Financial Analysis of Textile Sector

Abstract

Textile sector is considered as an important element in the progress and growth of economic development of Pakistan. It is based on locally grown cotton & yarn. Textile Industry is considered the backbone in both exports and economic infrastructure as compared to other sectors. Developments in this vital sector generally reflect the overall economic growth, progress & performance in the country. Pakistan is lucky to be one of those countries who have been able to acquire and develop Textile technology but Pakistan ranks amongst the countries with one of the lowest per capita consumption of Textile in the world. Shortage of essential raw material (cotton, imported fibers, polyester fiber and yarn, artificial silk and synthetic weaving material) hampered the development of this important industry and hence country is forced to fulfill its domestic requirements through import of cotton & fibers and its products. The existing domestic cotton & yarn industry could not respond to the rapid required escalation because of the absolute lack of production capacity. Therefore, modernization of the industry and enhancement of productivity are assumed to be necessary by the government. Huge amounts of financial capital are necessary to establish a modern Textile industry. This is because the Textile industry requires costly investments that must be made to generate a return. Moreover, sophisticated and extensive technologies are also indispensable, which means that Textile industry is not limited to a labor-intensive sector but it is also a technology-intensive. In the light of foregoing, we need to allocate funds for revamping and expansion of existing units, as well as installation of new & efficient Textile equipment based industry. Human resource needs to be properly groomed, trained and utilize therefore, to make both short & long term measures for comprehensive development of textile sector in Pakistan.