Interviews
'We are expanding denim capacity by 140%' – CEO, Denim Intl
24 Feb '11
6 min read
“The government of India had put a cap on exports of cotton and yarn to help its textile industry in accessing raw material requirements and we hope that the Pakistani government also promulgates the same type of policy to help our textile sector, as Pakistani cotton and yarn exports have surged in the last two years.
“This in turn is affecting the competitiveness of our textile sector as yarn prices too have shot through the roof and has helped countries like Bangladesh and India to grab our share of the global business of denim fabrics and clothing”.
When quizzed about as to what extent the rising cost of cotton has affected his company, he replied by saying, “Our export order position has fallen quite much, so we are now supplying a major quantity of our production in the local markets, which manufacture denim products for the domestic and export markets.
“In the preceding years, we had a competitive edge in the global denim markets, however, as of date; it is cheaper for an overseas buyer to import from India than from Pakistan”.
Speaking about reduced margins, he said, “Till the middle of 2010, we were operating at comfortable margins, but now our margins have gone down drastically and I am myself not sure for how long this trend is going to last. Salaries, gas and electricity charges too have risen in tandem and we have had to sacrifice our margins to keep our plants running, as denim fabric prices have not increased proportionately”.
Informing about the product range produced by his company, Mr Reza said, “We produce most of the varieties of denim as ordered by our buyers, but most of our output compromises of a blend of 98% cotton and 2% lycra. Other than that, we also produce cotton/polyester blends and stretch denim fabrics as per the requirements of our buyers”.
Visualizing the future trends of denim fabrics in the global markets, he enlightened us by saying, “The future trends are very bright and I expect the production of denim to shift to the sub-continent. However, I am pessimistic of the fact that Pakistan could get left behind if nobody helps us with the challenges posed by the cotton crisis.
“The biggest setback has come from the European Union which had permitted exports of textile products duty-free in to the EU. The same was supposed to begin from January, but now it has got delayed till March 2011. The most to be affected will be the weaving sector as it will bear the brunt if the EU concessions do not come through even in March.
“Like in India or China, which has a huge population and also has a culture where everybody wears denim jeans, Pakistan on the other hand is a small country and people prefer to wear traditional dresses. So, we have no alternative, but to depend on export markets. To make matters worse, Turkey, one of our major markets, has now imposed anti-dumping duty on our textile products”.
To conclude, he was optimistic that the Indian government would help the Pakistani textile sector in sourcing cotton from India, which in turn would give some breathing space to value-added producers like Denim International, till the next cotton crop arrives in the market.
“This in turn is affecting the competitiveness of our textile sector as yarn prices too have shot through the roof and has helped countries like Bangladesh and India to grab our share of the global business of denim fabrics and clothing”.
When quizzed about as to what extent the rising cost of cotton has affected his company, he replied by saying, “Our export order position has fallen quite much, so we are now supplying a major quantity of our production in the local markets, which manufacture denim products for the domestic and export markets.
“In the preceding years, we had a competitive edge in the global denim markets, however, as of date; it is cheaper for an overseas buyer to import from India than from Pakistan”.
Speaking about reduced margins, he said, “Till the middle of 2010, we were operating at comfortable margins, but now our margins have gone down drastically and I am myself not sure for how long this trend is going to last. Salaries, gas and electricity charges too have risen in tandem and we have had to sacrifice our margins to keep our plants running, as denim fabric prices have not increased proportionately”.
Informing about the product range produced by his company, Mr Reza said, “We produce most of the varieties of denim as ordered by our buyers, but most of our output compromises of a blend of 98% cotton and 2% lycra. Other than that, we also produce cotton/polyester blends and stretch denim fabrics as per the requirements of our buyers”.
Visualizing the future trends of denim fabrics in the global markets, he enlightened us by saying, “The future trends are very bright and I expect the production of denim to shift to the sub-continent. However, I am pessimistic of the fact that Pakistan could get left behind if nobody helps us with the challenges posed by the cotton crisis.
“The biggest setback has come from the European Union which had permitted exports of textile products duty-free in to the EU. The same was supposed to begin from January, but now it has got delayed till March 2011. The most to be affected will be the weaving sector as it will bear the brunt if the EU concessions do not come through even in March.
“Like in India or China, which has a huge population and also has a culture where everybody wears denim jeans, Pakistan on the other hand is a small country and people prefer to wear traditional dresses. So, we have no alternative, but to depend on export markets. To make matters worse, Turkey, one of our major markets, has now imposed anti-dumping duty on our textile products”.
To conclude, he was optimistic that the Indian government would help the Pakistani textile sector in sourcing cotton from India, which in turn would give some breathing space to value-added producers like Denim International, till the next cotton crop arrives in the market.
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