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Mr. Khan, we feel pleasure to host this talk with you. As your Group is a dynamic and diversified group of companies, we would like to initiate the talk by requesting your say on Saif Group’s overall financial strength and especially its focus on textile and garments sector.
Thank you for inviting me to this esteemed forum. Saif Group is well-diversified group having investments in textiles, telecommunication, power generation, oil & gas exploration and real estate etc. We have an overall asset base of US$ 400 million and annual turnover of US$ 170 million.
In Textiles, we are specialized yarn manufacturer having sizeable investments in four yarn manufacturing projects. We are managing three of these projects. We offer large count range to our customers producing shirting fabric, high-end knitwear, fashion apparel and home furnishing etc. We have a long list of satisfied customers inside and outside Pakistan. We are not into garments business now. However, with the increasing labor costs in other regions compared to lower costs in Pakistan, we are considering it as a JV with a strong international partner.
Please also narrate the panoramic view of the industries across the poles.
With specific reference to textiles, historically this industry has moved to the lower cost centers or the incentivized business environment. It was a major industry in the US and the EU, few decades ago but with abolition of protective duty regimes and the quota systems many developing countries in Asia, Africa and having lower cost centers became more attractive cost centers, we have already observed a major shift of this industry to Asia, Africa and South America. Very soon, we will observe that this industry will further move away from China and India especially due to their increasing operational costs. Next beneficiaries could be Vietnam, Bangladesh and Pakistan etc.
What are some ground realities on determinants adversely affecting textile and garment business, particularly in Pakistan?
On paper, Pakistan is the most economical country to produce textiles and garments, mainly because of the ample availability of cotton and other raw materials. Higher productivity in yarn and fabric manufacturing is another competitive advantage for Pakistan. On ground, deepening power crises and deteriorating law and order situation has shaken the confidence of local investor to invest in textile and garments sector. The financial institutions also do not consider textiles as a preferred sector and are hesitant in making new investments.
However, we are sure that if Government is able to control the first two problems, this sector will receive many equity investments anticipating a wide gap arising due to increasing operating costs, especially in China.
For this strategic year what are your plans on proliferating your group activities bases making regions of importance for textile business development, and why them?
Since we are mainly into yarn manufacturing business, our focus will remain to increase our flexibility in the back process machinery that can allow us to increase our product diversification. We are not expanding the spindle capacities now.
Before considering any new investment in the value added sector, we understand the detriments discussed above are necessary to address first. Once these issues are in order, we may look into it.
World Trade Organization (WTO) is to allow duty-free exports of 75 Pakistani items to EU for a two-year period. What all movements it will bring along in the sector in general? How will this bid for your business?
Since this facility is restricted to just 20% growth in each category, we understand the impact will be limited. Major impact will be in counts below NE 40s and its related products where, Pakistan is already quite competitive and attracts many buyers from China, Turkey, Bangladesh, etc. If EU grants duty-free status under GSP plus scheme in 2013, that will be the main trigger for investment in this sector.
Besides, signing regional cooperation agreements with China, Turkey and India are also critical for the growth of textile industry in Pakistan.