Research Article On:: Submitted To: Submitted by

Research Article on:
The impact of energy crisis because of

shortage of non-renewable energy
resources and not adopting the
opportunity of renewable energy
resources on the profitability and
performance of textile sector of Pakistan
Submitted to:
Honorable Mam Samavia Muneer
Submitted by:
Asia Ayaz
2347
BBA (Hons) 8th Evening
Section (A)
Department of Management Sciences,

University of Education,
Lahore (Multan Campus)
Abstract
This study analyzes the impact of shortage of non-renewable energy resources (electricity, gas,
petroleum, coal, etc.) and not adopting the opportunity of renewable energy resources (the
solar energy, small hydro, biomass, geothermal energy, wind power generation, etc.) on the
profitability and performance of textile sector of Pakistan. For this purpose, this study includes
the financial statements and ratios of various sectors of textile industry in Pakistan. For getting
real insight of the phenomenon under study and to make the study more effective the data that
I have collected is the secondary data from two variable sources. The first is the annual reports
of textile sector and the second is the financial statement analysis report of State Bank of
Pakistan (SBP). Both of the data is from Fiscal Year 2010 to 2016. During the entire period the
methodology comprised of horizontal analysis of the profitability ratios are used. The
profitability ratios and other ratios such as ROE (Return on equity), ROA (Return on assets), GPM
(Gross profit margin), Current ratio, Quick ratio, Interest coverage ratio, Inventory turnover ratio,
Asset turnover ratio, and NPM (Net profit margin) are calculated to show the effect of change in
the operating expenses on the profitability and performance of a firm. The asset management
ratios and debt management also evidenced the ill- management of debts and assets of textile
sector during energy crisis period. Declining trend during this period due to energy crisis is also
showed by some of the liquidity ratios.
In Brief, the results allow us to conclude that textile sector has been badly affected due to the
shortage of non-renewable energy resources and not using the opportunity of renewable energy
resources. This is not only because the expenses for energy consumption are very high but also
there are delays in the production processes due to shortage, load shedding, and dwindling of
energy resources.
1. Introduction
The textile sector of Pakistan is not only the biggest industry in Pakistan but is also scrutinized as
the backbone of economy of Pakistan (Siddique et al, 2012). It has been playing an integral role
in expanding the foreign trade for the last 50 years in the country and in the progression of the
country by eradicating unemployment to large extent. It contributes approximately 9.5% to the
GDP and also continues to hold a pivotal position (52% approximately) in the total exports of the
country. According to some estimates, it also provides employment to about 15 Million labor
force out of 49 Million labor which approximates to 30% of work force of the country.
Pakistan, in the continent of Asia, holds 8th position among the exporters of the textile products.
It is the third largest cotton consumer and fourth largest cotton producer in the world and its
availability has led to the expansion of the textile industry. Pakistans textile sector is highly and
majorly dependent upon the spinning activity. At present, the textile sector of Pakistan is
working with 1,221 ginning unit and 442 spinning units which are producing textile products in
the country. (Ahmed Yaseen, 2007).
After getting independence in 1947, the textile sector has grown at rapid pace. This sector has
proved itself by capturing the global markets expanding the foreign trade in the country In the
past five decades. Unfortunately, some unfavorable conditions including the effects of the pests
on the cotton crops, fluctuations in the global markets, instability in the political and economic
conditions, and overwhelming energy crises have severely and adversely affected the
productivity and growth of this sector. Moreover, unhealthy government policies, deficiency in
the gas supply, skyrocketing petroleum prices, escalating raw material prices, and overwhelming
load shedding of the electricity, have dramatically increases the cost of production. (SMEDA,
2011)
The objective of this study show how the performance and profitability of textile industry in
Pakistan is affected because of shortage of non-renewable energy resources and not adopting
the opportunity of renewable energy resources.
2. Literature review
The profitability and performance of textile sector in Pakistan is adversely affected by the
shortage of non-renewable energy resources and by not using the opportunity of renewable
energy resources.
I am going to study the impact of energy crisis (shortage of non-renewable energy

resources and not adopting the opportunity of renewable energy resources) on the profitability
and performance of textile sector of Pakistan. No such work has been done previously.
Following are some research works that are relevant and done before in various articles:
!. Impact of Electricity Crisis On Pakistan Textile Industry - Literature review:
Pakistan Textile Journal (2013) showed that the position of Pakistan was among the top
ten exporters of textile in the world. According to Economic Survey of Pakistan, 2013, Worlds
textile export was above $400 billion out of which China was leading with having $56 billion
exports. Other countries like Hong Kong export was around US$ 39 billion, Korea US$ 36 billion
and Pakistan, Bangladesh, Indonesia and India US$ 12 billion each (Economic Survey of Pakistan,
2013).
Shibata (2011) was a survey on relationship between energy crisis & economy growth.
The findings of this survey revealed that the cost of electricity Is increasing because of the rising
oil prices. A survey conducted by Sorensen (2008) on how to store energy. He discussed that the
coal, oil and wood are considered as basis for energy storage and production purpose.
Moreover, he highlighted that the demand of energy is increasing with the time because the
demand for production activities is also increasing. To meet the energy demand and avoid
energy crisis, energy storage can be very effective which can reduce or eliminate energy crisis.
Numerous factors are associated with electricity crisis or shortfall. Some significant
factors include Reduction in productivity; High costs; Increase in cost; Increased unemployment;
Order delayed: both domestic and international orders. The reason of this is political instability;
high interest and inflation rates etc. (Siddiqi, Jalil, Khalid, 2011). The consequences of electricity
crisis, as stated in APTMA (All Pakistan Textile Mills Association, 2014), affected different sub-
sectors of capacity of textile production and decreased the production to about 30%.
Electricity is highly important in any type of industrial activities but in Pakistan the
required electricity is not delivering to the textile sector because of scared resources. Ahmad
and Aliya (2012) opines that the Pakistani textile Industry consumes approximately 35% of
electricity in spinning, 6% for miscellaneous reasons, 24% in weaving and 39% in chemical
processing. Khan and Khan (2013) depicts that the textile industry of Pakistan was expanding
since the country got Independence from British till 2005 than started contracting. They also
identified and highlighted the factors and reasons which contributed significantly to contraction
of Pakistani textile industry. It includes:
Rise in oil price
Electricity load shedding
Political instability
Lack of research and development in new technologies
2. Energy Crisis and Performance of Industry of Pakistan: An Empirical Study of KSE Listed
Companies - Literature review:
Sahir and Qurashi (2007) considered energy to be the lifeline for every economy around
the globe and they also considered it the crucial component for both industrial and agricultural
development. It is also vital component to move forward. Economically it is important for every
industry while socially it represents the class of life of citizens. Stern Cleveland (2004) says that
the traditional theories of economics consider just labor and capital as the most important
factors of production while IEA (2005) and recent studies have suggested that the energy is the
most important component in the consumption and production function of every economy in
the world.
From last few decades the relationship of energy consumption and economic growth has
been investigated. Various studies were conducted for further investigation. The findings of
these studies is un supporting in few of the cases. Because of the difference in dependency of
the economy on energy and in the structure of the economies there is a difference in the
findings (Sari et al., 2008). The findings of Akarca and Long (1980) showed no relationship
between the economic development and energy consumption in US. Similar results were
reported by (Asafu-Adjaye, 2000;Altinay and aragol, 2004 ;Wolde-Rufael, 2005; Lee, 2006).
However some of the studies found that the economic development is significantly affected by
the energy (Soytas and Sari, 2003;Wolde-Rufael, 2004 and Lee, 2005).
In Pakistan, this area requires more attention. There are only few studies that were
performed to find the relationship between energy consumption and economy development. A
positive relationship between economic development and energy demand and consumption
was found by Aqeel and Butt (2001). In Pakistan, there is a rapid increase in the demand for
different sources of energy. For example, by only considering at the electricity in Pakistan, the
number of consumers were just 8.2 million in 1992-93 which was increased to 15 million in
2005-06 (ESP 20052006). It is the 83% growth in consumer which is observed during these 15
years. There is a sharp rate increase in per capita or per head usage of electricity was 425 kWh in
2004-05(IEA, 2006). The sharp increase in per capita consumption is caused by industrialization,
urbanization, electrification of rural areas, growth and technological advancement in agriculture
in the country (NBP, 2008). During this period the average per capita consumption of electricity
in the world was 2516kWh. It shows that the per capita consumption of electricity in Pakistan is
still not too much high (IEA, 2006).
Economic Survey of Pakistan (2007) showed available electricity production was 86.6% of
the total population of Pakistan. It shows that there was a room in the demand and supply of
electricity (ESP 20072008). If government considers some action to provide electricity to
remaining population of Pakistan which is not receiving electricity, there would be a significant
increase in the demand of electricity in order to serve the new consumers.
The utilization of natural gas which is the second major source of energy which is also
facing shortage and dwindling. Economic Survey of Pakistan showed natural gas was available to
just 30% of the total population of Pakistan (ESP 20072008). This proposes that the demand is
likely to increase in this sector. According to the various researches made all over the globe, it
has been verified that electricity is the most vital and richest source of economic growth and
production followed by gas (Erbaykal, 2008). Statistics has showed that gas and electricity are
key energy sources in Pakistan, for domestic, International and commercial usage (ESP 2007
2008). Since 2006 Pakistan is facing a decay in the production and distribution of both gas and
electricity (ESP 20062007). During the year of 2006 and 2007, production and distribution of
electricity and gas has reduced to approximately 40%(ESP 20072008).
In Pakistan, both of the two main, electricity and gas energy recourses, are not enough to
meet the demand of domestic household and commercial users. In this situation, the growth of
economy is very much difficult, even it is very tough to maintain the GDP at current level. The
tariffs of gas and electricity are also increasing rapidly at the same time, which is the chief source
of inflation in Pakistan (ESP 20082009). In this learning we have explored the effect of these
energy crises on the performance of different industries in Pakistan.
3. Impact of Electricity Crisis and Interest Rate on Textile
Industry of Pakistan - Literature review:
The study of Shibata (1983) on economy growth and electricity crises showed that the
cost of electricity increases because of shortage of oil and increase in the oil prices. Moreover,
this study showed by investigating a period of 6 years from 1973 to 1979 in Japan after post war
period when the prices of oil were increased unexpectedly that these crisis results in decreasing
GDP of the country and have bad impact on the industrial performance and productivity.
Sorensen (1984) done a research work on energy storage and highlighted that the wood, oil and
coal can be considered as basis for storing the energy and to achieve the purpose of production.
The demand of energy not remain continuous and because of numerous activities, the demand
of energy also fluctuates. Thus, to fulfill these demands of the energy, the storage of energy
need attention and should be make available a positive signal to remove or decrease the energy
related difficulties.
Khan and Khan (2010) opines that in Pakistan, 60% of the total exports of the country
comprise of textile sector, but because of some reasons its growth is decreasing day by day.
Energy shortfall, high rate of inflation, high interest rates and political instability are considered
as main causes of decrease in the growth of textile. They further suggested that the government
of the Pakistan can take steps to boost the growth of their textile sector by adopting the new
technology via research and development work.
The All Pakistan Textile Mills Association (APTMA) exercise their efforts to enhance the
quality of its products and manage other factors which increase the difficulties in the operations
and production of textile which includes high interest rates, high cost of inputs, non-beneficial
government policies, and nonguaranteed energy supplies is also very crucial. The Chairman of all
Pakistan textile mills association says The export of value-added products have been increases
to 57.4% from 53.9% in 2002 which gives a positive sign that we are moving in the right
direction.
The trade policy is considered a satisfactory paper, but if the industry does not find
anything that could get to the achievement of high level exports and eliminate trade difference.
The load-shedding of electricity leads to a rapid decrease in the production which also reduce
the level of exports. The cost of production has also increased because of prompt increase in
interest rate and electricity tariff. Because of load shedding some of the mill owner practices
alternative source of energy like generator which can increase their cost of production. This
dramatic situation can badly effect the capability of competitiveness of an industry in
international market.
4. Measuring Economic Cost of Electricity Shortage: Current Challenges and Future Prospects in
Pakistan - Literature review:
Few studies have investigated the impact of energy supply on real GDP growth in
Pakistan. These studies provided contradictory empirical findings. For example, Aqeel and Butt
(2001) investigated the relation between energy sources and gross domestic product. They
stated that real GDP growth is effected by electricity while economic growth depends on
petroleum supply and total energy. As a result, economic growth is stimulated. Similar work was
performed by Siddiqui (2004) asserted that energy plays a very important role in productivity
growth model like other inputs such as labor and capital. Siddiqui researched the effect of
energy supply on GDP or gross domestic production and found that real GDP growth or gross
domestic production growth is affected positively (negatively) by electricity and petroleum
supply (the shortages of electricity and petroleum).
Later on, Shahbaz and Lean (2012) tested the nexus between use of electricity and
economic growth using the production function. They provided empirical evidence to show that
a 1 percent increase in electricity use, capital use and labor leads to increase real-GDP by 0.31
percent, 0.11 percent and 0.29 percent respectively. This shows that electricity supply as well as
other inputs such as capital and labor in Pakistan is playing a critical role in enhancing domestic
production. Shahbaz et al. (2012) examined the impact of renewable and non-renewable energy
use on economic growth. They highlighted the importance of both energy sources and their
impact on economic growth. Their empirical exercise reported that the decrease in real GDP is
causes by a 1 percent reduction in renewable (non-renewable) energy and hence economic
growth by 0.09 (0.14) percent in long run. The case in short run is different, the real GDP is lost
by 0.07 (0.11) percent because of reduction in energy (renewable and non-renewable) supply.
Shahbaz and Feridun, (2012) distinguished that electricity supply does not seem to play its role
to increase economic growth whereas electricity demand leads to the economic growth. Liew et
al. (201 2) distinguished that energy supply is contributing to the agriculture growth but
industrial and services growth is not contributed by energy supply. Though, industrial and
services sectors contribute to gross domestic product knowingly.
Qazi et al. (2012) inspected the effect of disaggregated energy consumption on industrial
growth. They witnessed that energy conservation policies would be damaging for industrial
growth because energy (electricity, gas, oil and coal) supply increases industrial output and
hence industrial growth. Afzal, (2012) showed the importance of interest rate while investigating
the effect of electricity crisis on textile industry and its performance. Author revealed that a rise
in interest rate is adversely affecting the performance of industrial sector more than electricity
crisis do. The evaluations the productivity of industrial sector was 612.953 and 27.43 million
square meters due to electricity crisis and interest rate. Zeshan, (2013) investigated the
relationship between energy generation and economic growth (proxies by private business
investment). The empirical results was used to investigate and present the positive relationship
between economic growth and energy supply. This shows that economic growth is reduced by
1.58 percent in the long run and 0.51 percent in the short run while lower private business
investment is caused by a 1 percent reduction in energy generation by keeping other things
constant. In relative study, aggregated and disaggregated time series data was used by Abbas
and Choudhury (2013) to test the validation of energy-growth relationship in Pakistan and India.
They stated that in Pakistan, economic growth and electricity demand are dependent on each
other and are interdependent i.e. electricity use gives real GDP growth that leads to the real
GDP growth gives electricity use in Granger sense. Moreover, agricultural growth in agricultural
sector is cause by electricity use. Tang and Shahbaz, (2013) used the sectoral level data to find
the relationship between electricity use and real GDP. They also applied the TYDL Granger
causality test. They found that electricity consumption growth is caused by manufacturing
growth and similarly it is true from opposite side. Services sector growth has underlying impact
on electricity use in services sector and the neutral effect is highlighted in agricultural growth
and electricity use. The causality analysis shows that consistent energy and economic policies for
sustainable economic growth is not supported by policy makers in formulating policies. Khurshid
and Anwar, (2013) examined the industrial cost of energy outage using data of KSE listed
companies. They observed that a rise in energy crisis severely affected the performance of
textile and cement industries and their growth in Pakistan. Textile and cement industries add in
GDP through contributing in form of exports.
The impact of energy crisis on the sugar and chemical sectors is minimal. The impact of
energy (electricity) consumption on real GDP growth in next 11 countries including Pakistan was
investigated by Yildirm et al. (2014). In case of Pakistan, they distinguished that reduction in
energy supply will decline real GDP i.e. a 1 percent decline in energy supply effects and lowers
real GDP by 0.610 percent if other factors remains constant. Naz and Ahmad, (2013) applied
logit-model to measure the impact of power outage on urban households in Sindh. They
observed that rich households are less affected from power outage while the poor households
are more affected. Rich households make alternative arrangements of
power supply but poor households are failed to do this because they are handicapped and have
less financial resources10. In case of Sri Lanka, contribution of electricity supply in gross
domestic product was verified by Morimoto and Hope (2004). Using cost-benefit analysis, they
observed that electricity supply has positive impact on gross domestic product. They uncovered
that a 1 mega unit decline in electricity supply will result in decreasing the gross domestic
production by 38 200 LKR11. Mozumder and Marathe, (2007) observed the direction of casual
association between electricity supply and domestic output growth in a developing economy like
Bangladesh. Their estimates presented that electricity supply does not play its role in order to
increase domestic output growth, and domestic output growth causes electricity supply growth.
On the contrary, Paul and Uddin, (2011) engaged Bangladesh data to examine how much energy
consumption change affects output consumption change. They distinguished that output growth
in Bangladesh is energy dependent and reduction in energy supply will decline both domestic
and impede economic growth in the long-run. In US economy, Hatemi-J and Uddin (2012)
confirmed the causality between energy supply and economic growth by using bootstrap
causality test. Their findings specify the importance of energy supply for production process and
verified that energy supply shocks impact adds in real GDP growth and vice versa. Filiz et al.
(2012) followed the production function to test the effect of energy supply. They witnessed that
reduction in energy supply obstructs domestic production and causality is running energy supply
to domestic production. Chen et al. (2013) showed that how much electricity outage hampers
economic growth in case of China utilizing pre and post reforms period. Their results shown that
a 1% decline in energy supply will also lower GDP growth by 0.6% if other things remain
constant and the unidirectional causality is present in running from electricity supply to GDP
growth. For Hong Kong economy, Woo et al. (2014) applied the logit-ordered regression for
projecting the residential cost of power outages. They stated that an increase in power outages
increases the residential cost of households. Qasim and Kotani (2014) empirically investigated
the electricity shortage in Pakistan. They noted that consumers energy demand is affected by
energy prices fluctuations and underutilization or improper utilization of power plants increases
the consumption of fossil fuel to maintain the consistent supply of electricity. Their analysis
showed that electricity demand in Pakistan is derived by growth in income per capita. Recently,
Shahbaz (2015) observed the linkages between electricity use and economic growth in Pakistan
and found that electricity consumption have positive effect on economic growth. Reza et al.
(2015) also discovered the relationship between trade and economic growth and energy
consumption. They presented that energy use spurs trade which positively affects the economic
growth in Pakistan.
5. ENERGY CRISIS AND PRODUCTIVE INEFFICIENCY:
MICRO-EVIDENCE FROM TEXTILE SECTOR OF FAISALABAD - Literature review:
Energy is not only an essential component of every production process but it also plays a
pivotal role in the growth process of a country. The massive transition from labor intensive to
energy intensive techniques was experienced by production process (Stern and Cleveland,
2004). Currently, it is widely recognized that industrialization is an energy-intensive process. It
means that the production process will be continued by uninterrupted supply of energy. In
addition to it, the high per-capita energy consumption is considered as an indicator of the level
of economic development. There is a positive correlation between energy consumption and
output growth (and development) which led many countries, particularly developing ones, to
design policies for subsidized energy provision with emphasis on supply-side in late eighties. At
the same time, some European countries (i.e. Germany, Denmark, Belgium, Sweden) formulated
energy policy which focus on demand-side (energy conservation), and have achieved smaller
growth rates in energy consumption without any reduction in economic growth (Pintz, 1986).
After recent fluctuations of oil price, (started from 2006-07), tight financial position and huge
trade deficits forced many developing countries (Pakistan, in particular) to pull out, at least
moderately, from the policy of subsidized energy supply (Alahdad, 2012 and Malik, 2012). The
future energy need of Pakistan is forecasted to be, at least, three times that of today within next
two decades and in almost every sector of economy the energy demand in Pakistan has also
been increasing progressively. The emphasis of energy policy in Pakistan has been the demand
side as it is supposed that energy crisis in Pakistan is a management and not a capacity issue.
Besides this, demand-side policies are being altered to save not only capital but also the foreign
exchange of the country. These demand side energy policies e.g. energy conservation, energy-
prices mechanism etc. have showed to be a serious constraint and a big problem in the
industrial growth of Pakistan (Siddiqui, 2004; Aqeel and Butt, 2011 and Malik, 2012).
Prominently annual production loss due to power shortages is about two percent of gross
domestic product (Abbasi, 2011). Various studies (i.e., Bose, et al., 2005 and Wijayatunja and
Jayalath, 2008) have tried to estimate the output loss which is caused by power outages. In case
of Pakistan, a few attempts have been made to quantify the cost of unserved energy and other
relavant factors (Lahore Chamber of Commerce and Industry, 1986; Pasha, et al., 1989 and
Siddiqui et al., 2011). Siddiqui et al. (2011) also quantified the industrial production which is
caused by shift hours whereas the other studies emphasized on power outages only. Textile
sector is not only the largest industrial sector of Pakistan but also is generating the countrys
highest export earnings of about 58%; providing the bulk of employment (39%) to largely
underutilized workforce, unskilled as well as uneducated workforce, and contributes 8.5% to
GDP.
Textile production includes cotton ginning, yarn, fabric, home textiles, towels, hosiery &
knitwear, readymade garments and canvas. These components are being produced both in the
large and the small scale organized sector as well as in unorganized cottage or small and medium
units. According to Economic Survey of Pakistan (2012-13), this industry is characterized into
spinning, weaving, ginning, fabric and cotton cloth sectors while cotton-cloth sector is further
subdivided into down steam, dying, sizing, and textile production. Textile industry is presently
includes114000 rotors which makes Pakistan third largest spinning capacity in Asia with spinning
capacity of 5% of the total world capacity and 7.6% of the capacity in the continent of Asia and
521 textile units with installed capacity of 10.0 million spindles. Notwithstanding of this vigorous
and export oriented textile industry, miserable performance of textile exports (decreased from
65% of total exports in 2007 to 53% in 2012)6 is caused by stifling power shortages. This crisis
has left investors fighting for their survival and, in some cases, they are also shutting down
production units in Pakistan and/or moving abroad (especially in Bangladesh). In other cases,
some export-specific production units have now become unable to meet international orders
and have also converted into local production units with capturing local market in order to fulfill
its average fixed cost and other expenses. Besides this, the power crisis caused not only
prolonged delays in delivery schedule but also both at intra and inter industry level resulting in
less competitiveness of the industry along with tough competition from regional competitors
i.e., China, India, Bangladesh etc. (Alam, 2011) suggested that these problems are structured
problems in textile industry and cannot be resolved through the only financial support of the
government because these are structural in nature. Textile production is both energy and time
consuming process where a conversion of cotton into single type of good e.g. shirt, socks, or vest
takes about two months with the involvement of supporting sub-sectors and many units. It is
important to mention that every sector of textile industry is not equally energy intensive and it
has different level of energy consumption and dependency but the delay in accomplishing
output orders in any sub-sector involuntarily can also cause further delays in making the finished
product.
These delays badly affect capability of the textile industry while on the other hand it also
cause extraordinary production losses (as both domestic and foreign customers turn back).
Additionally, energy gap also differs among different sectors of the industry due to unequal scale
of production and input mix. Large scale production sectors are reducing their energy gap and
production loss at increased cost of final products by using the alternative sources of energy like
generators. Consequently, the high energy intensive industries may not have higher energy gap
comparing to the less energy intensive industries that are unable to purchase costly energy
inputs due to bad market conditions or capital constraints (as less orders reduces economies of
scale).
These sector-level differences of energy gap results in production loss and have not been
analyzed before in case of any industry in Pakistan. Recently, a study by Siddiqui et al. (2011)
measured the loss in total industrial output caused by power outages. This study showed the
ouput loss falls between the range of 12 percent to 37 percent. But the production delays in the
sub-sectors of textile industry caused by the power outages are not considered at all by this
study. Due to such restrictive assumption of sameness of textile industry sub-sectors (especially
with regard to energy consumption), the results can be bias because of the under-estimation of
production cost caused by energy shortage for the reason mentioned above. Moreover, for such
study the survey was conducted in the second quarter of 2008 and 2007 was considered as the
reference year. Therefore, this study does not account for recent developments in textile
industry i.e. severity of power outages, increased use of alternative energy sources, capital
flight, etc., regarding to the energy crisis in the textile industry. Contrary to this backdrop,
significant contribution is provided by the present study about our understanding of the impact
of energy crisis on textile sector.
This study shows that which sub-sectors of textile industry are more energy deficient
relative to other ones. This study is based on primary data collected from various sectors and
sub-sectors of textile industry.
To calculate the magnitude of production losses in accomplishing production orders due
to different size of lags is also an attempt of this study. Most importantly, for the very first time
by this study the estimation of producers willingness to pay for uninterrupted energy supply is
also considered. The remainder of this study includes details of the data, variables, and
methodology. While there will be conclusion in the final section of the study.
6. The Impact of Energy Crises on the Textile Sector of
Pakistan (2005-2010) - Literature review:
The availability of electricity or electric energy in Pakistan is limited because of the scared
resources while it is very important for any industrial activity or for any sector. The percentage of
electricity consumed by textile sector is around 38 percent in chemical processing, 23 percent in
weaving, 34 percent in spinning, and 5 percent for miscellaneous purposes. Ahmed Aliya, 2012
(Senior R&D Officer)
Afzal .Y aseen (2012) shares that the fast urbanization and industrialization is the major
reason behind the escalating demand of electricity.
Because of shortage of electricity and high interest rates the cost of production of textile
industry is also increased. This shortage had also decreased the production of the textile
industry because the operations of factories have adversely effected due to load shedding. High
fixed cost per unit is also caused by less production. Not only this but also the huge amount of
money is required to generating electricity privately. (Afzal.Yaseen, 2012)
The energy crisis arose in Pakistan in FY 2007 widely affected the energy intensive industry,
textile sector. All the manufacturing sectors of the country were also affected but the impact on
textile industry was worse than on the other sectors. The cost of production and expenses were
increased for which the profitability of the textile sector was ruined. Instant rise in electricity
tariff, shift to alternative source of energy like generators, unavailability of adequate energy
resources, load-shedding, and rising fuel prices leads to increase in the cost of production. The
competitiveness of textile industry in international market is affected badly by these worsened
situations. (Siddique et al, 2012)
The impact of financial crisis on textile sector of Pakistan was studied by Alam (2011). He
opines that many firms were less probable to survive in international markets as the debt equity
ratio increased due to financial and energy crisis.
New challenges faced by the textile sector of Pakistan was also mentioned by Khan & Khan
(2010). The decline, also known as great decline, which has been occurred in growth rate of
industry which can be identified from below table:
Trend of Textile Industry During 2005-

2010
2005-06 11.23%
2006-07 8.40%
2007-08 4.05%
2008-09 -0.70%
2009-10 -1.78%
(Source: Economic Survey of Pakistan State
Bank of Pakistan)
Jatinder and Caesa (2008) opines that political instability clogged had badly affected the
economy of Pakistan which is cause by political instability in Pakistan. The energy crisis which got
severe from the FY 2007 were greater than this hindrance. Increased unemployment and
shutdown of factories were its outcomes. Additionally, market division/termination was cause by
the biggest problem of unfair quota system thrown by developed nations.
Khan and Khan (2010) opines that although Pakistans history shows that textile sector
was expanding since 1947 but since 2007 it is contracting. The reasons that contributed to the
contraction of this sector were mentioned by them and are enlisted below:
Load shedding of the electricity

Increase in the prices of oil
Increase in the prices of gas
Lack of Research and Development in Cotton Sector
Increased prices of raw material
Lack of new technology
Reduced quality of finished goods
Lack of transportation facilities
Increase in the wage
Political instability
The impact of financial crisis, electricity crisis, and interest rate on textile industry of
Pakistan, and the growth trend of Pakistan Textile Industry are emphasized by this literature. It
also identified the variables of energy crisis. But the impact of energy crisis on the performance
of textile sector of Pakistan is measured by no one. This research will be able to fill this gap by
takin into consideration the whole industry. The purpose of this paper is to analyze the
performance of textile sector of Pakistan for a Six-year period (2005-2010) which was effected by
the energy crisis. This study is divided into two sub periods: pre-crisis period (2005-2006) and
post-crisis period (2007-2010) for the purpose of comparison.
3. Research Methodology, Data Collection, and Data Analysis
Data collection: Data collection is the crucial phase for any research. Mostly, true and reliable
results depend upon the real-world data. To make the study more effective I have collected
secondary data from two variable sources. The first is the annual reports of textile sector and
the second is the financial statement analysis report of State Bank of Pakistan (SBP). Both of the
data is from Fiscal Year 2010 to 2016.
Data sample: Seven textile spinning mills, two textile weaving mills and five textile composite
mills are selected as a sample for this research. The secondary data including the balance sheet,
profit and loss account, financial highlights and ratio analysis is collected from the annual
reports. Most of the data is available from 2011 to 2016. It shows that the six year data is
considered for the research purpose. Total 14 mills are focused in this research.
Spinning Units/Mills:
1. Reliance Weaving Mills Limited
PROFIT AND LOSS:
Net Sales Rs. M 10,049 10,878 11,412 9,514 8,699 9,394

Gross Profit Rs. M 886 842 1,121 1,217 914 1,351
Profit/ (Loss) before Tax Rs. M 107 (142) 290 549 289 602
Profit/ (Loss) after Tax Rs. M 3 (98) 219 570 260 504
ASSETS AND LIABLITIES
Total Equity Rs. M 2,139 2,109 2,261 2,094 1,663 1,492

Non-Current Liabilities Rs. M 2,102 2,272 1,805 1,130 508 596
Property Plant and Equipment Rs. M 5,171 5,384 4,596 3,814 2,859 2,772
Current Assets Rs. M 4,117 3,862 4,720 4,299 3,094 2,801
Current Liabilities Rs. M 5,276 5,121 4,989 4,455 3,401 3,057
OPERATIONAL
PERFORMANCE:
Weaving
Number of Looms Installed Number 336 336 336 296 296 274
Std. Cloth Production(50ppi) Mtrs '000' 78,197 78,197 78,450 70,930 70,930 62,090
Actual Cloth Production(50ppi) Mtrs '000' 68,770 74,916 73,518 61,621 64,881 58,088
Spinning
Number of Spindles Installed Number 61,920 61,920 48,720 35,520 35,520 35,520
Installed Capacity (@ 20 S) Kgs '000' 19,722 18,639 15,930 11,963 11,963 11,963
Actual Yarn Production (@20 S) Kgs '000' 16,295 15,122 11,258 8,504 9,268 9,819
SALES BREAKUP
Export Sale Rs. M 4,947 6,979 7,451 5,879 6,506 5,951

Local Sale Rs. M 5,090 4,032 4,033 3,6 51 2,197 4,020
Wast sale Rs. M 144 105 109 110 120 151
INVESTOR INFORMATION :
Book Value per share Rs./ share 68.21 68.46 73.38 68.65 54 48.40
Market Value per Share 25.18 32.52 38.57 34.00 9 11.25
Earning per share 0.1 (3.18) 7.12 18.67 8 16.35
Cash Dividend % 5% 0% 15% 20%
Specie Dividend % 10% 20%
FINANCIAL RATIOS:
Gross Profit Ratio % 8.83 7.74 9.83 12.84 10.50 13.52
Net Profit Ratio % 0.03 (0.90) 1.92 6.05 2.99 5.04
Current Ratio 0.78 0.75 0.95 0.96 0.91 0.94
Acid Test(Quick) Ratio 0.30 0.41 0.39 0.37 0.42 0.37
Interest Cover Ratio Times 1.20 1.20 1.58 2.30 1.67 2.25
Inventory turnover Times 4.67 4.67 4.24 4.19 4.93 6.56
Fixed Asset turnover Times 1.90 1.90 2.71 2.85 3.09 3.60
Total Asset turnover Times 0.99 0.99 1.28 1.34 1.50 1.79
2. Elloct Spinning Mills Limited
YEAR ENDED 30TH JUNE

Sales Rs.0002016
4,227,9102015
4,588,7882014
5,709,484 2013
4,858,426 2012
4,025,287 2011
4,991,956
restated restated restated
Gross profit Rs.000 245,286 291,992 594,188 6 54,883 432,740 689,245
Operating profit Rs.000 110,35 3 150,505 445,410 5 03,634 329, 1 54 559,844
Profit before tax Rs.000 59,490 90,206 361,435 422,423 200,010 421,921
Profit after tax Rs.000 71,165 54,299 297,571 350,335 146,404 352,101
Share capital - Rs.000 109,500 109,500 109,500 109,500 109,500 109,500

paid up
Shareholders Rs.000 1,418 , 1,384,687 1,407,543 1,251,396 969,180 903,057
equity 482
Total assets Rs.000 2,870,296 2,377,522 2,366,450 2,185,275 1,852,202 2,237,348
Earning per Rs. 5.43 8.24 33.01 38.58 18.27 38.53

share - pre-tax
Earning per Rs. 6.50 4.96 27.18 31.99 13.37 32.16
share - after tax
Dividend per Rs. 3 . 50 3.50 7.00 1 0.00 5.00 7.00
share
Market value per Rs. 73.39 65.00 73.95 64.89 26.00 24.00
share as on 30
June
Gross profit to % 5.80 6.36 10.41 13.48 10.75 13.81

sales
Operating profit % 2.61 3.28 7.80 10.37 8.18 11.21
to sales
Profit before tax % 1.41 1.97 6.33 8.69 4.97 8.45
to sales
Profit after tax to % 1 . 68 1.18 5.21 7.21 3.64 7.05
sales
Current ratio 2.08:1 2.68:1 2.66:1 2.27:1 1.67:1 1.33:1
Total debt to % 50.58 41.76 40.52 43.37 47.67 59.64

total assets ratio
Debt equity ratio % 30.72 23.80 22.07 24.95 26.61 33.80
3. J.K SPINNING MILLS
PARTICULARS 2016 2015 2014 2013 2012 2011

SUMMARISED
BALANCE SHEET
NON-CURRENT ASSETS
Property, Plant And 2,748,664 2,290,022 2,787,750 2,822,964 2,841,761 2,623,342

Equipment
Long Term Loans - - 1,727 387 392 -
Other Non-Current 6,432 12,256 15,618 9,304 675 8,280

Assets
CURRENT ASSETS
Stores, Spares And 65,643 65,076 61,125 44,926 37,082 35,226

Loose Tools
Stock In Trade 1,756,108 1,484,015 1,652,837 1,592,021 1,278,678 1,249,430
Trade Debts 513,799 593,632 691,322 612,751 451,143 528,745
Other Current Assets 569,149 448,659 459,030 380,539 370,479 366,660
TOTAL ASSETS 4,893,660 5,669,409 5,462,892 4,980,210 4,811,683
Share Holders' Equity 2,853,464 2,777,718 2,733,721 2,400,047 1,763,656 1,439,286
Surplus on Revaluation of 178,634 153,778 564,815 608,200 966,759 1,044,140

Operating Fixed Assets
NON-CURRENT
LIABILITIES
Long Term Financing 358,291 - 10,715 86,818 194,163 65,080
Director's Loan - - 300,000 300,000 300,000 300,000
Liabilities Against Assets 7,158 21,973 26,887 25,875 - 5,980

Subject To Finance Lease
Deferred Tax 145,824 167,865 258,612 277,824 264,216 258,452
Other Non-Current 792 1,634 1,951 - - -

Liabilities
CURRENT LIABILITIES
Short Term Borrowings 1,517,083 1,191,193 1,202,486 1,194,856 1,032,246 1,192,112
Current Portion Of Long 135,519 23,245 102,360 124,999 125,561 56,245

Term Liabilities
Other Current 463,030 556,254 467,862 444,273 333,609 450,388

Liabilities
Total Equity And Liabilities 4,893,660 5,669,409 5,462,892 4,980,210 4,811,683
PROFIT & LOSS

Sales 8,289,147 8,813,412 9,734,861 8,918,97 7,193,895 9,097,84
Gross Profit 650,889 842,388 969,226 3
1,442,70 1,017,273 9
1,384,45
EBITDA 421,945 548,337 841,572 5
1,011,93 736,629 3
969,805
Profit From Operations 183,256 323,630 572,116 3
866,712 605,624 839,721
Profit / (Loss) Before Tax 86,772 175,929 350,930 650,492 364,079 516,869
Profit / (Loss) After Tax 75,746 111,935 293,262 599,355 281,585 364,406
CASH FLOWS
Cash Flow From (113,065) 716,386 285,417 373,240 341,837 (763,089)
Operating Activities
Cash Flow From (669,963) (184,617) (222,047) (437,276) (387,618) (168,131)
Investing Activities
Cash Flow From 781,640 (489,440) (95,088) 77,833 30,708 937,056
Financing Activities
Changing In Cash & Cash (1,388) 42,329 (31,718) 13,797 (15,073) 5,836
Equivalents
Cash & Cash Equivalents 68,237 69,625 27,296 59,014 45,217 60,290
- Year End
PROFITABILITY RATIOS
Gross Profit % 7.85 9.56 9.96 16.18 14.14 15.22
EBITDA To Sales % 5.09 6.22 8.64 11.35 10.24 10.66
Pre Tax Profit % 1.05 2.00 3.60 7.29 5.06 5.68
After Tax Profit % 0.91 1.27 3.01 6.72 3.91 4.01
Return On Equity % 2.65 4.03 10.73 24.97 15.97 25.32
Return On Capital % 2.36 4.03 10.69 24.10 14.38 24.22
Employed
Dividend Rate (Cash) % 5.00 10.00 - 50.00 25.00 20.00
Leverage Ratio 0.71 0.45 0.60 0.72 0.94 1.13
LIQUIDITY RATIOS
Current Ratio T 1.37 1.46 1.62 1.49 1.43 1.28
Quick Ratio iT 0.51 0.59 0.65 0.56 0.55 0.53
Cash To Current iT 0.03 0.04 0.02 0.03 0.03 0.04
Liabilities
Cash Flows From iT (0.01) 0.08 0.03 0.04 0.05 (0.08)
Operation To Sales i
m
4. Fazal Textile Mills

Balance Sheet
As at June 30, 2014
June June June
2014 20I3 20I2
Restated Restated
Rupees in
'000'
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 4 5,617,963 4,674,18 3,298,45
Long term loans and advances 5 10,976 4
I7,97I 5
5,569
Long term security deposits 1,199 I,259 I,259
5,630,138 4,693,414 3,305,283
CURRENT ASSETS
Stores, spare parts and loose tools 6 76,603 78,386 64,240
Stock in trade 7 754,167 I,285,97I 9II,268
Trade debts 8 860,014 I,I54,876 792,566
Loans and advances 9 69,528 57,787 47,465
Trade deposits and short term prepayments I0 681 298 38,673
Other receivables II 60 6,203 237
Sales Tax refunds due from government 146,137 93,653 35,947
Income tax refundable I2 82,065 47,422 I7,2I7
Cash and bank balances I3 89,310 I9,325 I3,054
2,078,565 2,743,921 I,920,667
TOTAL ASSETS 7,708,703 7,437,335 5,225,950
EQUITYAND LIABILITIES
SHARE CAPITAL AND RESERVES
Authorized share capital I4 150,000 150,000 I50,000
Issued, subscribed and paid-up capital 15
Reserves 16
Remeasurement on post-retirement benefits obligation-net of tax
LIABILITIES 418,322
84,390
NON-CURRENT LIABILITIES 2,896,001
Long term financing 17 291,667
1,633,333 2,175,000 675,000
Deferred Liabilities 3,690,380 3,038,175 2,739,741
Staff retirement benefits 18 82,083 60,460 39,898
Deferred taxation 19 77,476
159,559 18,505
78,965 26,707
66,605
1,792,892 2,253,965 741,605
CURRENT LIABILITIES
Trade and other payables 20
Accrued markup
Short term borrowings 21
Current portion of long term financing
Contingencies and Commitments 22
TOTAL EQUITYAND LIABILITIES 7,708,703 7,437,335 5,225,950

Profit and Loss Account For the year ended June 30, 2014
NOTES June 2014 June 20I3 Restated

Rupees in '000'
Sales 23 6,536,510 5,909,410
Cost of sales 24 5,966,619 5,089,069
Gross profit 569,891 820,341
Distribution Costs 25 137,901 I94,889
Administrative expenses 26 67,337 60,364
Other operating expenses 27 40,595 25,253
245,833 280,506
324,058 539,835
Other Income 28 25,080 7,I27
Operating profit 349,138 546,962
Finance cost 29 148,224 89,656
Profit before taxation 200,914 457,306
Taxation 30 82,612 2I,677
Profit after taxation 118,302 435,629
Earning per share-basic and diluted (Rupees) 3I 19.12 70.40
Statement of comprehensive Income for the year ended June 30, 2014
June 2014 June 20I3
Restated
Rupees in '000'
Profit after taxation 118,302 435,629
Other comprehensive income

Items that will never be reclassified to profit or loss
Remeasurement of post-retirement benefits obligation (7,716) (II,I36)
Impact of tax 588 848
(7,128) (10,288)
Total comprehensive income for the year 111,174 425,341
5. Fazal Cloth Mills

Balance Sheet
ASSETS
Non-current assets Notes Rupees 2016 Rupees 2015
Property, plant and equipment 4 16,789,493,325 17,465,989,537
Long term advance and investments 5 3,854,006,152 3,657,165,531
Loan to Subsidiary Company 6 530,000,000 530,000,000
Long term deposits 24,446,493 22,807,493
21,197,945,970 21,675,962,561
Current assets
Stores, spares and loose tools 7 424,638,107 391,331,937
Stock-in-trade 8 5,112,752,436 4,446,033,548
Trade debts 9 1,903,365,247 3,805,423,237
Loans and advances 10 1,433,588,257 891,883,769
Trade deposits and short term
prepayments 11 1,628,075 7,385,469
Mark-up accrued 12 59,935,983 98,148,500
Other receivables and deposits 13 81,096,577 134,025,479
Short term investments 14 221,288,800 545,590,770
Tax refunds due from the Government 502,413,719 539,593,136
Cash and bank balances 15 85,453,947 169,824,779
9,826,161,148 11,029,240,624
31,024,107,118 32,705,203,185
EQUITY AND LIABILITIES
Share capital and reserves Notes 2016 2015
Authorized share capital 700,000,000 700,000,000
Issued, subscribed and paid-up capital 16 300,000,000 300,000,000
Capital reserves 17 1,622,451,755 1,945,611,134
Unappropriated profits 6,782,748,947 6,406,846,268
8,705,200,702 8,652,457,402
Surplus on revaluation of fixed assets - net of tax 18 6,511,467,057 6,865,760,927
Non-current liabilities
Long term financing - secured 19 4,436,247,908 5,549,364,925
Long term musharika - secured Deferred liabilities: 20 1,221,250,000 195,000,000
- Staff gratuity 21 209,641,455 212,473,755
- Deferred taxation 21 2,069,560,362 1,950,326,682
7,936,699,725 7,907,165,362
Current liabilities
Trade and other payables 22 1,945,616,935 1,815,673,276
Accrued mark-up 23 247,808,813 296,152,121
Short term borrowings - secured 24 3,885,590,245 5,741,657,906
Current portion of non-current liabilities 25 1,791,723,641 1,426,336,191
7,870,739,634 9,279,819,494
Contingencies and commitments 26 31,024,107,118 32,705,203,185
Profit and Loss account for the period ended June 30, 2016.
2016 2015
Note Rupees Rupees
Sales - net 27 20,615,979,078 25,568,443,177
Cost of sales 28 (18,861,646,409) (23,009,982,011)
Gross profit 1,754,332,669 2,558,461,166
Selling and distribution expenses 29 (376,454,106) (449,589,354)
Administrative expenses 30 (246,929,069) (250,817,369)
Other expenses 31 (84,346,750) (74,142,655)
Other income 32 (707,729,925) (774,549,378)
326,753,654
165,550,315
Profit from operations 1,373,356,398 1,949,462,103
Finance cost 33 (917,294,238) (1,274,737,143)
Profit before taxation 456,062,160 674,724,960
Taxation 34 (306,497,950) (164,212,109)
Profit after taxation 149,564,210 5510,512,851
Earning per share basic and diluted 4.99
6. Sargodha Spinning Mills- SIX YEARS FINANCIAL DATA AT A GLANCE

PARTICULARS 2016 2015 2014 2013 2012 2011
ASSETS EMPLOYED
Operating Fixed Assets 1,130,778 1,098,080 1,132,394 1,005,825 1,044,771 1,083,044
Capital Work in Progress - - - 54 - -
Assets subject to Finance - - - - - -
Lease
Long Term Investments 3,449 5,001 3,863 3,104 924 310
Long Term Security 1,918 1,971 3,654 3,654 3,654 3,550
Deposits
Deferred Tax - - - - - -
Current Assets 75,561 157,153 289,795 373,763 405,071 322,062
TOTAL ASSETS EMPLOYED 1,211,706 1,262,205 1,429,706 1,386,400 1,454,420 1,408,966
FINANCED BY
Share Holder's Equity (103,309) (57,796) 82,909 112,905 42,526 97,617
Surplus on Revaluation
of
Property, plant & 843,795 774,348 778,435 667,945 672,432 678,340
equipment
Sponsor Advance - 15,655 14,040 28,465 30,644 30,644 30,644
Interest Free
Long Term Financing - 33,798 43,276 65,022 93,403 132,022
Liabilities Against Assets
Subject to Finance Lease - - - - - -
Current Liabilities 455,565 497,815 496,621 509,884 615,415 470,343
TOTAL EQUITY AND LIABILITIES 1,211,706 1,262,205 1,429,706 1,386,400 1,454,420 1,408,966
PROFIT & LOSS ACCOUNT
Sales 142,492 2,051,787 3,053,261 2,975,596 2,337,805 3,499,736
Cost of Sales 204,711 2,061,792 2,914,308 2,704,416 2,206,256 3,243,996
GROSS PROFIT (62,219) (10,005) 138,953 271,180 131,549 255,740
Administrative Expenses 28,903 47,075 48,161 47,920 36,413 35,538
Distribution Cost 1,610 30,375 57,091 70,219 56,131 90,343
Other Operating 25,757 8,872 1,708 19,640 5,048 4,848
Expenses
Other Operating Income 52,376 10,829 16,578 15,636 7,214 17,664
PROFIT / (LOSS) FROM (66,113) (85,498) 48,571 149,037 41,171 142,675
OPERATIONS
Finance Cost 30,046 40,246 54,280 61,568 79,981 96,357
PROFIT / (LOSS) BEFORE (96,159) (125,744) (5,709) 87,469 (38,810) 46,318
TAXATION
Provision for Taxation 37,218 (21,002) (30,855) (23,757) (22,803) (31,290)
PROFIT / (LOSS) AFTER (58,941) (146,746) (36,564) 63,712 (61,613) 15,028
TAXATION
Effect of Changes in - - - - - -
Accounting Policy
Final dividend for the - - - - - (15,600)
year ended 30.06.10
Transfer From 14,980 4,903 5,809 4,487 5,908 6,517
Revaluation Surplus
(Deficit)/surplus on revaluation of 1,138 759 2,180 614 51
investment (1,552)
PREVIOUS YEAR'S BALANCE (369,796) (229,091) (199,095) (269,474) (214,383) (220,379)
B/F
BALANCE CARRIED TO B/S (415,309) (369,796) (229,091) (199,095) (269,474) (214,383)
EARNINGS / (LOSS) PER SHARE (1.89) (4.70) (1.17) 2.04 (1.97) 0.48
(Rs.)
Number of Spindles 54,432 54,432 54,432 54,432 54,432 54,432
installed
Number of Spindles 27,094 35,759 43,077 43,380 43,228 48,937
worked - average
Number of Shifts per Day 3 3 3 3 3 3
Actual Production
Converted
into 20's Count (Kgs. in 1.484 13.151 16.581 16.692 14.222 15.731
million)
7. Sartaj Textile
2015-2016 2014-2015 2013-2014 2012-2013 2011-2012 2010-2011

All figures are in Million Rupees other than where percentages and ratio sign appear.
PROFIT & LOSS ACCOUNT
3155.887 3291.892 4036.097 4208.752 3985.019 4039.701
Net turnover Gross Profit
325.129 309.329 292.339 432.924 332.672 443.376
Operating 159.625 130.673 129.669 243.336 212.857 344.522
116.513 74.289 73.010 146.441 91.596 234.480
Profit before tax Profit after tax 98.858 58.244 71.177 112.897 87.280 204.734
Earning per share (Rs.) 10.23 6.03 7.37 11.69 9.04 21.19
45% 25% 25% 40% 35% 60%
44% 41.5% 34% 34% 38% 28%
4.50 2.50 2.5 4.00 3.50 6.00
0
Cash dividend
Dividend payment ratio
Cash distribution per share in Rupees

BALANCE SHEET 96.600 96.600 96.600 96.600 96.600 96.600
Shareholders funds
Reserves 793.853 722.403 676.173 624.725 540.186 504.86
Property plant and equipment 799.161 858.610 987.473 995.632 884.750 1
859.04
Long term liabilities 82.276 171.029 159.893 201.717 336.986 1
457.04
Net current assets / liabilities 243.724 198.150 210.529 208.141 198.173 4
336.04
7
INVESTORS INFORMATION
Gross profit ratio 10.30% 9.40% 7.24% 10.29% 8.84% 10.97

%
Profit before tax ratio 3.69% 2.26% 1.81% 3.49% 2.30% 5.80%
Inventory turnover ratio 10.33 9.15 7.60 7.13 12.60 9.47
Fixed asset turnover ratio 3.95 3.83 4.09 4.22 4.50 4.70
Return on equity 11.10% 7.11% 9.21% 15.65% 13.71% 34.04
Debt equity ratio 9:92 17:83 17:83 22:78 35:65 %
43:51
Current ratio 1.43:1 1.35:1 1.36:1 1.37:1 1.27:1 1.42:1
Interest cover ratio 3.70 2.32 2.29 2.51 1.76 4.03
Weaving Units/ Mills
1. Prosperity Weaving Mills
BALANCE SHEET AS AT JUNE 30, 2014
2014 2013
ASSETS Note Rupees Rupees
NON-CURRENT ASSETS 15 1,396,314,418 826,324,957
Fixed assets Long term deposits 16 15,039,000 15,039,000

CURRENT ASSETS
Stores, spare parts and loose tools 17 53,614,902 38,885,526
tock-in-trade 18 3 8 7,735,353 462 , 049,355
Trade debts 19 245,148,605 250,831,357
Advances 20 2 0 ,653,925 24 , 9 90,478
Short term prepayments 21 1 ,550,025 1 , 172,837
Other receivables 22 1,377,529 1,833,862
Sales tax refundable 23 111,380,286 54,598,739
Advance income tax 24 35,221,998 30,377,159
Cash and bank balances 25 31 ,039,252 67,455,289
887,721,875 932,194,602
TOTAL ASSETS 2,299,075,293 1,773,558,559
EQUITY AND LIABILITIES NOT 2014 RUPEES 2013 RUPEES

E
SHARE CAPITAL AND RESERVES
Authorized Capital 20,000,000 (2013: 20,000,000) 200,000,000 200,000,000
ordinary shares of Rs. 10 each
Issued, subscribed and paid up capital 5 184,800,000 184,800,000
Capital reserve 6 1 6,600,000 16,600,000
Accumulated profit 724,496,345 655,800,247
Total equity 925,896,345 857,200,247
SURPLUS ON REVALUATION OF AND 7 37,182,634 37,182,634
LIABILITIES
NON-CURRENT LIABILITIES
Long term finances 8 628,484,046 214,100,319
Employees retirement benefits 9 51,444,502 39,000,140
Deferred taxation 10 23, 277,589 23,798,161
703,206 276,898,620
CURRENT LIABILITIES
Trade and other payables 11 221,967,280 201,679,943
Accrued interest/ mark-up 12 1 4,509,830 12,276,384
Short term borrowings 13 307,204,833 304,198,925
Current portion of long term finances 8 89,108,234 84,121,806
632,790,177 602,277,058
TOTAL LIABILITIES 1,335,996,314 879,175,678
CONTIGENCIES AND COMMITMENTS 14
TOTAL EQUITY AND LIABILITIES 2,299,075,293 1,773,558,559
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2014
Note 2014 Rupees 2013 Rupees

Sales-net 26 6,346,900,609 6,600,175,345
Cost of sales 27 (5,886,420,201) (5,931,469,385)
Gross profit 480,480,408 668,705,960
Distribution cost 28 (93,678,354) (104,517,907)
Other operating expenses 30 (19,746,430) (33,108,138)
Sub total (179,938,890) (189,648,365)
Total 300,541,518 479,057,595

Other income 31 2,888,075 1,756,723
Operating profit 303,429,593 480,814,318
Finance cost 32 (60,696,635) (82,942,273)
Profit before taxation 242,893,746 397,871,845
Provision for taxation 33 (60,696,635) (53,095,469)
Profit after taxation 182,197,111 344,776,376
2. YOUSAF WEABING MILLS LIMITED

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2015
2015 2014
Note Rupees Rupees
Sales net 27 1,708,643,518 2,748,395,375
Cost of sales 28 (1,887,215,333) (2,490,521,604)
Gross (loss) / Profit (178,571,815) 257,873,771
Distribution cost 29 (41,563,253) (60,183,837)
(102,712,316) (135,301,010)
Operating (loss) / Profit (281,284,131) 122,572,761
Other operating charges 31 (13,369,965) (19,655,002)
Finance cost 32 (70,244,038) (74,186,010)
Other operating income 33 20,037,592 14,507,022
(Loss) / profit before Taxation (344,860,542) 43,238,771
Taxation 34 (2,679,187) (32,935,271)
(Loss) / profit for the Year (347,539,729) 10,303,500
Discontinued operations:
Loss for the year from discontinued operations 25.1 21,276,590 9,352,283
(Loss) / Profit for the Year from Continuing (326,263,139) 19,655,783

Operations
(Loss) / Earning per Share - Basic 35
- From continuing operations (8.16) 0.49
- From discontinuing operations (0.53) (0.23)
- From (loss) / profit for the year (8.69) 0.26
Composite Units/ Mills

1. Quetta Textile Mill
2015 2014 2013 2012 2011 2010

Sales Rs. 10,175,47 12,301,40 12,967,97 11,141,09 14,343,55 9,334,111
'000' 6 5 9 6 3
Cost of Goods Rs. 9,562,202 11,064,70 11,528,54 9,670,029 12,049,96 7,626,141
Sold '000' 1 9 3
Gross Profit Rs. 613,274 1,236,704 1,439,430 1,471,067 2,293,590 1,707,970
'000'
Profit / (Loss) Rs. (323,527) 214,911 267,252 157,549 773,468 375,591
Before Taxation '000'
Profit / (Loss) Rs. (392,014) 70,699 159,273 36,439 583,795 255,034
After Taxation '000'
FINANCIAL DATA
Equity Balance Rs. 2,182,001 2,488,036 2,424,932 2,238,689 2,192,119 1,536,724

'000'
Property, Plant S Rs. 6,038,998 5,008,146 5,056,794 5,081,501 5,133,307 4,911,251
Equipment '000'
Current Assets Rs. 5,068,859 5,128,633 4,402,188 4,426,786 4,483,901 3,552,358
'000'
Current Liabilities Rs. 6,014,082 5,532,754 4,702,127 4,855,243 4,551,382 4,069,031
'000'
PROFITABILITY RATIOS
Gross Profit % 6.03 10.05 11.10 13.20 15.99 18.30

Margin
Operating Profit % (3.42) 1.70 2.00 1.37 5.35 3.78
Margin
Net Profit Margin % (3.18) 1.75 2.06 1.41 5.39 4.02
LIQUIDITY RATIOS
Current Ratio Time 0.84 0.93 0.94 0.91 0.99 0.87

s
Quick Ratio Time 0.11 0.15 0.18 0.14 0.24 0.20
s
ACTIVITY / TURNOVER RATIOS
Days in Days 11.98 12.19 11.68 11.00 16.75 20.49

Receivables
Accounts Time 27.31 29.79 34.54 22.41 24.26 13.23
Receivables s
Turnover
Inventory' Time (2.65) 3.20 3.61 3.12 4.62 3.39
Turnover s
Total Assets Time 0.96 1.25 1.36 1.16 1.58 1.07
Turnover s
Return on Total % (0.03) 0.02 0.03 0.02 0.09 0.04
Assets
Return on Equity % (0.15) 0.09 0.11 0.07 0.35 0.24
LEVERAGE RATIOS
Long Term Debts Time 0.78 0.71 0.64 0.57 0.58 0.47
to Equity s
Total Debts to Time 3.04 2.60 2.42 2.74 2.85 3.79
Equity s
Long Term Debts Time 0.15 0.17 0.22 0.23 0.26 0.31
to Total Assets s
Total Debts to Time 0.59 0.64 0.62 0.64 0.65 0.68
Total Assets s
Equity to Total Time 0.20 0.24 0.26 0.23 0.23 0.18
Assets s
Interest Coverage Time (0.52) 0.36 0.37 0.17 0.79 0.39
Ratio s
OTHERS
Earnings / (Loss) Rs (30.15) 5.44 12.25 2.80 44.91 28.26

Per ShareValue of
Breakup Rs 167.85 191.39 186.53 172.21 168.62 118.21
Share w/o
Revaluation Rs 283.22 244.41 240.87 227.90 225.78 176.95
Surplus Breakup
Value of Share
with
Revaluation % NIL NIL 15 NIL 15 20
Surplus Cash
Dividend
2. Pakarab Fertilizers Limited

Horizontal Financial Analysis
Particulars Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31,
Income Statement 2009 2010 2011 2012 2013 2014
Restated
Turnover Rs.
Cost of Goods Sold Rs. 16,706 18,248 16,701 8,136 7,428 14,248
Gross Profit Rs. (9,796) (9,051) (7,188) (6,221) (7,143) (12,264)
Admin Cost Rs. 6,910 9,197 9,513 1,915 286 1,984
Distribution Cost Rs. (610) (780) (969) (1,165) (888) (731)
Financial Cost Rs. (898) (994) (829) (299) (495) (686)
Other Expenses Rs. (3,159) (3,589) (3,472) (2,610) (1,579) (1,626)
Interest Income Rs. (244) (386) (510) (218) (382) (1)
Other Income Rs. 146 543 736 685 63
Re measurement gain / (loss) Rs. 196 866 1,119 843 198 1,036
Share gain/(loss) of associated company Rs. 2,866 (121) 741 (47)
Profit before Tax Rs. (25) (39) (18)
Profit after Tax Rs. 5,183 4,697 6,311 (896) (2,798) (25)
EBITDA Rs, 4,738 3,232 4,590 (240) (1,825) (45)
8,342 8,943 10,665 2,929 (745) 2,041
Balance Sheet
Paid up Capital Rs.
Shareholder's Equity including revaluation reserve Rs. 4,500 4,500 4,500 4,500 4,500 4,500
Long term borrowings Rs. 12,823 10,224 17,856 15,396 13,584 16,273
Capital employed Rs. 16,191 13,372 8,484 4,559 1,466 1,891
Deferred liabilities Rs. 39,426 33,989 43,754 37,077 31,518 32,303
Property, plant & equipment Rs. 5,021 5,631 11,058 11,038 10,059 10,303
Long term assets Rs. 21,285 21,916 37,937 37,290 37,114 39,909
Net current assets / Working capital Rs. 35,039 33,178 46,336 41,188 40,945 43,735
Total Assets Rs. 4,387 811 (2,456) (4,111) (10,188 (9,620)
52,126 50,637 65,341 54,636 48,148 52,727
Cash Flows
Operating activities Rs.
Investing activities Rs. 6,712 4,109 4,023 (1,179) (682) 2,797
Financing activities Rs. (10,353) (2,989) (710) 5,870 2,790 345
Changes in cash & cash equivalents Rs. 3,467 (316) (2,643) (5,665) (1,864) (1,789)
Cash & cash equivalents -Year end Rs. (174) 804 669 (973) 244 1,352
(5,321) (4,517) (3,847) (4,820) (4,576) (3,224)
Key Indicators:
Operating:
Gross Profit Margin %
Pre tax margin % 41.36 50.40 56.96 23.54 3.84 13.92
Net profit margin % 31.03 25.74 37.79 (11.01) (37.67) (0.17)
EBITDA % age to sales % 28.36 17.71 27.48 (2.95) (24.57) (0.31)
Earning per share (Rs.) Basic Rs. 49.93 49.01 63.86 36.00 (10.03) 14.33
10.53 7.18 10.20 (0.53) (4.06) (0.10)
Performance:
Book Value per share (Excluding revaluation surplus) Rs.
Book Value per share (Including revaluation surplus) Rs. 32.99 27.22 23.14 17.63 13.78 13.96
Return on assets % 38.50 32.72 49.68 44.21 40.19 46.16
Total Assets Turnover Time 9.09 6.38 7.02 (0.44) (3.79) (0.08)
Fixed Assets Turnover Time 0.32 0.36 0.26 0.15 0.15 0.27
Debtors turnover Time 0.77 0.82 0.44 0.22 0.20 0.36
Debtors turnover Days 11.80 11.13 12.19 11.14 20.52 83.57
Inventory turnover Time 31 33 29.95 33 18 4
Inventory turnover Days 1.80 1.82 1.45 1.32 1.40 3.07
Return on Share Capital % 203 200 251 276 261 119
Return on Equity (excluding revaluation surplus) % 105.29 71.82 102.00 (5.33) (40.56) (0.99)
31.91 26.39 44.08 (3.03) (29.44) (0.71)
Leverage:
Debt : Equity
Interest cover 54:46 59:41 59:41 54:46 43:57 36:64
1.64 1.31 1.82 (0.66) (0.77) (0.02)
Liquidity:
Current Ratio
Quick ratio 1.35 1.05 0.89 0.77 0.41 0.48
0.98 0.73 0.67 0.49 0.20 0.30
Valuation
Earning per share (before tax) Rs.
Earning per share (after tax) Rs. 11.52 10.44 14.02 (1.99) (6.22) (0.05)
Earnings Growth % 10.53 7.18 10.20 (0.53) (4.06) (0.10)
Cash dividend % (55.45) (31.79) 42.02 (105.23) 660.45 97.55
Bonus dividend %
Specie dividend %
100.00 130 148 49
3. Gul Ahmad
Financial Highlights
Profit and Loss 20I5 2014 2013 2012 2011 2010
Rupees in Millions
millions
Sales 33,355 33,013 30,243 24,918 25,435 19,689
Gross profit 6,094 5,976 4,751 3,486 4,627 3,173
Operating profit 2,118 2,659 2,120 1,374 2,635 1,653
Profit/(Loss) before tax 783 1,496 852 (1) 1,537 708
Profit/(loss) after tax 605 1,235 711 (240) 1,196 478
Cash dividend 343 81 - - - 79
Bonus shares - 457 305 - 635 -
Balance Sheet
Property, plant and equipment 9,039 8,210 7,132 6,829 6,654 6,140
Intangible II 20 23 27 39 16
Long-term investment, loans,
advances and deposits 165 151 112 109 96 93
Net current assets 756 890 666 (98) 422 (224)
Total assets employed 9,971 9,271 7,933 6,867 7,211 6,025
Represented by:
Share capital 2,285 1,828 1,523 1,270 635 635
Reserves 4,884 4,832 3,905 3,203 4,078 2,961
Shareholders' equity 7,169 6,660 5,428 4,473 4,713 3,596
Long-term loans 2,408 2,239 2,155 2,096 2,199 2,223
Deferred liabilities 394 372 350 298 299 207
Total capital employed 9,971 9,271 7,933 6,867 7,211 6,025
Cash Flow Statement
Operating activities 670 2,090 (161) 3,497 (2,617) 454
Investing activities (1,783) (1,833) (1,068) (920) (1,250) (711)
Financing activities 108 217 210 (70) (148) (170)
Cash and cash equivalents at the end of
the year (8,721) (7,715) (8,188) (7,169) (9,676) (5,660)
Profitability ratios and Horizontal analysis
Particulars 2011 2012 2013 2014 2015 2016

Gross profit ratio % 18.27 18.10 15.71 13.99 18.19 16.12
Operating leverage ratio Times (19.65) 2.77 2.56 23.48 2.03 0.88
EBITDA margin to sales % 9.28 10.66 9.59 8.54 13.21 11.92
Net profit to sales % 1.81 3.74 2.35 (0.96) 4.70 2.43
Return on equity % 8.75 20.43 14.36 (5.23) 28.80 14.22
Return on capital employed % 22.01 30.91 28.65 19.90 40.25 27.87

Liquidity ratios
Current ratio 1.05 1.06 1.05 0.99 1.03 0.97

Quick/acid test ratio 0.24 0.20 0.27 0.24 0.19 0.34
Cash to current liabilities 0.01 0.01 0.01 0.01 0.01 0.01

Cash flow from operations 0.02 0.06 (0.01) 0.14 (0.10) 0.02
to sales
Capital structure ratios
Financial leverage ratio 1.67 1.62 2.03 2.25 2.67 2.40
Weighted average cost of 0.09 0.10 0.11 0.11 0.10 0.11

debt
Debt to equity ratio 0.34 0.34 0.40 0.47 0.47 0.62
Interest cover ratio 1.59 2.29 1.67 0.98 2.34 1.75
Turnover ratios
Inventory turnover Days 155 145 122 151 134 98
Inventory turnover ratio 2.35 2.52 3.00 2.41 2.72 3.74
Debtor turnover Days 18 22 28 30 31 45
Debtor turnover ratio 20.33 16.76 13.01 12.14 11.59 8.05
Creditor turnover Days 118 126 100 86 82 73
Creditor turnover ratio 3.10 2.91 3.64 4.23 4.43 4.98
Fixed assets turnover ratio 3.69 4.02 4.24 3.65 3.82 3.21
Total assets turnover ratio 1.34 1.36 1.43 1.41 1.25 1.35
Operating cycle Days 55 41 49 95 83 70
Investment/Market ratios
Earning per share Rupees 2.65 *5.40 *3.21 *(1.12) *5.57 *2.22
Price earnings ratio 18.51 11.85 7.39 (18.87) 9.29 8.34
Price to book ratio 0.45 0.48 0.17 0.15 0.16 0.08
Dividend yield ratio 0.03 **0.02 - - - 0.07
Cash dividend per share Rupees 1.50 **1.50 - - - 1.25
Bonus shares issued % - 25 20 - 100 -
Dividend payout ratio % 56.60 **2221 - - - 16.60
Dividend cover ratio Times 1.77 *4.50 - - - 6.02
Breakup value per share Rupees 31.37 *29.14 *27.41 *25.90 *27.29 *20.82
Market value per share
at the end of the year Rupees 49.05 64.01 23.74 21.11 51.73 18.53
high during the year Rupees 73.25 72.35 27.64 64.29 53.65 38.84
low during the year Rupees 44.65 20.50 19.16 16.05 18.53 17.40
EBITDA Rs. 3,094 3,519 2,900 2,129 3,359 2,347
Million
4. Nishat Mills Limited

Financial Highlights
2016 2015 2014 2013 2012 2011
Summarized
Balance Sheet
Non-Current
Assets
Property, plant, 24,715,095 24,357,269 22,964,388 15,530,320 14,318,639 13,303,514

and equipment
Long term 55,399,080 51,960,454 44,771,715 37,378,224 21,912,790 21,337,889
investments
Other non- 634,214 631,833 537,482 521,490 547,283 1,005,542
current assets
Current Assets
Stores, spares 1,269,509 1,335,763 1,316,479 1,285,371 1,019,041 955,136
and loose tools
Stock in trade 9,933,736 10,350,193 12,752,495 10,945,439 9,695,133 9,846,680
Short term 2,065,217 2,189,860 3,227,560 4,362,880 1,589,093 1,781,471
investments
Other current 12,582,368 10,314,628 11,478,458 10,610,870 7,544,404 5,858,672
assets
Total Assets 106,599,219 101,140,00 97,048,577 80,634,594 56,626,383 54,088,904
0
Shareholders 82,155,155 76,142,823 68,589,176 58,917,035 37,762,749 35,393,959
Equity
Non-Current
Liabilities
Long term 4,629,456 5,582,220 6,431,304 3,149,732 3,426,578 2,861,956
financing
Deferred tax 261,567 247,462 474,878 499,415 310,305 510,640
Current Liabilities
Short term 10,475,657 11,524,143 14,468,124 11,939,028 9,665,849 10,471,685

borrowings
Current portion 1,980,768 1,783,250 1,595,652 1,310,769 1,106,902 1,283,865
of non-current
liabilities
Other current 7,096,616 5,860,102 5,489,443 4,818,615 4,354,000 3,566,799
liabilities
Total Equity and 106,599,219 101,140,00 97,048,577 80,634,594 56,626,383 54,088,904
Liabilities 0
Profit & Loss
Sales 47,999,179 51,200,223 54,444,091 52,426,030 44,924,101 48,565,144
Gross profit 6,264,308 6,046,784 7,863,774 9,044,485 6,789,191 7,846,447

EBITDA 8,937,616 8,260,046 9,125,677 9,334,690 7,101,295 8,186,974
Other Income 4,079,054 3,982,009 3,653,041 2,739,102 2,683,685 2,444,985
Profit before tax 5,725,038 4,389,925 5,975,552 6,356,853 4,081,567 5,411,912
Profit after tax 4,923,038 3,911,925 5,512,552 5,846,853 3,528,567 4,843,912
Cash Flows
Cash flow from 4,704,482 5,298,151 4,887,376 491,795 2,760,562 260,523
operating
activities
Cash flow from 735,980 (3,042,332) (7,909,028) (2,695,026) 37,326 (2,222,501)
investing
activities
Cash flow from (3,377,513) (5,005,916) 4,695,106 973,537 (1,572,033) 2,984,094
financing
activities
Changes in cash 2,062,949 (2,750,097) 1,673,454 (1,229,694) 1,225,855 1,022,116
& cash
equivalents
Cash and cash 2,115,168 52,219 2,802,316 1,128,862 2,358,556 1,132,701
equivalent-year
end
Ratios
Profitability
Gross profit % 13.05 11.81 14.44 17.25 15.11 16.16
EBITDA to sales % 18.62 16.13 16.76 17.81 15.81 16.86
Pre-tax profit % 11.93 8.58 10.98 12.13 9.09 11.14
After tax profit % 10.26 7.64 10.13 11.15 7.85 9.97
Return on equity % 6.22 5.41 8.65 12.10 9.65 14.51
Return on capital % 8.01 7.79 10.99 15.33 14.56 18.86
employed
Operating (1.66) 3.21 (1.27) 2.19 2.23 1.09
leverage ratio
Horizontal analysis
Balance Sheet Total Equity 232% 215% 194% 166% 107% 100%
Non-current liabilities Current liabilities 145% 173% 205% 108% 111% 100%
128% 125% 141% 118% 99% 100%
Total liabilities 131% 134% 152% 116% 101% 100%

Total Equity and Liabilities 197% 187% 179% 149% 105% 100%
Assets
Non-current assets 227% 216% 192% 150% 103% 100%

Current assets 140% 131% 156% 148% 108% 100%
Total Assets 197% 187% 179% 149% 105% 100%
Sales 99% 105% 112% 108% 93% 100%
Cost of sales 102% 111% 114% 107% 94% 100%
Gross profit 80% 77% 100% 115% 87% 100%
Distribution cost 98% 111% 117% 115% 117% 100%
Administrative expenses 170% 168% 157% 133% 111% 100%
Other operating expenses 73% 85% 80% 95% 80% 100%
109% 119% 120% 116% 111% 100%
59% 47% 86% 115% 69% 100%
Other operating income 167% 163% 149% 112% 110% 100%
Profit from operations 97% 87% 108% 114% 83% 100%
Finance cost 65% 109% 101% 101% 110% 100%
Profit before taxation 106% 81% 110% 117% 75% 100%
Provision for taxation 141% 84% 82% 90% 97% 100%
Profit after taxation 102% 81% 114% 121% 73% 100%
5. Kohinoor Mills Limited

Six years performance
Particulars 2015- 2014- 2013-14 2012-13 2011-12 2010-11

OPERATING 16 15
Gross Margin % 16.29 16.43 13.45 16.31 14.67 (1.81)

Pre-Tax Margin % 2.37 3.03 0.70 12.86 11.00 (23.32)
Net Margin % 1.39 1.56 1.37 11.93 10.05 (26.79)
PERFORMANCE
Return on Long Term % 3.16 3.11 3.01 29.17 17.58 (41.38)

Assets
Total Assets Turnover x 1.35 1.26 1.30 1.44 1.08 0.90
Fixed Assets Turnover x 2.37 2.14 2.26 2.52 1.83 1.70
Inventory Turnover Days 59.13 58.34 52.80 45.36 53.41 63.84

Return on Equity % 0.14 0.14 0.14 1.93 nm nm
Return on Capital % 36.36 25.86 13.65 48.03 36.36 nm
Employed
Retention % 100 100 100 100 100 -
LEVERAGE
Debt: Equity 68:32 67:33 71:29 82:18 nm nm

LIQUIDITY
Current 0.75 1.05 1.19 1.33 1.06 0.38

Quick 0.39 0.56 0.70 0.82 0.67 0.26
VALUATION
Earning per share (pre-tax) Rs. 3.98 4.70 1.06 21.36 13.53 (23.87)
Earning per share (after Rs. 2.33 2.42 2.09 19.81 12.36 (27.42)
tax)
Breakup value Rs. 17.04 17.30 15.23 10.24 (11.21) (24.69)
Price earning ratio Rs. 8.65 7.16 5.96 0.82 0.19 (0.04)
Market price to breakup Rs. 1.19 1.00 0.82 1.58 (0.21) (0.04)
value
Market value per share Rs. 20.20 17.30 12.49 16.20 2.36 1.06
Market capitalization Rs. In 1,028 881 636 825 120 54

million
HISTORICAL TRENDS
Turnover Rs. In 8,551 7,906 7,772 8,452 6,262 5,210

Gross profit million
Rs. In 1,393 1,299 1,045 1,378 919 (95)
million
Profit/(Loss) before tax Rs. In 203 239 54 1,087 689 (1,215)
Profit/(Loss) after tax million
Rs. In 119 123 107 1,009 629 (1,396)
million
FINANCIAL POSITION
Shareholders funds Rs. In 867 881 775 521 (571) (1,257)

Property Plant and million
Rs. In 3,614 3,694 3,441 3,355 3,413 3,063
Equipment million
Current assets Rs. In 2,592 2,326 2,445 2,403 2,243 2,414
Current liabilities million
Rs. In 3,474 2,207 2,047 1,804 2,116 6,345
Long term assets million
Rs. In 3,761 3,951 3,542 3,457 3,580 3,373
million
Long term liabilities Rs. In 930 2,086 2,396 2,794 3,423 31
million
4. Conclusions and Recommendations
This study fills the gap in literature by examining the impact of shortage of non-renewable
energy resources and not adopting the opportunity of renewable energy resources on the
profitability and performance of textile sector of Pakistan. The study covers a seven-year period
from 2010 to 20116. Whole textile sector has faced severe losses due to the extensive energy
crises in the FY 2007 and afterwards is revealed by the trend of all the major accounting ratios. I
concluded that hypothesis The profitability and performance of textile sector in Pakistan is
adversely affected by the shortage of non-renewable energy resources and by not using the
opportunity of renewable energy resources. This hypothesis is accepted because figures of
various ratios including the profitability ratios, liquidity ratios, debt management ratios, and
asset management ratios, and Cost of goods sold Is increases while the operating income
(Earnings before interest and tax EBIT) is reduced after energy crisis.
The findings of this research will surely help the top management of textile sector in making
important decisions, especially long-term decision, and in contingency planning for unexpected
events. Moreover, it will also help for improving the performance of the textile sector by
providing insight into activities that require consideration. Further research can be conducted to
analyze the impact of energy crises on the exports of textile and its effect on trade balance of
the country.
Machines that can be powered by solar energy should be made and used. Besides, the
administrative building should be wholly dependent on the solar energy. In case, the utility
expenses of textile industry will be reduced by approximately 90%.
There are six primary sectors of the textile production in Pakistan:
Spinning.
Weaving.
Processing.
Printing.
Garment manufacturing.
Filament yarn manufacturing
All the above units require much consideration.

Moreover, the table below is also evident about the losses caused by the shortage, load-
shedding, and dwindling of non-renewable energy resources and not using the renewable
energy resources.
Table-1: Economic Cost of Electricity Shortage
Years Agriculture Sector Loss Industrial Sector Loss Services Sector Loss
PKR in Billions PKR in Billions PKR in Billions
1991 11.96 39.25 41.39
1992 11.87 41.19 43.32
1993 12.61 42.78 45.16
1994 14.57 44.59 47.34
1995 14.96 46.71 49.71
1996 17.84 46.57 51.52
1997 15.77 49.42 52.37
1998 18.54 51.85 54.99
1999 13.89 52.51 57.27
2000 14.39 53.81 59.82
2001 15.36 56.69 62.41
2002 14.72 59.78 65.74
2003 15.07 62.59 65.74
2004 18.81 70.09 69.68
2005 16.10 88.50 80.42
2006 15.20 96.37 86.09
2007 16.71 97.81 91.27
2008 16.51 96.02 92.76
2009 16.27 100.77 97.02
2010 24.27 100.52 100.28
2011 20.80 101.57 103.63
2012 25.11 102.61 106.95
2013 27.11 104.49 110.62
Electricity Shortage and Future Loss
2015 29.82 106.38 117.33
2020 38.52 112.17 134.33
2025 47.23 117.96 151.35
2030 55.93 123.75 168.37
2035 64.64 129.53 185.39
2040 73.34 135.32 202.42
2045 82.05 141.11 219.44
2050 90.75 146.90 236.46
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The impact of energy crisis because of

Department of Management Sciences,

I am going to study the impact of energy crisis (shortage of non-renewable energy

Trend of Textile Industry During 2005-

Load shedding of the electricity

PROFIT AND LOSS:

Net Sales Rs. M 10,049 10,878 11,412 9,514 8,699 9,394

ASSETS AND LIABLITIES

Total Equity Rs. M 2,139 2,109 2,261 2,094 1,663 1,492

Export Sale Rs. M 4,947 6,979 7,451 5,879 6,506 5,951

2. Elloct Spinning Mills Limited

YEAR ENDED 30TH JUNE

Operating profit Rs.000 110,35 3 150,505 445,410 5 03,634 329, 1 54 559,844

Share capital - Rs.000 109,500 109,500 109,500 109,500 109,500 109,500

Earning per Rs. 5.43 8.24 33.01 38.58 18.27 38.53

Gross profit to % 5.80 6.36 10.41 13.48 10.75 13.81

Total debt to % 50.58 41.76 40.52 43.37 47.67 59.64

3. J.K SPINNING MILLS

PARTICULARS 2016 2015 2014 2013 2012 2011

Property, Plant And 2,748,664 2,290,022 2,787,750 2,822,964 2,841,761 2,623,342

Long Term Loans - - 1,727 387 392 -

Other Non-Current 6,432 12,256 15,618 9,304 675 8,280

Stores, Spares And 65,643 65,076 61,125 44,926 37,082 35,226

Trade Debts 513,799 593,632 691,322 612,751 451,143 528,745

Other Current Assets 569,149 448,659 459,030 380,539 370,479 366,660

TOTAL ASSETS 4,893,660 5,669,409 5,462,892 4,980,210 4,811,683

Share Holders' Equity 2,853,464 2,777,718 2,733,721 2,400,047 1,763,656 1,439,286

Surplus on Revaluation of 178,634 153,778 564,815 608,200 966,759 1,044,140

Director's Loan - - 300,000 300,000 300,000 300,000

Liabilities Against Assets 7,158 21,973 26,887 25,875 - 5,980

Deferred Tax 145,824 167,865 258,612 277,824 264,216 258,452

Other Non-Current 792 1,634 1,951 - - -

Short Term Borrowings 1,517,083 1,191,193 1,202,486 1,194,856 1,032,246 1,192,112

Current Portion Of Long 135,519 23,245 102,360 124,999 125,561 56,245

Other Current 463,030 556,254 467,862 444,273 333,609 450,388

PROFIT & LOSS

4. Fazal Textile Mills

SHARE CAPITAL AND RESERVES

Authorized share capital I4 150,000 150,000 I50,000

Issued, subscribed and paid-up capital 15

Remeasurement on post-retirement benefits obligation-net of tax

1,792,892 2,253,965 741,605

Short term borrowings 21

Current portion of long term financing

Contingencies and Commitments 22

TOTAL EQUITYAND LIABILITIES 7,708,703 7,437,335 5,225,950

NOTES June 2014 June 20I3 Restated

Other comprehensive income

Remeasurement of post-retirement benefits obligation (7,716) (II,I36)

Impact of tax 588 848

5. Fazal Cloth Mills

6. Sargodha Spinning Mills- SIX YEARS FINANCIAL DATA AT A GLANCE

2015-2016 2014-2015 2013-2014 2012-2013 2011-2012 2010-2011

Dividend payment ratio

Cash distribution per share in Rupees

Gross profit ratio 10.30% 9.40% 7.24% 10.29% 8.84% 10.97

Weaving Units/ Mills

1. Prosperity Weaving Mills

BALANCE SHEET AS AT JUNE 30, 2014

ASSETS Note Rupees Rupees

NON-CURRENT ASSETS 15 1,396,314,418 826,324,957

Fixed assets Long term deposits 16 15,039,000 15,039,000