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Khaddi Work Cluster in Multan

A Study on

Khaddi Work Cluster in Multan



SBP- BSC, Multan

Khaddi Work Cluster in Multan

All praise is for Allah, the Almighty, and the Creator of this world who enabled us to perform this task. No work in reality is the sole efforts of its writers as many people like the foundation stone contribute silently. These people sometime deserve more praise and appreciation than the writers themselves. It is unequivocally stated that among such silent contributions have been made by the Worthy Mr. Javed Iqbal Marath, Chief Manager SBP-BSC, Multan who afforded us with an opportunity of exploring our talent. Our Respected Coordinators Mr. Abdullah Khan, ACM, SBPBSC, Multan, Mr. Asif Iqbal, OG-2 SBP-BSC, Multan and our friends lent us their helping hands at every step of our report. Their confidence in us, their motivations for us to do something authentic gave the basic impetus for undertaking this strenuous task. Our project is the result of discussions with many other people including a comprehensive survey, discussion with businessmen, trade bodies and various associations. Finally and most importantly, we are very thankful to our parents, who pray for our success day and night.

SBP- BSC, Multan

Khaddi Work Cluster in Multan

Acknowledgement Executive summary 1- Introduction. handloom industry. Geographical Locations. Objectives of the study. 5 6 7 8 8 9 10 10 12 12 14 15 16 16 16 17 17 18 18 19 19 19 20 20 22 23 23 23 24

2- Introduction of Cluster. of cluster. Multan. Product details. Trade data.

3- Cluster actors. 3.13.2Primary cluster actors. Secondary cluster actors. 3.2.1- Khaddi Crafts Development Company. (KCDC) 3.2.2- All Pakistan handloom and traditional textiles manufacturers and exporters association. (APHTMEA) 3.2.3- TEVTA. 3.2.4- APBUMA. 3.2.5- UCTE, Multan. 3.2.6- SMEDA. 3.2.7- TDAP. 3.2.8- PSIC. Forward linkages. Backward linkages. 3.4.1- Nature and extent of linkages.


4- Importance of cluster. perspective. Employment opportunity. Current cluster scenario. Global scenario of handloom cluster.

SBP- BSC, Multan

Khaddi Work Cluster in Multan

5- Analysis of business operations. 5.1Production process. 5.1.1- Spinning. 5.1.2- Dyeing. Tube dyeing. Hank dyeing. Cone dyeing. 5.1.3- Dyes. 5.1.4- Weaving process. Use of technology. Marketing strategies. Distribution channels.

25 26 26 26 26 26 26 27 27 28 28 28 29 30 30 32 35 38 40 48 51 55 57 73

6- Export and Import of cluster. 6.16.2Exports. Imports.

7- SWOT Analysis 8- Bank lendings. 9- Research methodology. 10- Analysis of Cluster. 11- Key issues. 12- Recommendations. 13- Cluster map. Annexure Group Photo

SBP- BSC, Multan

Khaddi Work Cluster in Multan

Executive Summary
We are the students of MBA (Evening) final Semester in the University of Education, Lahore, Multan Campus, Multan. This report is submitted in response to the project assigned by our Respected Coordinators Mr. Abdullah Khan, ACM SBP-BSC, Multan and Mr. Asif Iqbal, OG-2 SBP-BSC, Multan. This report has been prepared for the identification of the financial problems being faced by the handloom weavers in Multan region. In order to achieve this goal, we conducted a field survey for getting knowledge about the access to finance to the weavers. We have visited more than hundred weavers for this purpose. In order to collect correct information from the cluster, we prepared a questionnaire comprising of eighty-three questions, ranging from the educational background of a weaver to his financial history. We made field visits to the old walled city of Multan, Mumtazabad town and Makhdoompur Pahoran. During the survey, we observed that weavers were facing undue exploitation by the middleman, who usually reaped the fruit of their hard work. Besides this, many of them complained that industry was facing a downfall owing to the frequent outages, non-availability of the finance, costly inputs like threads, labor wages and competitive rise of the regional powers like India and Bangladesh in the weaving industry. Moreover, people were skeptical of banking policies due to a lack of awareness regarding the financing facilities. However, many remedial measures can be taken to improve the state of the affairs in this industry. Firstly, the government should establish a department for taking measures for the development and growth of this industry. One of the actions taken by this department could be the establishment of showrooms for their products which would help them find and tap the global markets like EU and USA. The banks can also play an important role in providing relief to the weavers by providing them soft loans. Moreover, the banks can also liaise with the weavers by aiding them in finding out of new markets, both local and foreign. Moreover, Islamic banks should also extend their services to this sector as currently this sector has not been focused by them. SBP, being the central financial institution, can play a pivotal role to remove the misconception and hesitation of weavers about the lending facilities of banks by recruiting a field force of youngsters for their awareness and to solve their access to finance issue.

SBP- BSC, Multan

Khaddi Work Cluster in Multan

SBP- BSC, Multan

Khaddi Work Cluster in Multan

According to Merriam Websters Dictionary

Loom \'lm\: a frame or machine for interlacing at right angles two or more sets of threads or yarns to form a cloth Loom is a machine which is used for weaving the clothes. There are two types of it, that is handlooms and power looms .The word handloom or khaddi means a machine in which weaving is done manually i.e. by hands and feet. The weaving on handloom is done through the intersection of Warp and Weft. The Warp is a vertical thread wound on a roller and the Weft is a thread at right angles to Warp/Horizontal Thread. The person working on handloom used to throw the shuttle, Weft, through the tautly stretched warp threads, back and forth, over and over again. This process is performed under tension to facilitate interweaving of weft threads. The precise shape of the loom and its mechanics may vary with the passage of time, but its basic function remains the same.

1.1- Pakistan Handloom Industry:-

The historical roots of handloom industry in Pakistan can be traced back to Indus valley civilization in 3000 B.C and Mughal Era. People of this civilization were familiar with the techniques of growing cotton and converting it into yarn which was weaved on handlooms. Thus the art of weaving and spinning has been passed on from generation to generation. Some historians are of the view that this area could be the first home of weaving and printing. Mughal emperors were especially interested in the variety of handloom products such as Jamawar, Jamdani, Sussi, Brocade, Kamkhawab, Katan, Carpets and Rugs. They took variety of measures for the development of this industry. Before the partition, subcontinent was the major area of high quality weaving around the world. Foreign buyers such as Europeans used to came and purchase wide variety of clothes from the local weavers. This admiration was the main cause of British invasion in the subcontinent which eventually leads to towards the establishment of East India Company. After the partition, Pakistan inherited only three textile mills Sutlej cotton mills Okara, Lyallpur cotton mills Lyallpur and Tata weaving mill in Tatay pur, Multan. All of these mills were self contained having all departments. In addition to the above, there was large number of handlooms in Pakistan at the time of partition which were operating in the status of cottage industry

SBP- BSC, Multan

Khaddi Work Cluster in Multan Short timeline of the industry Imposition of Excise duty in 1968-80 by GOP with exemption up to 4 looms. Separation of East Pakistan in 1971 and withdrawal of jute handlooms industry. Mr. Tariq Sehgal initiatives in 1980s.

1.2- Geographical Locations:-

In Pakistan, handloom industry is geographically dispersed that it is found in almost every corner of the country. As we know that this industry has very low initial capital requirements and the persons who are engaged with this industry mostly belong to the lower end of the society. They are carrying on their work on micro and small level. This cluster is a primary or secondary source of their earnings. Their manufacturing techniques are similar all over the Pakistan but the list of the products varies with respect to the area. Despite its tremendous potential, which is obvious from the increasing trend of Indian and Bangladeshi handloom exports, unfortunately the handloom cluster is a shrinking sector in Pakistan. The number of handlooms had reportedly decreased from 0.25 million in 1948 to approximately 0.02 million in 2010.

1.3- Objectives of the Study

To identify the areas where handloom weavers are working in the cluster. To evaluate the present socio-economic status of the H/L weaver in the cluster. To identify the products being manufactured by the weavers. To assess the technology used by the H/L weavers in weaving and dyeing. To identify and assess the backward and forward linkages. To identify the financial problems being faced by the H/L Weavers. To identify the bottlenecks in the development of cluster and solutions thereof. To analyze the business operations of H/L weavers. To highlight the operational issues of the cluster. To analyze volume of financing by the banks to cluster. To analyze the strengths, weaknesses, opportunities and threats for the H/L industry. 8

SBP- BSC, Multan

Khaddi Work Cluster in Multan To prepare an action plan and strategy for the implementation.

SBP- BSC, Multan

Khaddi Work Cluster in Multan

2.1- Definition of Cluster:-

Cluster is a geographical concentration of enterprises which produce and sell a range of related or complementary products and are, thus, faced with common challenges and opportunities There is strong evidence that small- and medium scale enterprises (SMEs) or cottage industry operating in the same or in related sectors tends to make a cluster. This tendency to bunch in well defined areas has been observed in different environments in both developed and developing countries, and in different historical periods.

2.2- Multan:-

Multan is one of the famous and oldest cities of Pakistan with state of the art infrastructural facilities. It is in the centre of Punjab Province. It has an international airport, a dry port connected with the main railway line and national highways. It is the part of major cotton belt in Pakistan. Multan is surrounded by the District of Khanewal in the North and North East, Vehari district on East and Lodhran district on South. The river Chenab passes on its Western side across which lies in district Muzaffargarh. District Multan is spread over an area of 3,721 square Kilometers with the population of 3.1 Million (1998).

SBP- BSC, Multan


Khaddi Work Cluster in Multan

It comprises of four towns and Cantt area:

1. 2. 3. 4. 5.

Multan Cantt Bosan Town. Shah Rukn e Alam Town Mumtazabad Town. Sher Shah Town.

Multan is famous for its elegant ivory products, blue pottery, tiles, khussa work, camel skin products, weaving products, block printing and embroidery products. These traditional crafts are also a source of foreign exchange earnings. The situation in Multan regarding handloom cluster is not very encouraging, which is considered an important cluster by the Government for the development and promotion of the Micro and Small and Medium scale enterprises. The units in Multan are constantly closing or limiting their production due to a number of issues but there are two schools of thoughts which consider Multan as the important cluster in Punjab: It is a major area engaged to the production of traditional products. It constitutes a large number of handlooms then anywhere else in southern Punjab. (60%)

According to a survey conducted by APBUMA authorities in 1998, there were more than 447 units in District Multan, who were engaged in handloom business, there were more than 2000 looms installed at different locations in District Multan but now

SBP- BSC, Multan


Khaddi Work Cluster in Multan the number of units has been reduced to around 114 units due to revolution made by power looms and other factors at micro and macro level. Power looms are equipped with the state of the art technology and capable to give higher productivity with lower cost than handlooms. In the normal course of time, power looms can produce 20-22 meters of fabric per day whereas handlooms can produce only 7-8 meter of fabric per day. In Multan, handlooms cluster is situated in almost every town of the city.

2.3- Product Details:-

The product range of Handloom cluster in Multan includes Rugs, Foot-Mat, Floor Coverings (Duree), Khees, Cushion Covers, Curtin Cloth, Prayer rugs, Mushddi, Handkerchiefs, Bed-Sheets and other home textile items. Most of products are export oriented and can be manufactured in bulk quantity against the order.

2.4- Trade Data:The overall world textile market is now estimated at more than US$ 430 billion. The category of division of textile market is depicted in the diagram below

The European Union (EU), USA, Middle East countries are the major buyers of Handloom products. The Handloom market for these countries is estimated as follows 123EU Handloom Import USA Handloom Import Middle East Handloom Import US $ 450 Billion US $ 60 Billion US $ 18 Billion

SBP- BSC, Multan


Khaddi Work Cluster in Multan

(Pakistan share of textiles in World Market)

(Share of Handloom products in the world market)

Pakistan had been manufacturing and exporting handloom products since its inception but even after having a continued presence in the international market; Pakistan is still unable to capture a strong place among foreign buyers. There are only two major players in the Multan cluster who are engaged in the production and packaging of the export-oriented products but now these players are facing crises due to lack of trust and interest by the foreign buyers. An important factor that had played a significant role in the rise of handloom products export was that before 2005, the exports of handloom products were exempt from quota restriction in the USA and EU, and to avoid quota barriers, the exporters of similar products, manufactured on power loom, misrepresented their exports as handloom export. This factor was successful in short term rise of exports from Pakistan but when this issue was highlighted by the foreign experts, Pakistani exports were banned in the international market. It is not the handloom Industry that lacks export potential, as it is evident from a comparison with our close competitor, India, which is able to do a massive export of US $ 591.031 million.

SBP- BSC, Multan


Khaddi Work Cluster in Multan

SBP- BSC, Multan


Khaddi Work Cluster in Multan

Cluster Actors:In Handloom industry, there are different types of actors playing an important role in the development and progress of the industry. Products of this industry are in greater demand in the foreign world. We have divided the cluster actors into two parts: Primary cluster actors. Secondary cluster actors.

3.1- Primary Cluster actors:-

The primary cluster actors consist of those people who have been engaged to this industry since their childhood (Weavers). These actors have normally in-house operations involving all family members. These scattered actors mange their own raw materials but usually they are dependent upon middle man for the supply of raw materials and marketing. They live in a hand to mouth condition and have been mainly exploited by the middle man. If government takes some steps for the development of this industry, then it will create employment opportunities for the youth and generate sizeable amount of foreign exchange. Because of low capital requirements, any one can enter into this industry easily. However, after entering the industry only those businessmen survive who are able to develop long term relations with the customer, which is only threat for the new entrants. In addition to this, the handloom Industry is also facing a real threat from the power loom industry, which has been involved in violating the intellectual property rights of handloom producers through large-scale duplication of handloom products. These practices enable them to flood the market with cheap and affordable clothes. The competitive rivalry between the existing players is high but not so much different between the products and strategies to sell their products.

SBP- BSC, Multan


Khaddi Work Cluster in Multan

3.2- Secondary cluster actors:The secondary cluster actors consists of major players, government institutions and other semi-government institutions which are taking some steps on micro and macro level for the development, sustainability and revival of handloom cluster in Multan. 3.2.1- Khaddi crafts development company (KCDC):-

Head Office: Branch office: Number of field offices: Mission:-

Lahore Multan 06

Our quest is to become the most admired group by all our stakeholders Nature of activities planned: Establishment of field units and training and development centre in Multan. Installation of 700 Pit Looms and Handlooms. Sectional Warping and Manual Traditional Warping. Manual hand Spurn. Yarn Dyeing and establishment of state of the art textile laboratory for color testing and cone dyeing plant in Multan.

3.2.2- All Pakistan Handloom and Traditional textile manufacturers & exporters association (APHTMEA):Address: Near Allah o Akber Mosque near chowk qaddafi, Multan This association, after its inception in August 2004, did some efforts for the development of handloom industry, but as time passed, the motivational level kept on decreasing. Some of the important works done by the association is to identify the people associated with handlooms in Multan Cluster. All members of this association were active in liaison with the government but due to non cooperation of government and other factors. This association has now become a non functional body.

SBP- BSC, Multan


Khaddi Work Cluster in Multan

3.2.3- TEVTA:-

TEVTA was formed through an Ordinance (No XXIV of 1999) promulgated by Governor of the Punjab which has now been replaced by TEVTA Act (Act X of 2010) Punjab. Mission:To enhance global competitiveness in Punjab, through a quality and productive workforce by developing demand driven, standardized, dynamic and integrated technical education and vocational training service Nature of Activities: Introduction of Textile weaving technology course with 24-36 months duration. Signing of MOU with Akhuwat and Centre for women co-operative development for providing interest free loans to graduates and pass outs of TEVTA. The Akhuwat will provide Loans up to Rs.25, 000/- without interest to the Graduates of TEVTA living in the area which comes in the radius of 6 KMs of the branches of Akhuwat located. CWCD will provide Loan up to Rs.100, 000/- to the TEVTA Graduates / Pass-outs living in the area of 20 KMs radius of the branches of CWCD on the terms of Islamic Financing.

3.2.4- All Pakistan Bed sheets and Upholstery Manufacturers Association (Apbuma):-

Mission:APBUMA aims at developing the sense of partnership to synergies the efforts for creating better environment in Trade and Industry which offers equal opportunity to grow and prosper by discouraging discrimination and prejudice SBP- BSC, Multan 17

Khaddi Work Cluster in Multan

Nature of activities:APBUMA is an apex trade Association of Pakistan with strong presence all over the country with its Zonal Offices in Faisalabad, Lahore, Karachi and Head office in Multan. It represents broad spectrum of textile industry from very large groups to very small entities and promotes their interests by providing feedback to policy makers. Since its inception in 1983, APBUMA has served the Textile sector and handloom sector all over the Pakistan and specially the long neglected area of Southern Punjab. During the span of more than 25 years in service, it has undertaken the various projects like establishment of College of Textile Engineering Multan, Multan Dryport Trust Multan, cluster Council for Bed sheets & Upholstery manufacturers & Clariant Scientific Centre are few to mention. Some of the major work done by association was the Identification of hand loom weavers in Multan cluster to determine the variety of products manufactured in cluster. 3.2.5- BZU college of textile engineering and technology, (UCTE),Multan

Nature of activities: This college was established in 1995 as a technical training institute named the Institute of Handloom and Home Textile Technology in Multan. Multan Textile Education Trust and Export Promotion Bureau (Government of Pakistan) funded the project with the industrialists of the region to establish a textile institute in the region to provide technical manpower to the textile industry and allied fields. A three year diploma of associate engineering (DAE) with specialization in Spinning, Weaving, Dyeing and Printing was introduced by the institute in September 1999 with a syllabus approved by the Punjab Technical Board of Education, Lahore. Specializations are offered in the fields of Spinning, Weaving, Processing and Garments Manufacturing. This department offers variety of courses and diplomas in the textile engineering.

3.2.6- Small and Medium enterprise development authority (SMEDA):-

SBP- BSC, Multan


Khaddi Work Cluster in Multan

SMEDA did some work in the year 2000 and 2005 and compiled a report on the handloom industry of Pakistan. The report contained information regarding international market of handloom products and the share of various exporting countries such as Pakistan and India. 3.2.7- Trade development authority (TDAP):-

TDAP requested SMEDA in 2004 to write a report on the present situation of handloom industry of Multan. However unfortunately, the work was carried on for only two months and then subsided for several reasons and the report was never completed. 3.2.8- Punjab Small Industries Corporation (PSIC):-

PSIC has been taking number of initiatives for the development of handloom sector at Punjab level. In 2003, it had established a Handloom development centre in Multan along with the collaboration of ADB (Asian Development Bank) and hired a number of artisan to make innovative products but this project was terminated in 2004 due to lack of funds. At present it is extending loans at micro level to handloom weavers ranging from 15-40 thousand on personal and cross guarantee.

3.3- Forward linkages:-

SBP- BSC, Multan


Khaddi Work Cluster in Multan

The handlooms products are usually made on order by the weavers. The middlemen have their own informal sources of communication in which they place order to weavers along with advance payment to produce the specific quantity of items by the due date. Some of middlemen supply raw material and some do not. The main advantage with respect to current scenario is that the handloom owner can effectively fulfill their deadline requirements as compared to power loom owner as there is no involvement of electricity in the production process. After completing the production cycle, the weaver hand over the consignment to middlemen who further move the items to the party. The weaver usually receives his remaining payment within normal course of 2 or 3 weeks. Nowadays some middlemen are also providing packaging facilities to order placement parties.

3.4- Backward Linkages:-

In backward linkages, the weavers purchase different types of raw materials and loom parts from the vendors. The acrylic, cotton threads and wool are usually purchased from Faisalabad, Lahore, Sahiwal and Multan. The threads are normally twisted on the cones and packed in the special nylon sacks and each sack contains 40 cones. The average price of each sack is Rs.30,000/- to 40,000/- depending on the quality of thread whereas wool is purchased from the flea market. This wool is in the form of used sweaters and other woolen items. These items are sold on Kilograms basis. After the purchase, these items are handed to women for spinning who transform the wool to the wool balls. The cotton threads usually come in white color, the purchaser then dye the threads according to his requirement, whereas the polyester, acrylic usually comes from the China in the form of bunches. This purchase is strictly on cash basis and there is no such credit facility available for micro and small weavers. 3.4.1- Nature and extent of linkages:-

The most important factor in the backward and forward linkages is related to open money lending. These money lenders are in the form of Seiths, Pathans etc. These persons are adept in money lending for the number of years. As we know that handloom owners are the part of poor section of the society, so they are always in the

SBP- BSC, Multan


Khaddi Work Cluster in Multan need of money whenever they receive orders from the parties. Through these informal sources, they instantly meet their financial requirements. The main problems of these linkages are related to bad debts and undue exploitation. The middlemen promises to make the remaining payment and later he does not fulfill his promise. Most of disputes are referred to Police department but department wants written evidence. Due to the verbal promises; the weaver usually fails to provide strong grounds to his appeal. If manufacturer becomes aware of using the banking channels for all transactions and use written contract then these problem can be reduced. In this type of lending, there is no interest factor but some other system to generate the profit. The middle men usually bound the weaver to supply the certain quantity of goods at specific price till specified time period. We will now illustrate it through an example: Loan amount: Sale price of a floor covering: Sale price of a floor covering: Time period: Normal supply in time period: Profit factor: Profit in figures: Total Repayment: Interest factor: 30,000/- rupees 600/- rupees (Weaver) 1000/- rupees (Middlemen) 6 Months 200 to 300 items 40% per piece (Middlemen) 400200=80000 30,000+80,000=110,000/- (In hidden terms) 267% (Approx) (For six months)

SBP- BSC, Multan


Khaddi Work Cluster in Multan

SBP- BSC, Multan


Khaddi Work Cluster in Multan

Importance of cluster:4.1Economic perspective:-

SME and Micro level businesses contribute more than 90% of the businesses in Pakistan, all of which function within the private sector and mostly operate in undocumented informal part of the economy. They represent a significant component of Pakistans economy both in terms of value-addition and employment generation. As they predominantly provide employment to lower income group, they are also considered an important vehicle for poverty reduction. In Pakistan, the handloom Industry is a shrinking sector and may vanish in the wake of modern industrialization as it is on the verge of collapse. At this stage it is very necessary to create awareness about the problems being faced by craftsmen, designers and a proper policy should be formulated and implemented that could address the concerns and facilitate the weavers to overcome issues, increase collective efficiency through collaboration and networking and enhance the institutional capacity of the cluster in order to make them competitive both in the domestic and international market. Otherwise we will lose a great chance of increasing our: Foreign exchange, which is very necessary to boost the economy of any country. Employment ratio, because this is a cottage industry that involves all members of the family. Employment opportunity:-


In handloom industry, labor absorption rate is very high, because most of the people associated with this industry are self-employed and family based and amount of capital required for establishment is very low and attractive as compare to other capital intensive sector of the industry because traditional methods of manufacturing and processing are used which is the core strength of handloom industry. Thus for any resource restrained such as financial resources, technical/skilled human resources and issues of developing country, this is a cost effective and potential method for creating employment opportunities in the country. 23

SBP- BSC, Multan

Khaddi Work Cluster in Multan


Current cluster scenario:-

At present there are different types of problems which are facing by the cluster actors. Poverty. Illiteracy. Rise in the prices of threads. Increased labor cost. Increased burden of taxes (professional tax) Low input cost of Bangladesh, India and Sri Lanka. Lack of interest by the foreign buyers in Pakistani products due to quality and quantity issues. Lack of formulation or implementation of attractive policies by the Government for the protection of cottage industry. Non availability of spare parts. Increased exploitation by the middle man. Bad debts. Size of the majority of units is below the threshold level required to enter into the highly competitive export market. Health problems of the workers. Non availability of skilled laborers due to switch over towards new professions. Non existence of unions or association of persons for protection of interests of weavers. Lack of optimism by the weavers. Lack of trust on banking operations. Lack of awareness campaigns by the bankers. Limited but potential trust on Islamic banks by weavers. Global scenario of Handloom cluster:


Handlooms have remained not only one of the important options of livelihoods but also have been the saviors of the various traditional skills that have been inherited by the weavers over generations. The unique and high-skill oriented processes for creating the exquisite fabrics have helped the handloom tradition survive the attack of automated production systems. It is estimated that today there are about 4.60 million handlooms in the world out of which about 40000 to 45000 looms are in Pakistan. The total handloom production in Pakistan was about 10000 square foot during 2008 09. India is the leader which has more than 3.9 million handlooms. While the major producers are India followed by Bangladesh, Pakistan and Nepal, the main importers of textiles & clothing are the USA, EU and Italy.

SBP- BSC, Multan


Khaddi Work Cluster in Multan

SBP- BSC, Multan


Khaddi Work Cluster in Multan

Analysis of Business operations

5.1- Production Process

There are four steps which are involved in the weaving process

5.1.1- Spinning:At the very beginning, cotton yarn spins on spinning wheels which are also called charkha, but today the desired quality of yarn is obtained from spinning mills or from the yarn market which are located in Faisalabad, Lahore and Multan. But this process is also performed by some Handloom weavers on limited scale i.e. rugs weavers. 5.1.2- Dyeing:In the second step, the yarn is dyed before weaving. Following types of dyeing practices are common today. Tube dyeing:In this process yarn is dipped in the tanks and dyeing is done with wooden sticks and hands. These tanks are heated with natural gas or firewood. No special equipments are used to dye the yarn except big rubber gloves, which are used for protection of hands. Hank dyeing:-

SBP- BSC, Multan


Khaddi Work Cluster in Multan For Hank dyeing, it is first necessary to convert yarn in hank form. If the yarn is not available in the hank form, the yarn is first converted in hank form and then dyed. Cone dyeing:In this type of dyeing, the yarn is twisted on steel cones and then it is dyed. The process ensures high quality of dyeing. In developed countries cone-dyeing machines are used to achieve good quality of dyed yarn. In Multan, Pakistans second largest cone dyeing plant is installed near Mumtazabad. APBUMA has established Special Clariant scientific centre in Multan for providing free of cost color testing facilities to its members and other businessmen.

5.1.3- Dyes: In dyeing process, the industry mostly uses following types of dyes. Reactive Direct Vat Sulpher

The Reactive, Direct and VAT dyes are ECO friendly and they are most commonly demanding in International market. Among them direct dye colors bleeds, lose color, at 40 degree centigrade temperature. Sulpher dyes are poor in rubbing test, the process in which two small pieces of cloth are rubbed together to see whether it loses color on each other or not? The choice of dyes, depend upon buyers specification and the type of market in which weaver is supplying its products. 5.1.4- Weaving process:After dyeing, the yarn is usually taken to the warping section where Warp beams are prepared for the handlooms. After the preparation of warp beams they are installed on the handloom. There are three types of handlooms namely Pit Looms, Upright Looms and Flat weaving looms. The Pit looms are installed at ground level and driving paddles of the looms are placed in the pit. In Upright looms, there is only wooden structure in the loom. The flat weaving looms are different in a way that Warp beams are not used in it but instead Warp threads are clamped to the ground with a metallic hook. The weft is inserted manually either through a shuttle or simply rolled on it. All of these Handlooms are capable of producing different types of fabric. For simple and plain designs, ordinary handlooms are used. For complex fabric designs, Jacquard looms are most commonly used in the power loom sector.

SBP- BSC, Multan


Khaddi Work Cluster in Multan

5.2- Use of technology:In the past, handloom and power loom weavers faced different types of problems in the dyeing step. These problems were related to the poor color compositions and blends but now with the establishment of dyeing plant in Multan, the weavers are free to choose and blend any color of their choice. On the other hand, power loom sector is now using the state of the art machineries in weaving. These machines are capable to give maximum output in the little passage of time and with the minimal human intervention.

5.3- Marketing strategies:In handloom and power loom sector, the small weaver is not using any special marketing strategies for its products. As everyone has been working for more than 50 years and specialized in the specific products. So they get orders immediately from middle men as their product is demanded in the market. On the other hand, the big industries promote their products in the national and international fairs. These fairs are regularly advertised and held from time to time by TDAP and Chamber of Commerce with expensive entry fee structure. The Government of Punjab has established a specific showroom near MDA chowk, Multan named as Sant Zar for the marketing of embroidery clothes and PSIC showroom in Cantt for marketing of handicrafts but there is no such showroom which has been established for the promotion of weaving products by small weavers.

5.4- Distribution channels:There are two types of channels which are used by the weavers. Customer


Weaver SBP- BSC, Multan

Middle Man



Khaddi Work Cluster in Multan

SBP- BSC, Multan


Khaddi Work Cluster in Multan

Exports and Imports of Cluster


Pakistan has been manufacturing and exporting handloom products for many years, but even after having a continuous presence in the international market; Pakistan has still not been able to make a strong place in the mind of foreign buyers (Positioning). Major exports of handloom cluster are as follows: Bed sheets (S&D) Curtain cloths (Stitched and Unstitched) Rugs and floor mats. Prayer rugs. Cushion covers. Bath robes. Table cloths. Kitchen Sets like Glove, Apron & Mitten and Kitchen Towels. Mushadi. And other Home Textile items.

Major foreign buyers of Cluster are as follows: 6.2European Union. Scandinavian Countries. USA and North America. Central Asia and Middle East.


Major imports of cluster are as follows. SBP- BSC, Multan 30

Khaddi Work Cluster in Multan

Polyester Dyeing chemicals. Cone dyeing machines. Stitching machines. Pressing machines. Automatic embroidery machines. Doubling machines Dryers High quality yarn. Wool of flea market. Fresh wool.

Major suppliers of raw materials and industrial equipments are USA EU China Japan

Issues in Exports: War on terrorism. ISO certification issues. Limited R&D facilities. Quality and quantity problems. Non compliance of deadlines. Energy problems. Quota and tariff restrictions in international markets. Increased competition e.g. India and Bangladesh High price tag of the products. Unexpected fluctuations in yarn prices. Limited role TDAP. Rupee devaluation against US dollars. Lack of state of the art transportation facilities.

Issues in Imports: Duty on dyeing, packaging machinery and threads import.

Suggestions: More and more trade fairs should be conducted on the national and international level to attract foreign investors.

SBP- BSC, Multan


Khaddi Work Cluster in Multan Use of international media for the positive image of Pakistan and promotion of products. Awareness campaigns should be conducted by TDAP on the union council level for resolving the quality, quantity, R&D and timing issues. A separate government policy should be formulated and implemented for the development of handloom industry. Removal of tariff restriction by the government authorities.

SBP- BSC, Multan


Khaddi Work Cluster in Multan

SWOT Analysis

Strengths: Rich heritage Production of high quality and export oriented fabrics and its versatility and variety. Use of traditional technology and machinery. Use of durable and long lasting machinery. Lower over head cost due to no use of electricity. Strong raw material base in the cluster. Availability of skilled and cheap laborers to produce variety of products. Weaknesses: Poor Research and development (R&D) facilities. Use of old and outdated traditional designs and machines. 33

SBP- BSC, Multan

Khaddi Work Cluster in Multan Absence of variety of color testing laboratories and automatic dyeing plants in the cluster. No vision and motivation for developing new products. Producers are scattered throughout the cluster. Unawareness about new markets. Market is very limited and targeted only to low and lower middle income group. Poor infrastructure facilities. Lower labor productivity. Group activities are very limited and networking and body of association is not present in the Handloom cluster. No awareness about the banking operations and financing products. Poor quality standards.

Opportunities: Existing but not tapped domestic and international markets for handloom and power loom products. Skill up gradation programs can be introduced with the help of TEVTA and other vocational institutes. Awareness of new market designs can be provided. New machines and tools along with infrastructural support can be provided for getting high quality. Increased marketing efforts by the TDAP and Local governments. Establishment of small chamber of commerce and body of associations for addressing the concerns and solution of problems. Status Symbol due to its high price and uniqueness in the domestic and international markets. (Brand positioning) Banks and financial institutions lucrative financing schemes can give boost to this sector. Increased awareness campaigns and melas by banks and other financial institutions to gain confidence. Threats: Threats of new entrants. Shifting of technology from handloom to power loom due to greater productivity and economies of scale and scope. Increased intervention by power loom owners e.g. Unhealthy trade practices Shifting of skilled labor from this field to other professions. Some artisans are reluctant to learn new skills.

SBP- BSC, Multan


Khaddi Work Cluster in Multan Weavers indifferent attitude towards change, banking system and financing facilities. Global scenario is changing rapidly e.g. India, Bangladesh and Sri Lanka progress Few artisans are reluctant to adopt group activity. Threat of Japanese power looms.

SBP- BSC, Multan


Khaddi Work Cluster in Multan

Bank Lending to Cluster

Following is a list of the banks, who are lending to the cluster

SME Bank: SME Running finance facility

This product has been specifically designed to meet the short term capital needs of all types of businesses. Businesses entrepreneurs can avail this facility to meet the working capital needs such as purchase of raw materials. Limit amount: 1 2 3 4 5 6 500000 to 30 Million.

The business must be in the form of sole proprietorship, partnership or a company. The business must exist for 2 years. Bank account is desirable. Urban property, hypothecation of plant and machinery/stocks and pledge of government securities can be used as the collateral. SME Bank offers to borrowers with good credit history a higher loan amount against equal collateral. The person intending to obtain this facility should have to bring the CNIC, Business registration documents and financial accounts with him. SME Assets Finance facility

SBP- BSC, Multan


Khaddi Work Cluster in Multan This product has been specifically designed to meet the business fixed assets investment need such as purchase of plant and machinery, equipment and building premises. Flexible loan period from 1 to 4 years. Loan amount is 500000 to 30 million. Repayment period is in flexible monthly installment of 12 to 48 months. Eligibility criterion is as above.

Khushali Bank:Product Name: Product type/category: Product description: Loan eligibility criteria: Enterprise loan Group based/Association of persons For managing and running the business and purchase of new assets with minimum useful life of 1 year. Age 18-58 years, Maximum for repeat clients: 65 years, Total annual income is less than 300000/-, permanent resident of locality for 2 years, NADRA CNIC holder and 2 year experience in the same field. 3000 to 15000 3-12 months Monthly/Quarterly/Annually/Semiannually Cross guarantee

Loan Amount: Tenure/Repayment options: Guarantee:

NRSP Microfinance Bank:Product Name: Product type/category: Product description: Urban enterprise development loan Individual based Grocery shops, Handicrafts, Procurement of animal for milk production, Repair of transport vehicles, Procurement of donkey cart, Mechanics workshop, Vegetable vendors, Barber shops, Electrician shops, Tea stalls, any business within the nature of a small enterprise. Age 18-60, should have a CNIC, permanent resident of the locality, independent head of household for the development of enterprise. 5000-30000 Up to 24 installments Group Guarantee 30% for installment loan on declining trend

Loan eligibility criteria: Loan Amount: Tenure/Repayment options: Guarantee Interest Rate

Kashf Microfinance Bank:Product Name: Product type/category: SBP- BSC, Multan Kashf Kamyab Karobari Karza Individual based 37

Khaddi Work Cluster in Multan Product description: Loan eligibility criteria: Loan Amount: Tenure/Repayment options: To meet the working capital needs and fixed assets requirement of Micro and small business enterprise Maximum 150000/6-12 months Monthly

Tameer Bank:Product Name: Product type/category: Product description: Tameer karobari krza Individual and group based This loan provides working capital for Microfinance entrepreneurs for growing their business unit and provides critical cash flows necessary for keeping Micro sector businesses above the poverty line. 10000 to 150000 12 to 36 months

Loan eligibility criteria: Loan Amount: Tenure/Repayment options: Guarantee Interest Rate

SBP- BSC, Multan


Khaddi Work Cluster in Multan

Research Methodology
In research methodology, we decided on the techniques and tools used in the study for data collection, presentation and analysis. After the gathering of initial information about the Kahddi cluster in Multan, we developed a questionnaire consisting of 83 questions. In order to collect the accurate information, we made field visits of 50 units out of more than 143 units of the Kahddi cluster in Multan. During the visits, we interviewed our respondents and gathered the data.

SBP- BSC, Multan


Khaddi Work Cluster in Multan

SBP- BSC, Multan


Khaddi Work Cluster in Multan


Entry in this business. 95% of the businesses are family businesses, which is due to the fact that handloom cluster dates back to the independence of Pakistan. Most of the people are working in this cluster as their primary or secondary source of earning. Only 5% of the people are self starters in the business. Duration of doing this business. 75% of the people are doing this business for more than 30-40 years. 20% of the weavers are doing this business for the last 20-30 years, while only 5% are engaged in this business for the last 10-20 years.
80% 70% 60% 50% 40% 30% 20% 10% 0% 5%

Entry in this bus ine s s

5% Family business Self s tart 95%

Duration of doing this business 75%


10-20 years

20-30 years

More than 30-40 years

Nature of business premises According to survey, 90% of the businesses premises are owned personally by the weavers; these production facilities are usually located in their own homes. Other rented premises belong to those weavers, who do not fulfill the standard definition of Micro and Small enterprise.

Nature of business premises


Rented Ow nership


SBP- BSC, Multan


Khaddi Work Cluster in Multan

No. of workers in business

Number of workers in the business. 70% of the units covered in survey are small units, employing 5-10 persons. Another 20% of the business units employ 11-25 persons, while 5% are operated by a single person. Herein Multan cluster, only 5% of the business units have more than 50 workers and one such unit covered was Gultex factory, Multan. Workers composition. 72% of the workers in the handloom cluster are paid workers while 28% of the workers are from the families owning the very business. In some of the mixed structured units, a combination of the family members and paid employees was also observed.
80% 70% 60% 50% 40% 30% 20% 10% 0%

5% 5% 20%

Singe person operated 5-10 persons 11-25 persons More than 50 persons


Workers composition



Family members


Sources for obtaining business counseling. 45% of the weavers seek the advice of other business colleagues, who usually are individuals experienced in their respected fields. 25% of the weavers seek advice from their family and friends. The rest of the 20% have their own lawyers and other professionals. 10% use banks for their professional advice, whereas there are not any associations for the continued commitment and support to the weavers.

Family and Friends 30% Business colleagues Law yer/Professio nal advisor Banks 45% Association

5% 20%


Reasons for obtaining business counseling. 30% of the respondents said that they seek the advice of the experts due to their more knowledge and experience. 25% of the weavers seek the advice as it is cheaper. 30% of the weavers seek advice from a person who is trustworthy. 15% of the weavers seek advice from a person who is of good repute, while 5% of the weavers seek advice from a person due to other reasons.

R e a so n s
M o r e kn o w le d g e a n d e x p e r ie n c e 25% Tr u s tw o r th y Re p u ta tio n in th e area 15% Ch e a p e r 30% O th e r

5% 25%

SBP- BSC, Multan


Khaddi Work Cluster in Multan Major products of the cluster. More 50% of cluster producing rugs and there is only 10% share of carpet in the cluster. Another 35% offers and produces a variety of home textile products in Multan, while there is only minor share of 5% of silk and khaddar in the cluster products.
M ajo r p r o d u cts o f t h e clu s te r

2 3% % Rugs 35% Carpets 50% Home tex tiles Silk Khaddar 10%

Direct sale to the consumers. More than 90% of cluster actors have no facility and arrangements for selling products directly to the consumers, and depend on the middlemen.10% of the actors who have state-of the- art facilities for selling their products in the local and foreign markets. Micro, Small and Large scale enterprises sell products through door-to-door selling, small shops and big showrooms.

S a le to th e c o n s u m e r s

100% 80% 60% 40% 20% 0% Yes 10%



Exploitation and unacceptable demands by the middlemen. Due to non availability of facilities for direct sale to the consumers, 97% of the weavers complained of exploitation by the middlemen, which are in the form of bad debts and offering of low prices to weavers.

Expolitation by the middlemen

100% 80% 60% 40% 20% 0%


3% Yes No


Raw material suppliers. 65% of the weavers purchase raw materials from local vendors, which are situated in Dehli gate and Mumtazabad. These markets consist of wide variety of products of qualities of Local and foreign markets. 35% of the weavers purchase threads from Faisalabad and Lahore. However, in case of orders it is normal practice that the order placement party is responsible for providing raw materials to the weavers. Terms for purchase/sale. On both backward and forward side, 76% of the order placement and order receiving parties work on cash basis, and do not deal on credit basis. 24% of the weavers deal on credit basis.

R a w m a t e r ia l s u p p lie r s 80% 60% 40% 20% 0% S e r ie s 1 L o c a l Pa r tie sN a tio n w id e Pa r tieo r e ig n Pa r tie s Fs 65 % 35% 0%

Terms for Purchase/S ale 80% 60% 40% 20% 0% Series1 C ash basis 76% C redit basis 24%

SBP- BSC, Multan


Khaddi Work Cluster in Multan


APP (Average Payment Period) and ACP (Average Collection Period). 70% of the parties which deal on credit basis normally collect their outstanding payments in the normal course of 7-14 days. 25-30% parties who collect their amounts in 15-30 days, while only a fraction of 5% of the wavers receive their payments in more than 30 days. Collection and payment methods of credit proceeds. As we have already mentioned that majority of their dealings are on cash basis so 5% of the weavers settle their credit proceeds in from of cash. 25% of the weavers belonging to the medium and large scale enterprise use banking channels for settling their credit proceeds. Payment of Income Tax/Sales Tax. Only 10% of the weavers pay income/sales tax. 30% of the weavers do not pay any tax as their businesses are undocumented and informal. 20% of the weavers do not pay taxes because of the absence of punitive actions against them.10% of the weavers do not pay any tax because they are unaware of the tax rules.

80% 70% 60% 50% 40% 30% 20% 10% 0%


25% 5% 7-14 Days 15-30 D ays M ore than 30 Days

Collectrion/Paym ent Methods to Custom e r 75%

80% 60% 40% 20% 0%




Payment of Income Tax/Sa les Tax

Y es 10% 20% 30% 10% No, because inf ormal bus iness No, mainly beac ause not enough prof it No, because no action is taken against me 30% Doesn't know about the process

Other sources of earnings. 47% of the weavers in the clusters have earning source other than their business while 53% of the weavers have no other source of earning except for their business.

Other source of earnings 54% 52% 50% 48% 46% 44% Yes No S1 47%


Major secondary source of earnings 30% of the weavers are earning through chicken shops apart from the weaving. 30% of the weavers are earning through open vending in which they sale fruits and vegetables in the streets. 30% respondents have grocery shops while there are only 10% of respondents which are earning through other sources. Are you optimistic about the future growth of your business? 65% of the respondents were not optimistic about the future growth of their business while 35% respondents are optimistic about the future growth of business.

Major Secondary Sources

10% 30% 30% Chicken Shop Open Vendor Grocery Shop Others 30%

Optimisim about the future grow th

35% Yes No 65%

SBP- BSC, Multan


Khaddi Work Cluster in Multan

M ajor Exp e ns e s 60% 40% 20% 0% Series 1 Input c os ts 45% Labor costs 35% Energy c harges 20%

Major expenses. Major expenses of the weaving cluster are input, labor and energy costs. 45% of the respondents have input expenses as their major expenses. 35% of the weavers have labor as their major expenses while energy charges are major expense of 20% of the weavers.

Bank Branch availability

Bank Branch availability. 98% of cluster has full coverage of a variety of commercial bank branches, while there is only 2% area in the cluster that is not being covered by the banks.



0% Series1

Yes 98%

No 2%

Bank account. 25% of the weavers have accounts with different type of commercial banks. Since the majority of transactions are on cash basis so 75% of the population do not account with banks.

Bank Account 80% 70% 60% 50% 40% 30% 20% 10% 0% 25% Yes N o


SBP- BSC, Multan


Khaddi Work Cluster in Multan

Tim e duration of bank account

Number of years. Up to 52% of the respondents are maintaining accounts with their banks for the last 5-10 years. 24% of the respondents have bank accounts for the last 1-5 years. 18% of the weavers hold accounts for the last 10-15 years, while 6% of the population is availing bank services for the last 1 year. Sources of funds for start/establishment of business. 68% of the weavers have used borrowings at the time of establishment of their business, while 32% have used their own capital.


6% 24%

Upto 1year 1-5 years 5-10 years 10-15 years


So u r c e s o f f u n d s f o r e s ta b lis h m e n t

32 %

Pe rs o n al Mone y Bo rr ow ing s f ro m f amily an d f r ien ds


Knowledge about financing facilities of commercial banks. 77% of the weavers are fully aware of financing facilities provided by the variety of banks, while there are only 23% respondents who are unaware of the financing facilities by the banks. Knowledge about Microfinance banks. 80% of the cluster actors do not posses any knowledge about the microfinance banks and their products. 20% have knowledge about the Microfinance banks due to awareness sessions or campaigns on union council level.

Know ledge of financing facilities by com mercial banks

23% Yes No 77%

Kn o w le d g e a b o u t M ic r o f in a n c e b a n k s

20% Y es No 80%

Knowledge about the government/non government institutions grants/financing. 63% of the cluster actors have full knowledge about the government and non- government institution financing and grants, while only 37% of the population were unaware of these institution.

Kn o w le d g e ab o u t go ve r n m e n t/n o n g o ve r n m e n t in s titu tio n s

80% 60% 40% 20% 0%

63% 37%

Y es


Bank loan. 73% of the cluster actors were willing to obtain the bank loan for meeting their financial needs and 27% did not express any need for financing facility due to escalation of commitment and availability of personal sources for meeting business needs.

Do you need loan

27% Yes No 73%

SBP- BSC, Multan


Khaddi Work Cluster in Multan

W ether yo ev a p h u er p lied fo a b n lo n r a k a

Application for a bank loan. 70% of the weavers have never applied for any bank loan due to various reasons. Only 30% of the cluster actors have applied for a bank loan. Success in obtaining the loan. After fulfilling all the documentation and threshold criteria, only 15% were successful in obtaining the loan from banks, while 85% of the weavers were rejected by the banks due to an over-valuation of collaterals and variable pattern of incomes. Type of Institution from which the loan was obtained. 55% of the parties get their loan from commercial banks; they belong to the medium and large scale enterprises. 20% actors get their financing from government institution e.g. PSIC. 15% people obtain finance from microfinance banks, while only 10% get grants/financing from NGOs. Collaterals offering. 55% of the respondents used pledge/mortgage as collaterals; the most common were property mortgages. While only 45% respondents used guarantees and crossguarantees for borrowing. Types of fixed assets that need to be financed in the business. 50% of the weavers spend their possible loan amount on the purchase of machinery and equipment e.g. power looms or new handlooms. 50% weavers spend it on the purchase and construction of separate factory, as majority of their current facilities are on rent. Reasons for never applying of a bank loan. 54% weavers have interest considerations in the financing, 20% have no collaterals available for bank financing and 20% doesnt know the exact forum for applying for a bank loan, whereas only 6% dont need any loan due to sufficient resources. Sources for meeting the financing needs. 57% of the weavers meet their business financing needs through open money lending, 24% of the weavers rely on family and friends for finance, while only 19% respondents use their personal savings to meet financial requirements.

3 0% Ye s N o 7% 0

If yes, were you able to obtain the loan 100% 80% 60% 40% 20% 0% 15% Yes No 85%

Typ e of ins titution

10% 20% 55% 15%

Commerc ial banks Mic rof inanc e banks Government ins titutes NGO's

types of collateral

60% 40% 20% 0% Series1

Pledge/Mortgage 55%

Gurantee 45%

Re as o n s f o r n e v e r ap p lyin g o f b an k lo an


6% 20%

Do n't nee d loa n Do es n't know ho w to apply Inter es t b as ed pr oduc ts


No c ollaterals

Source s for m e e ting the financing ne e ds 60% 50% 40% 30% 20% 10% 0% 57%



Family and Open Money Personal Friends Lenders Sav ings

Reasons to obtain financing from informal sources. 37% of the weavers are satisfied with the low cost, 30% of the weavers get it due to its easy availability, 20% are SBP- BSC, Multan satisfied with the flexible repayment patterns, 13% of the respondents are satisfied with its fast processing.


Khaddi Work Cluster in Multan

Re as ons Low cost 13% 37% 20% Flexible repayment patterns 30% Fast processing Easy availability

Satisfied with the terms and conditions of informal financing facilities. 93% of the weavers were satisfied with the present terms and conditions of financing facilities extended by informal sources. While only 7% of the respondents were not satisfied with these sources. Participation in Banks/SBP awareness programs/melas. 94% of the cluster actors dont participate in the banks/SBP awareness programs and only 6% weavers participate in these programs.
Participation in Banks/SBP awareness programs/melas

6% Yes No 94%

Willingness to obtain Shariah compliant Islamic banking products. 97% of the respondents have showed their interests in the shariah-compliant Islamic banking products as a majority of them are maintaining their accounts in the Meezan bank, Multan. Only 3% weavers dont have any interest in the Islamic banks products.

Sh ar iah co m p lian t Is lam ic b an k in g p r o d u cts


Y es No 97%

SBP- BSC, Multan


Khaddi Work Cluster in Multan

Major Cluster Issues

The key issues of the Khaddi cluster are: Technology Issues: Absence of variety of state-of-the-art dyeing units and color testing Absence of modern packaging facilities in the cluster. No R&D facilities and design studios in the cluster.


SBP- BSC, Multan


Khaddi Work Cluster in Multan No awareness or limited use of information technology systems for e-

commerce. Marketing Issues: Exploitation by the middlemen in the market. Middlemens unique system of profit generation on open money lending. Non-availability of display centers, showrooms and buying houses in the Use of outdated designs and used/recycled raw materials. Absence of foreign and sizable orders in the market due to quality and Competition with the power loom cluster. Lack of knowledge about the unique marketing strategies by micro and small Non-availability of marketing professionals in the cluster. Rising competition of Chinese products.

cluster for micro and small weavers.

quantity issues.


Human Resource Issues: Child labor. Long working hours. Health problems. Poor pay structure. Illiteracy. Indifferent attitude of laborers. Lack of technical trainings. Limited role of TEVTA.

Financial Constraints: Open money lending.

SBP- BSC, Multan


Khaddi Work Cluster in Multan Reliance on informal sources. Increased ACP and decreased APP. Non-productive expenditures e.g. health, death and marriage expenses. Lack of awareness about the Microfinance banks operations. Interest considerations on banks financing. Use of cash-based systems in the business. Complex lending criteria of banks. Declining confidence on the banks. Non-availability of collaterals. Limited or no liaison by banks in the cluster. Misuse of loan amount and non-repayment issues. Low profit margin on sales. Higher input costs.

Legal issues: Lawsuits for the repayment of bad debts by the middlemen. Problems with open money lenders regarding under or non-repayment. Litigation with banks.

SBP- BSC, Multan


Khaddi Work Cluster in Multan

Increased educational facilities in the cluster. Child labor should be eliminated in the cluster. Hospitals and dispensaries should be established in the cluster.

SBP- BSC, Multan


Khaddi Work Cluster in Multan A dispute resolution board should be established under the supervision of More and more dyeing plants, chemical testing and packaging plants should be

Town Administrator and SSP (Investigation), Punjab Police, Multan. established under open competition and public private partnership (PPP) which are capable to offer their services at lower prices to the weavers. Establishment of research and development centre, design studios, cooperative Establishment of small chamber of commerce and display centre in the cluster. Independent marketing firms should establish their facilities in the cluster, societies and handloom village in the cluster.

which are capable of maintaining a complete data bank of the weavers and international and local buyers to act as a bridge between the weavers and buyers. Increased role of secondary cluster actors and micro-finance banks. An area-wise/union council level counseling body should be established

comprising seniors of the society for liaison between government bodies, financial institutions and weavers. Each counseling session should be interactive and must be delivered by experts of these organizations who are capable to give comprehensive briefings on modernization of products and bad consequences of open money lending. At the end of sessions, the participants should be awarded with the promotional gifts e.g. key rings, pens. Awareness campaigns should be launched for weavers for using e-commerce Use of electronic media e.g. TV, Radio for giving practical suggestions and Profit-based repayment structure on the financing facility of banks. Islamic micro-finance systems. systems. lectures to the weavers.

A MUDARABA MODEL (trustee financing):Bank provides all the capital and the client provides their expertise and skills. Profits are shared according to a predetermined ratio; loss is entirely borne by the Bank. Now we will see that how this proposed model will work in the cluster:

SBP- BSC, Multan


Khaddi Work Cluster in Multan

Downsize. Etc Loss Banks

Profit sharing Weavers


Sale of Products

Weaving facilities Piecework Basis Products

A MUSHARKA MODEL (joint venture partnership):The Bank and the client will place their share capital together on a joint venture and share the risk and reward according to a predetermined ratio.

Profit/Loss sharing SBP- BSC, Multan 54

Khaddi Work Cluster in Multan



Capital SellingLocal




SBP- BSC, Multan


Khaddi Work Cluster in Multan

SBP- BSC, Multan


Khaddi Work Cluster in Multan TEVTA, PSIC, SMEDA, APHTMEA, KKDC, TDAP, UCTE, APBUMA Whole sellers

Big Thread merchants & color chemical suppliers LHR, FSD, KHI, SHL Thread merchants and local chemical suppliers, Multan Loom parts suppliers (Multan)

Master Weaver


Dyeing (Tube dyeing, Hank dyeing, Cone dyeing)


Display centers Weavers produce products

SBP- BSC, Multan


Khaddi Work Cluster in Multan


Survey list
Sr no. 1 Name and Address M/S Gultex, Vehari Road, Multan Owner name Sohail Tareen No. of hand looms 120 Main Products Bed sheets & Home textiles Size of Contact business Number Large 03008735056

SBP- BSC, Multan


Khaddi Work Cluster in Multan 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 M/S Mohammad Ali, Mominabad, Multan M/S Bagh Ali, Mohallah Ahmed Pura, Samejabad, Multan M/S M.Khursheed, Mohallah Qadirabad, Samejabad, Multan M/S Nasir Iqbal, Mohallah Zikriya, street No. 6, Makhdoom pur Pahooran M/S M. Manzoor, Khooh Jamal Wala. Kohi Wala, Kabir Wala M/S Manzoor, Mominabad, Multan M/S Mohammad Bashir, Mohallah Din Pura, Samejabad, Multan M/S Sheeraz Ahmed, Mohallah Hussain Pura, Samejabad, Multan M/S Mohammad Ilyas, Mohallah Mughal Pura, Samejabad, Multan M/S Mohammad Abbas, Bismillah Colony, Samejabad, Multan M/S Tariq Chohan,Bismillah Colony, Samejabad, Multan M/S Bashir Ahmed, Mohallah Javed Nagar,Sameejabad, Multan M/S Mohammad Din, Mohallah Din Pura, Samejabad, Multan M/S Abdul Sattar, Mohallah Din Pura, Samejabad, Multan M/S Mohammad Yasin, Mohallah Din Pura, Samejabad, Multan M/S Baba Shaukat Ali, Mohallah Din Pura, Samejabad, Multan M/S Javed Iqbal, Mohallah Din Pura, Samejabad, Multan M/S Javed urf Qadoos, Mohallah Sharif Pura, Samejabad, Multan M/S Fateh Mohammad urf Phatto, Mohallah Sharif Pura, Samejabad, Multan M/S Nathho, Mohallah Sharif Pura, Samejabad, Multan M/S Haji Hidayat and Sons, Moham mad Ali Bagh Ali M.Khurs heed M. Nasir Iqbal M.Manz oor Manzoo r Moham mad Bashir Sheeraz Ahmed Moham mad Ilyas Moham mad Abbas Tariq Chohan Bashir Ahmed Sajid Ali Abdul Sattar Moham mad Yasin Baba Shaukat Javed Iqbal Javed urf Qadoos Fateh Moham mad urf Phatto Nathho Haji 10 6 12 1 1 4 17 12 4 4 12 2 16 2 10 11 5 5 6 Khais/Durre e Durree Durree Khais Khais, Durree Khais, Durree Durree Durree Durree Durree Durree Durree Durree Durree Durree Durree Durree Durree Durree Medium Small Medium Micro Micro Small Large Medium Small Small Medium Micro Large Micro Medium Medium Small Small Small 03036908150 03336178608 03226162110 03027493256 03067436558 03217025981 03008631951 03216309645 03006326074 03366326074 03336151080 03055320632 03007363377 03006344580 03017460716 03006390578 03006309646 03127128555 03366005233 03457464281 0333-

21 22

4 5

Durree Durree

Small Small

SBP- BSC, Multan


Khaddi Work Cluster in Multan Mohallah Rehman Pura, Samejabad, Multan M/S Artex, Khanewal Road, Multan M/S Khawaja Tex, al Road, Multan M/S Ampala Fabrics, Vehari Road, Multan M/S Paradise Factory, Manzoorabad, Multan M/S New Tex Mohallah Rasta Syed wali near jalandher ice factory O/S Delhi Gate, Multan M/S Farooq tex chowk fowara, Multan M/S Irshad Ahmed Mohallah chah basin das chowk shahdeen, Multan Ghulam Mustafa, Mohallah gharibabad chah muqadam Wala near Masjid Al-Farooq, Multan M/S Khurshid Ali Aziz colony Sharif Pura , Multan Allah Rakha, Aziz colony, Sharif Pura, Multan M/S Faqir Mohammad, Chah muqadam Wala Mohallah gharibabad, Chowk shahdeen, Multan M/S Ghulam Mohammad, Aziz colony, Sharif Pura, Multan M/S Amjad Sheikh No.1523, Railway road, Multan Muneer Ahmed, Aziz Colony, Sharif Pura , Multan M/S Fayyaz Hussain No.1554 Chah Muqadam Wala, Chowk shahdeen, Multan Hidayat S.Ghula m Nasir Shah Kh. Moham mad Rafi Dr. Nasir Mehmo od Abdul Rashid Abdul Hakim Moham mad Siddiqui Irshad ahmed Ghulam Mustafa Khurshi d Ali Mian Allah Rakha Haji Faqeer Moham mad Ghulam Moham mad Moham mad Amjad Sheikh Muneer Ahmed Fayyaz Hussain 40 31 Bed sheets and Home Textiles Bed sheets and Home Textiles Bed sheets and Home Textiles Bed sheets and Home Textiles Bed sheets and Home Textiles Bed sheets and Home Textiles Bed sheets and Home Textiles Bed sheets and Home Textiles Cloth Cloth Bed sheets & Purdah cloths Bed sheets & Purdah cloths Handkerchie f (Roomal) Handkerchie f (Roomal) Durree Large Large 7635672 0614511158 0616222573 2 03006325432 03136045456 03326084161

23 24




26 27 28 29 30 31 32 33

35 30 37 4 4 3 3 8

Large Large Large Small Small Micro Micro Small


34 35

2 6

Micro Small

36 37

4 8

Small Small

SBP- BSC, Multan


Khaddi Work Cluster in Multan 38 39 40 41 42 43 M/S Abdul Sattar Aziz Colony, Sharif Pura, Multan M/S Abdul Rashid, Aziz Colony Sharifpura, Multan Muhammad Shafi, Aziz Colony, Sharifpura, Multan M/S Ahmed Din, Muslim Colony, Manzoorabad, Multan M/S Khalid Weaving factory, Masoom Shah Road, Multan M/S Riaz Hussain Mohallah Gharibabad No. 1554/A Chah Muqadam Wala chowk shahdeen, Multan M/S Shahzad Durree house Mohallah qasab Pura O/S Khuni Burj, Multan M/S Abdul Majid Street No. 3/B Main Road Sharifpura, Multan M/S Noor Mohammad near shah khurram colony O/S Khuni Burj, Multan M/S Mohammad Ismail, Momin Abad, Multan M/S Azmat Rasool Khan Bukhari Masjid, Sharif Pura, Multan M/S Muzamil Rasool Gali No, 19 Sharifpura, Multan Mohammad Hussain, Gali No. 17, Sharifpura, Multan M/S Mohammad Yousaf Khooh Phindi Wala, Sharifpura, Multan M/S Sardar Gali No. 16 Sharifpura, Multan M/S Noor Mohammad, Gali No. 13 Sharifpura, Multan M/S Jan Mohammad Gali No. 13, Sharifpura, Multan M/S Abdul Haq Gali No. 8, Abdul Sattar Abdul Rashid Muham mad Shafi Ahmed Din Hakim Moham mad Khalid Riaz Hussain Moham mad Yousaf Abdul Majid Noor Moham mad Moham mad Ismail Azmat Rasool Muzami l Rasool Sufi Muham mad Hussain Sufi Moham mad Yousaf Baba Sardar Noor Moham mad Jan Moham mad Abdul 2 4 3 4 40 6 Bed sheets Bed sheets Bed sheets Bed sheets Bed sheets Bed sheets Micro Small Micro Small Large Small

44 45 46 47 48 49 50

8 4 10 3 2 2 2

Durree Durree Durree Putkay Putkay Putkay Mushadi

Small Small Medium Micro Micro Micro Micro




52 53 54 55

2 2 4 4

Mushadi Mushadi Mushadi Handkerchie

Micro Micro Small Small

SBP- BSC, Multan


Khaddi Work Cluster in Multan Sharifpura, Multan M/S Mohammad Ali, Gali No. 5, Sharifpura, Multan Allah Rakha, Mohallah Din Pura, Samejabad, Multan M/S Zulfiqar Ali, New Nazimabad Near Pir Mastan Shah, Multan Karam Din Gali No. 19 Sharifpura, Multan M/S Talib Hussain Mohallah Husain Pura, Samejabad, Multan Haq Moham mad Ali Allah Rakha Zulfiqar Ali Mian Karam Din Talib Hussain f (Roomal) Handkerchie f (Roomal) Durree Suiting Khais Durree

56 57 58 59 60

2 5 12 2 7

Micro Small Medium Micro Small

Product wise cost/profit structures of handlooms products Product name Carpet Bed *Cost/profit structure based on estimates Raw Labor Total Sale Profit material charges cost price 750.00 1900.00 2650.00 2750.00 100.00 270.00 55.00 325.00 400.00 75.00 Int. prices $12.5$1000 $29062

SBP- BSC, Multan

Khaddi Work Cluster in Multan

sheets Rugs Foot mat Khais Durree Cushion covers Curtains Mushadi

80.00 50.00 150.00 220.00 35.00 280.00 1200.00

60.00 35.00 75.00 230.00 22.00 70.00 225.00

140.00 85.00 225.00 450.00 57.00 350.00 1425.00

160.00 100.00 250.00 500.00 68.00 420.00 1900.00

20.00 15.00 50.00 50.00 11.00 70.00 475.00

$500 $100$2000 $150$450 $60$100 $7$15 $8$32 $4$40 $195$500

*based on the respondents opinions and estimates.


Name: Mobile # Age: __________________

SBP- BSC, Multan


Khaddi Work Cluster in Multan Educational Qualification: Address: General Information:1How did you enter in this business? Self Start 2Family business

How long have you been doing this business? 1-5 Years 5-10 Years More than 10 Years


What is your form of business organization? Sole Proprietorship Partnership Company


What is the nature of your business premises? Rented Ownership


What is the market value of your business premises? __________________________________


What is the size of your business premises? Single Person 5-10 Operated 711-25 More than 50 Persons Persons Persons

Do you hire labor or use family persons in business operations? Laborers Family Persons


What is the pay structure in your organization? Piece work Basis Week end Basis Month end Basis


What type of looms do you use in your operations? Power Looms Hand Looms Foot Looms

10- Is your business seasonal? Yes (Season Time :________) No 64

SBP- BSC, Multan

Khaddi Work Cluster in Multan


Do you have other branches of your business? Yes No

12- Is your business registered with some union or body of association? Yes No

13- Are you satisfied with continued commitment and support of these bodies? Yes 14No

Do you obtain any professional advice for your business? Yes 15No If yes, from whom? Family, Friends, Partners Business Colleagues Lawyers/Professional advisors Banks Associations Published journals and booklets Others: ____________________


You mentioned that you relied most on ______ (from above). Can you tell us why? More knowledgeable, experienced Trustworthy Reputation in the Industry Cheaper

SBP- BSC, Multan


Khaddi Work Cluster in Multan Others: _______________ 17Are you currently paying for such business advisory service? If yes, how much? No Yes. Cost: __________________,

18- How satisfied are you with your business advisory service? Extremely Satisfied Not satisfied Not Applicable 19 How many competitors do you have and what is the geographical concentration of your competitors? One to five Five to ten More than ten Satisfied Average

Extremely not satisfied

Geographical concentration __________________ 20Do your workers have some skills and experiences? Yes 21No

Do you and your laborers have some technical training from any institute? Yes No


What are your major products? Carpet and Rugs Home TextilesJute

Cotton Silk

Garments & Embroidery 23-

Others ____________________

What is the nature of your product? Intermediate product Final product


Who are the major customers of your products? Wholesalers Exporters Distributors Local Shopkeepers

SBP- BSC, Multan


Khaddi Work Cluster in Multan 25Do you sale any products directly to consumers? Yes 26No

Do you face exploitation and unacceptable appeals of reduction in the sale price at the time of selling to purchasers? Yes No


Who are your raw materials suppliers? Local Vendors Foreign Vendors Nationwide Vendors


Do you purchase on cash or credit? Cash basis Credit basis

29- If you purchase on credit basis, then what is your average payment period? 16-30 days 3030-60 days 90 days More than 90 days

Do you sale on cash or credit basis? Cash basis Credit basis


If you sale on credit basis, then what is your average collection period? 10-30 days 20-60 days 70 days More than 70 days


What methods do you usually use to collect/pay due money to your customers? Cash Cheque Banks funds transfer system Others: _________________


Do you maintain proper books of accounts for your business?

SBP- BSC, Multan


Khaddi Work Cluster in Multan Yes No

34- If yes, then do you determine the profitability of your business after the end of some specific time period? Yes (Time Period :________) 35No

What is the average annual revenue for the last three years? Less than 5 Lacs 5 Lacs to 1 Million 1 Million to 1.5 Million More than 2 Million


What is the percentage growth/decline in your income? Less than 1% 1% to 5% 5% to 10%

37- Which channels do you use for communicating with your suppliers and or customers? Personal visits Visit by an employee Telephone Courier Others: ____________ 38Yes Does your business pay Income Tax? If not what is the main reason? No, because Informal No, mainly because not Business enough profit Does not know the process

No, mainly because no Action is taken against me Others: ____________________ 39-

Is your business registered for GST? Yes No 68

SBP- BSC, Multan

Khaddi Work Cluster in Multan


Do you have any computerized systems in your business operations? Yes No


Do you have any other sources of earning? Yes No


If yes, then please mention the sources? _______________________________________


Are you optimistic about the future growth of your business? Yes No


Do want to discontinue your business? Yes No


If yes, then please mention reasons for the same? _____________________________________

46- Do you have any plans to invest further in your business? Yes 47No

How do you dispose wastage of your products? Sale to Shopkeepers Sell to companies for further processing


Your major expenses are related to? Energy charges


Labor cost


Who will take over the business after you? Son/Daughter Brother or other family member Friend

Others: ________________ Access to Finance:69

SBP- BSC, Multan

Khaddi Work Cluster in Multan


Is there any bank branch within the radius of 5-10 KMs of your area? Yes No


If yes, then please mention its name? ________________________________________ Do you have a bank account? Yes No

If Yes, Please mention Personal A/C Business A/C

Use of account in business affairs? Personal A/C Business A/C

53- If yes, then for how may number of years you are using this account? Up to 1 Year 1-5 Years 5-10 Years 10-15 Years

54- What sources of funds did you or your forefathers use to start/establish this business? Personal money Borrowed from banks /financial Institutions 55Pool of funds by partners Borrowed from family and friends

Funded by someone else

Are you aware of financing facility extended by the banks? Yes No


Do you know about the SME banks and microfinance banks? Yes No


Do you know about the financing facility extended by these banks? Yes No


If yes for both, then what is the source of this information? 70

SBP- BSC, Multan

Khaddi Work Cluster in Multan

Bank Staff TV/Radio



News Papers

Others _______________

59- Do you have any awareness about the government institutes grants/financing? Yes 60No

Did you ever receive any grant/financing from government sector? Yes No


If yes, was it sufficient to meet your financial needs? Yes No


Did you ever attend Banks/SBP awareness programs/melas? Yes No


If yes, was it effective in improving your understanding about the financing facilities? Yes No


Do you need bank loans to invest in your business? Yes No


If yes, whether you ever applied for bank loan? Yes No


If yes, were you able to obtain the loan? Yes No


If no, what was the reason for rejection at that time? ______________________________________________________


If you were successful in obtaining the loan, what was the time spent in obtaining the loan? Up to 15 days 16-30 days 31-60 days More than 60Days 71

SBP- BSC, Multan

Khaddi Work Cluster in Multan


Whether you used some reference to obtain the loan? Yes No


Whether you used undue consideration to obtain the loan? Yes No


The type of bank from which the loan was obtained? Commercial Banks NGOs Micro-Finance Banks Government Institutions


What type of collaterals did you offer at the time of obtaining the loan? Pledge/Mortgage Others___________ Guarantee


How much time has passed since you obtain you first loan? 1 year 3-5 years 6-7 years
Over 10 years


Whether the amount of loan obtained was sufficient to meet the financing requirements?

Yes 75-


At present, what are the types of fixed assets that need to be financed in your business? Machinery and equipment Buildings Office or business equipment Others: _________________


Are you satisfied with the terms and conditions of financing facilities of banks? Yes No


Are you satisfied with the quality of service and products of your banks? Yes No


Does the bank staff pay visits or keep liaison after grant of loan?

SBP- BSC, Multan


Khaddi Work Cluster in Multan Yes No

79- Do you want to obtain further financing facilities of banks to meet your future growth prospects? Yes No

80- If you have never applied for the bank loan, then what are the reasons for the same? Dont need loan Dons know how to apply Interest based Products Procedure Others ___________________ 81If you have never applied for the bank loan, then how do you meet your financing needs? Family & Friends Open Money lenders Personal Savings

No Awareness No Collateral


Others ____________________ 82Are you willing to obtain the interest free Islamic banking products? Yes 83No

Did you ever default on the loan obtained from the bank? Yes No


If yes, then please mention the reasons? ______________________________________________


SBP- BSC, Multan


Khaddi Work Cluster in Multan

Hand loom survey list prepared by Chaudhry Taj Mansha (General Secretary), APBUMA, Head Office Multan (Apbuma.org) Imran Cheema, Project Manager, AHAN Project SMEDA Office Multan (Sameda.org.pk)

SBP- BSC, Multan


Khaddi Work Cluster in Multan

Tashfeen Peerzada, PSIC UNIDO Diagnostic STUDY on Handloom sector of Multan (unido.org.pk) KHADDI CRAFTS DEVELOPMENT COMPANY (khaddicrafts.com) WIKIPEDIA.ORG TEVTA (tevta.gop.pk) JAVED IQBAL, EX CHIRMAN, APHTMEA MULTAN OFFICE TDAP (tdap.org.pk) Atta Ullah Qureshi (Joint Director) Punjab Small Industries Corporation (PSIC), Multan Office (psic.gop.pk)

SBP- BSC, Multan