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Quantitativepossibilitiesofvalueadditionalongthe
textilechaininPakistan
PaperpresentedbyDr.H.R.Sheikh,PTJEditor&
Professor,TextileInsituteofPakistan
Pakistanisthefourthlargestcottonproducerintheworld.Cottonplaysan
extremelyimportantroleintheeconomyofPakistan.Thepaperoutlinesthe
problemscreatedbycontaminatedandpoorqualityginnedcottonsproducedby
majorityoftheginningfactoriesatthestartofthetextilechain.Estimatesofthe
extracostincurredbythespinningmillsinprocessingthesecottonstoavoid
shadingproblemsindyedfabricswithoutanyvalueadditionaregiven.Onthe
basisoftheyarnproductionstatisticsitispointedoutthevalueadditionbythe
spinningsectorislowbecauseoftheaveragecountoftheyarnproducedbeing
20.99Ne.Quantitativeestimatesofthepossibilityofhighervalueadditionare
givensubjecttotheaveragecountbeingraisedto30Ne.
Weaknessesofthepowerloomsectorwhichaccountsforapproximately90%of
thetotalgreyclothproductionarelisted.Estimatesofvalueadditionbythepower
loomunitsaregiven.Thedilemmafacedbytheseunitsinproducinggreycloth
fortheexportmarketishighlighted.Estimatesofvalueadditionbyatypicalwet
processingfacilitywithadailyproductionof60,000yardsofmercerizeddyedand
finishedfabricsaregivenforvarioustypesofdyesandshades.Similarestimates
forbleaching,dyeing,finishing,ofknittedfabricshavealsobeengiven.Recent
trendsingarmentmanufacturehavebeenreportedbrieflyandestimatesofvalue
additioninthecaseofastitchingplantwithdailyproductionof100dozensofT
shirthavebeengiven.Finallythevalueadditionalongthetextilechainin
PakistaniscomparedwiththatinIndia.
Pakistan'scottonproductionin2002/03wasapproximately1.785millionmetrictons
(10.5millionbalesof170Kgeach).Pakistanisthusthefourthlargestproducerof
cottonintheworldafterU.S.A,ChinaandIndia.ThetextilechaininPakistanstarts
withtheprocessofcottonginning.Theginningsectorisaweaklinkinthetextile
chain.Thequalityofginnedcottonproducedbymajorityoftheginningfactoriesis
poor!Tomakemattersworseforthespinningmillsforeigncontaminantssuchassmall
piecesofPolypropylene(PP),Polyethylene,Jutefibres,PPfibres,woolfibres,pieces
ofbrokencombs,hairpinsandhairsofthecottonpickersgetincludedinseedcotton
andconsequentlyinthecottonbales.Thetrashcontentofthesebalesisusuallyabove
7.5%ascomparedto4%orlowerthecaseofAmericanandCIScottons.Thesurvey
conductedbytheInternationalTextileManufacturesFederation(ITMF)in1999places
Pakistanicottonsunderthemost"ContaminatedDescription"[1]AdelElSayedAssal
anEgyptianexpert[2]highlightedtheshadingproblemsindyedfabricsarisingfrom
abnormallyexcessivetrashcontent,presenceofforeigncontaminantsespeciallyPP
fibres,admixtureofvarietiesandgradesandlargescalevariationsinfibreproperties.
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PresenceofPPfibresincottonbaleshasbeenpointedoutasthemostdangerous
contaminationbyAbdulRazzakTeli[3]beingcolorlessandundectable,itgetscrushed
intoinnumerablesmallpiecesatthecardingstagewhicharespunintoyarnswoven
intofabricsandultimatelyshowupasundyedspecksreducingthequalityoffinished
fabricstounacceptablelevelbothinthelocalandtheinternationalexportmarket.
1.Valuedeductionbytheginningsector
Itisobviousfromtheforegoingsituationprevailingintheginningsectorthatmostof
theginningfactoriesexcludingthoseownedorcontrolledbybigtextilesgroupsdonot
addvaluetocotton.Ontheotherhandbyreducingitsqualityvalueisdeductedas
under:
1.1LowerYieldofYarn
Presenceofexcessivetrashcontentinpoorlyginnedcottonsupto7.5%lowersthe
yieldofyarnascomparedtothatobtainablefromcustomginnedcottonswithtrash
contentof4%orlower.
Estimatesofescalationincottoncostforcardedyarnsonthebasisofprevailingcotton
priceofRs3700/permaundincludingsalestaxisasunder:
Theabovecalculationsshowthatcostofpoorlyginnedcottonsishigherthanthatof
customginnedperLBofyarnbyRs3.53inspiteofpremiumofRs100/maundpaid
incaseoflattertypeofcottons.
1.2Cottonmixing
Thespinningmillsmakeelaboratearrangementsforremovalofforeigncontaminants
andpreparationofhomogeneousmixingsbeforestartingprocessingintheblowrooms
sothatshadingproblemsanddefectsinthedyedandfinishedfabricsareavoided.The
objectivesare:
TheCVofthecottonmixingheapisnotabove3%incaseof2.5%S.Land12incase
ofmicronairevalue.Thetechniquesusedandtheexpensesinvolvedarereportedas
under:
1.2(1)CondenserConveyorBeltSystem
Essentiallythecondenserconveyorbeltsystemcomprisesoftwoautobalepluckers,
revolvingconveyorbeltandarowoflightsfixedoverheadtoilluminatethestock
spreadovertheconveyorbeltandfacilitatedetectionandremovalofcontaminations
byfemalesorters.Usuallyoneautopluckerisoperatingdeliveringtheopenedcotton
ontotheconveyorbeltthroughthecondenser.Theotherautobalepluckerisbeing
filledwithcottonbalesothattheprocessiscontinuous.Eightfemalepickersare
employedfouroneachsideoftheconveyorbelt.Theconveyorbeltdeliveredthe
checkedcottonintotheblowroomthroughanopeninginthewall.Detailsoftheman
poweremployedareasunder:
Twomaleworkersremovebailinghoops,filltheautobalepluckersafterbrushingthe
bales.
Eightmaleworkerstransporttheopenedandsortedcottontoblowroomandspreadit
overamarkedareareservedforcottonmixingheap.Usuallytwoareasarereservedfor
cottonmixing.Theheapononeareapreparedonthepreviousdayisbeingprocessed
andnewheapunderpreparationonthesecondarea.
Fourmaleworkersareemployedtospreadandleveltheheapofcottonmixing.One
supervisorisemployedtosuperviseandensurethoroughsortingworkandpickingof
contaminants.Usually50to60balesaresortedpershiftandtheworkisdoneontwo
shiftsbasisdependingupondailyconsumptionofbalesbytheconcernedspinningmill.
Supposing60balesaresortedpershifttheexpensesincurredareasunder:
DailywageofeightfemaleworkersRs800/(approximate)
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DailywageoffourteenmaleworkersRs1400/(approximate)
DailywageofonesupervisorRs200/(approximate)
TotalRs2400/
ThusexpensesofRs40/baleareincurredinsorting,pickingoutcontaminationsand
preparationofhomogeneousmixing.The60baleswithdrawndailyfromthecotton
stockareselectedaccordingtoawithdrawalplansothatrangeofvariationsof
micronairevaluearewithin0.1.TheexpensesincurredperLBofcottonworkoutat
Rs0.11.forthespinningmillsequippedwithconventionalblowrooms.Thebest
practicemillsequippedwithstateoftheartblowroommachinescanavoidthese
expenses!TheexpensesincurredperLBofyarnworkoutatRs0.134.Thetotal
expensesperLB.ofyarninprocessingofpoorlyginnedcottonsworkoutatRs3.66
morethanincurredinthecaseofcustomginnedcottonswithoutanyvalueaddition.
2.Valueadditionbythespinningsector
Duringtheconversionofcottonfibresintoyarncostisincurredonaccountof
conversion,windingandpreparingamarketablepackageofyarn,administrativeand
salesexpenses,salestax(differential)etc.Intheseprocesesvalueisaddedtotheraw
material.Maincomponentofvalueadditiononthecostofcottonistheconversioncost
whichiscalculatedonthebasisoffixed/runningcost,breakupofwhichinthecaseof
aspinningmillcomprisingof17280spindlesisgivenasunder:
ParticularsRspermonthinmillions
(i)Markuponloans2.0
(ii)Interestoncottonfinance
limitofRs60million@20%1.0
(iii)Utilities,Electricity,Gas,Wateretc4.0
(iv)Salariesandwagesincl.EOB,ESSI,CECetc1.0
(v)StoresandSpares,Maintenance,etc0.70
(vi)InsurancesofPlant,Machinery,Buildings,
StockinProcess,Cotton,CashinTransit0.60
(vii)O.H.expensesatthefactoryandH.O1.00
(viii)Cottoncess@Rs6/bale0.0216
(ix)Paymenttoloading,unloadingand
packingcontractors0.15
(x)Depreciation0.17
TotalRs10.6416
Costperspindleshift(CPS)Rs6.842
Ozsperspindleshiftincaseof21Ne
{Spindlespeed=16800RPM,T.P.I=19
operatingefficiency=92%}9.84
Conversationcost/LBofyarnRs11.125
2.1NetYarnProductionCost
Calculationsforthenetyarnproductioncostareasunder:
(i)CottoncostperLB.Ofyarn(82%yield)Rs54.84
(ii)Conversioncost/LBofyarnRs11.125
(iii)Packingmaterialcost(localmarket)Rs0.70
(iv)Salestaxdifferential(assumedsaleprice
ofyarnRs65/Lb)Rs3.92
(v)Grossproductioncost/LbRs70.58
(vi)Recoveryfromthesaleofwaste/LbofyarnRs2.00
(vii)NetyarnproductioncostRs68.58
Valueadditionbythespinningsectorinthecaseof21NeyarnworksoutatRs13.745
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perLb.
Theaveragecountofyarnonthebasisofproductiondatapertainingtotheyear1999
2000reportedbelowworksoutat20.99orsay21Ne:
Thedatareportedaboveclearlyshowsthatcomparedto1990/91thepercentageof
coarsecountyarnsincreasedto47.97%from33.29%andthatofmediumcountyarns
decreasedfrom48.21%to22.70%.Consequentlytheaveragecountofyarnproduced
bythespinningsectordecreasedfrom22.26Neto20.99Netherebythevalueaddition
bythespinningsectordecreasedproportionately.
2.3ImprovementPossibilityinValueAdditionbySpinningSector:
Atpresent73%ofcottonproducedinPakistanfallsinthestaplelengthrangeof1.031
inchto1.094inch(26.20to27.80m.m)suitableforproducing30Necardedand40Ne
combed.ThecommercialcottonvarietiesbelongingtothiscategoryareCIM240,CIM
443,Karishma,Rehmani,K68,Qalandari,Sarmast,MNH93,MS84,etc.Thus,raw
materialforproducingyarncountsintherangeofmediumandfinecategoriesis
abundantlyavailable!Iftheaveragecountofthespinningsectorimprovesto30Ne
carded,improvementinvalueadditionwillbeasunder:
OPS(OzsperSpindleshift)of30Neat
17000RPM,T.P.I=23,operatingefficiencyat93%=5.82
CPSRs6.84
Conversioncost(30Ne)/LbRs18.80
Thus,valueadditionwillimprovebyRs7.68perLbofyarn.
Totalvalueadditionwillbeequalto
Rs13.74+Rs7.68=Rs21.24
i)Additionalbenefitsofimprovementintheaveragecountofthespinningsectorfrom
21Neto30Newillbeintheformofsavingintheannualconsumptionofcotton
whichiscalculatedasunder:
TheinstalledandworkingcapacitiesreportedbytheFederalBureauofStatisticsatthe
endof2001/02were8.802millionand7.149millionspindlesrespectively.
Consumptionofcottonperannum(300days)incaseof21Ne=9.84x3x300x
7149000=10.56millionbales162.2046170
Consumptionofcottonperannum(300days)incaseof30Ne=5.82x3x300x
7149000=6.25millionbales.162.2046170
Thequantityofcottonsaved/annum=10.566.25=4.31millionbales.
Thus,itisobviousthatsubstantialquantityofcottonwillbesurplustothe
requirementsofthespinningsector.Valuableforeignexchangecanbeearnedbythe
exportofthesurpluscottontothetuneofapproximatelyUS$1275/million.
ii)Additionalrevenuewillbeearnedbythesale/exportofvalueadded30Neyarnas
comparedto20Neasunder:
Salepriceof21Neyarn=Rs.650/per10lbsapprox.
Salepriceof30Neyarn=Rs.740/per10lbsapprox.
Additionalrevenue/10lbs=Rs.90/
3.Valueadditionbythepowerloomsector
TheweavingsectorinPakistanisdividedintothreesubsectors.Theinstalled,working
capacitiesinthesesubsectorsin2000/01aretabulatedbelow:
Itwouldbeseenfromtheabovedatathattheweavingsectorisdominatedbythe
powerloomsubsectorwhichaccountsfor90.91%ofthetotalgreyclothproductionin
Pakistan.
AsreportedbytheGherziTextileOrganisation,thepowerloomsectorishandicapped
becauseitoperatesobsoleteshuttleloomsofobsoletetechnologylevel.[4]Similar
viewswereexpressedbyDr.BandanelliandIng.FabioLancerotto.[5]Textileexperts
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areunanimousintheirviewsthatbecauseofthePowerLoomSubSectorPakistanhas
acquiredthereputationofbeingcheapclothproduceroflowquality.Thevalueadded
bythissubsectorisobviouslylowandiscalculatedforatypical10shuttleLoomunit
asunder:
3.1BreakupofFixedCostPerMonth
RentofthepremisesRs20,000
Salaries,WagesincludingoverheadsRs21,000
Utilitiesincludingwater,gas,electricityRs55,000
Sparesincludinglubricants,Chemicals,Sizing,Packingmaterial
etcRs15,000
TotalRs111,000
Assumingthefabricconstructionbeingwovenis
21x21/60x60,63inchthen
Weightofwarp/metrewith4%contraction
=60x63x1.0936x1.04=0.244LBS
21x840
Weightofweft/metrewith7%contraction
=60x63x1.0936x1.07=0.251LBS
21x840
Totalweightofyarn/metreoffabric=0.50lbs(approximate)ProductionperLoom
shift=26metres@85%efficiencyand150PPM.
3.2NetCostofGreyCloth
Costofyarn/metreoffabric@Rs65/LBRs32.50
ConversioncostpermetreoffabricRs4.74
Conversioncost/loomshiftRs123.33
Packingcost/metreRs0.60
SalesTaxonFabricassumingsale
priceofRs38/metreRs5.7
SalesTaxpaidonyarnRs4.88
SalesTaxdifferentialRs0.82
Fabricproductioncostexcl.recoveryfrom
thesaleofwasteRs38.66
Thus,thevalueadditionisequaltoRs6.16/metre
Rs12.32/
Rs27.16/KG(verylow)
Thepowerloomsubsectorisinurgentneedofmodernization!Howevertheowners
faceadilmma.Majorityoftheownerslackfinancialresourcetoundertake
modernistionprograms.SMEbankhasbeenassignedtheworkofcateringtothe
financialrequirementsofsmallandmediumenterprises.SMEbankdemands
collateralswhichmajorityofthepowerloomunitscannotprovide.Hencethegap
betweendemandandavailabilityoffinanceforthesmallandmediumenterprisesin
generalandforthepowerloomunitsinparticularremainsverywide!
4.Valueadditionbywetprocessingsector
Thewetprocessingandfinishingsectorcomprisesofapproximately625unitsboth
largeandsmallsize.Valueadditionbysmallunitsisonthebasisofpartialprocessi.e
eithersinginganddesizing,scouring,andbleachingorcalenderingordyeingetc.
Henceestimatesofvalueadditionbyafullfledgedwetprocessingbasedonlocal
machineryforbleaching,mercerisinganddyeingandimportedmachineryforprinting
arecalculatedasunder:(dailyproductionis60,000yds).
4.1BreakupofFixedCostPerMonth(Rsin1000)
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MarkuponloansandbankborrowingsRs3535.285
SalariesandwagesatthefactoryandH.ORs552.00
Utilities,Gas,Water,Electricityetc.Rs1500.00
Insuranceoftheplant,Buildings,Stockin
processandcashintransitRs200.00
Loading/Unloadingcontractorsfor
greyclothandfinishedclothRs50.00
PackingcontractorRs50.00
ESSI,EOBI,CECetcRs50.00
Spares,Stores,Lubricants,Greases,Chemicals
anddyespackingmaterialsetcRs1000
TotalRs6937.285
Totalproductionoffabric(MDF)25days/month=60,000x25=1500,000YDS
1371616.68metres
Conversioncost/metreof21x21/60x60(63inch)fabric=Rs4.63peryardforlight
shades.Conversationcostwillbehigherdependinguponthetypeofdyesanddepthof
shades.TheconversioncostpermetreforlightshadesanddispersedyesisequaltoRs.
5.06permetreoffabric.
4.2NetProductCost
Costofgreyfabric21x21/60x60(63inch)permetreRs38
ConversioncostfordarkshadeswithdispersedyesRs11.50
SalesTaxonMDFfabricassumingsaleprice
ofRs80/metreRs12.00
SalesTaxpaidonfabricRs5.7
SalesTaxdifferentialRs6.30
NetproductcostforMDFfabricpermetreRs55.80
ValueadditionpermetreoffabricRs42
PerLBRs84
PerKG
Rs185.19
5.Wetprocessingofknittedfabrics
Valueadditioninwetprocessingoftabularandopentypeofknittedfabricscanbe
calculatedbyfollowingtheproceduregivenaboveforthewovenfabrics.Value
additionwillbemoreorlessthesame.
6.Valueadditionbystitchingplant
Thereareapproximately2500garmentunitsinPakistanwithaninstalledcapacityof
300,000sewingmachines.Theproductsofagarmentunitsellmainlyonthebasisof
brand.ThegarmentindustryinPakistanhasmadetremendousprogress.MajydAziz
(6)Reportsthefollowingbrandnamesbeingusedinthedomesticreadytowear
apparel:Aladin,Chiraghdin,Nawabdin,etc.
Scopeforvalueadditioningarmentmanufactureistremendous.Valueadditionbya
stitchingPlantwithdailyproductioncapacityof100DozensTShirtsiscalculatedas
under:
6.1BreakupofFixedCostPerMonth
Rentofpremises(approximately1200SQ.FT)Rs10,000
Utilities,Electricity,Gas,WateretcRs15000
SalariesandWagesRs135800
InsuranceRs2000
Spares,StoresandmaintenanceexpensesRs4000
DeprecationRs5400
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TotalRs172200
(Workingdayspermonth=25)
6.2NetProductCostPershirt=PerKG
Materialcost@Rs80/metre,(Rs160/LB)
@1metre/shirt=Rs80Rs352.74
Conversioncost/ShirtRs5.74Rs25.31
PackingCostRs0.25Rs1.10
TotalRs379.15/Kg
Valueadditioninstitching(garmentmarking)=Rs374.782/Kg.
AssumingasalepriceofUSD3.0pershiftvalueadditioningarmentmakingworks
outatRs85/shirtorRs.401.24perKG.
7.Summary
Onthebasisofestimatesgiveninthepreceedingpagesthevalueadditionalongthe
textilechainworksoutasfollows:
PriceperKG
RawCottonRs99.14US$1.74
YarnRs143.30US$2.51
FabricRs167.55US$2.94
FinishedFabricRs401.24US$7.04
GarmentsRs753.97US$13.23
8.ComparisonwithIndia
ThevalueaddedproductsofPakistan'stextileindustryarecomparedwiththatofIndia
onthebasisofexportpricerealizationasunder:
SectorAverageUnitPricerealizationUSD/KG
PakistanIndia
Knitwear9.7314.50
Bedwear5.393
Towels3.8184.64
Readymadegarments13.2324.69
Acknowledgement
UsefultechnicalinformationreceivedfromM/s.FahadAqeel,MuhammedMobin,
HurraffeNoorKhanandNazimKhanzadaRajput(3rdyearstudents)duringthe
preparationofthisreportisgratefullyacknowledged.

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