when needed.
3. Controlling and then elimination power supply, fluctuation voltages etc.
4. Working condition of floor need to overhaul for maximum output.
5. Time management for administrative staff as well as workers producing towels.
6. Fixation of target and award.
7. Define quality according to market needs.
8. Concentration of industrial areas. Prices of land increase tremendously which is main hurdles in establishment of new industries. In order to break land prices it is necessity to increase rapidly industrial zone and allocate industrial land to actual producers and take proper guarantee for development of industries within time frame.
9. Needs special attention to overcome the shortages of quality water.
10. Inadequate and poor quality of road and transport system needs special attention from Government of Pakistan or City Government.
11. Lack of mass transit system which increase the time and cost.
12. Acquiring of product knowledge as per market and consumer demand.
13. Development of export houses.
14. To reduce administrative and other expenses merging of industries.
15. Establishing co-ordination between University, institute and research centers.
16. Improvement in law & order situation.
17. Image building of Pakistan so, that buyer can travel Pakistan without any harassment.
18. Till the law & order situation is not improved Government should adopt travel relief support packages for the promotion and marketing of exports.
(The writer is Chairman, Towel Manufacturers Association of Pakistan.)