The textile sector enjoys a pivotal position in the exports of Pakistan. In Asia, Pakistan is the 8thlargest exporter of textile products. The contribution of this industry to the total GDP is 8.5% i.e. 46%. It provides employment to about 15 million people, 30% of the country with work force of about 49million. The annual volume of total world textile trade is US$18 trillion which is growing at 2.5 percent. Out of it, Pakistan’s share is less than one per cent. The development of the Manufacturing Sector has been given the highest priority since Pakistan’s founding with major stress on Agro-Based Industries. For Pakistan which was one of the leading producers of cotton in the world, the development of a Textile Industry making full use of its abundant resources of cotton has been a priority area towards industrialization. In Asia, Pakistan is the 8^th largest exporter of textile products. At present, there are 1,221 ginning units, 442 spinning units, 124 large spinning units and 425 small units which produce textile products. 3% of US imports regarding clothing and other form of textiles is covered by Pakistan. Major home linen exporting countries include: China, India, Pakistan and Turkey. During FY10, total textile exports accounted for 9.5% of the GDP.

The industry consists of large-scale organized sector and a highly fragmented cottage / small-scale sector. The various sectors that are a part of the textile value chain are: Spinning, most of the spinning industry operates in an organized manner with in-house weaving, dyeing and finishing facilities. Weaving comprises of small and medium sized entities. The processing sector, comprising dyeing, printing and finishing sub-sectors, only a part of this sector is operating in an organized state, able to process large quantities while the rest of the units operate as small and medium sized units. The printing segment dominates the overall processing industry followed by textile dyeing and fabric bleaching. The garments manufacturing segment generates the highest employment within the textile value chain. Over 75% of the units comprise small sized units. The knitwear industry mostly consists of factories operating as integrated units

(Knitting + processing+ making up facilities). The clothing sectors both woven and knits are mainly clustering in Karachi– Lahore and Faisalabad.

Due to the sector's high share in exports (~52%), it has strong bargaining power with the government, which has resulted in favorable domestic policy formulations. Moreover, efforts to achieve preferential access to EU market materialized, but the legislation has been challenged by

Competing EU countries. Rising cotton prices have pushed raw material costs substantially high, making it difficult for small players in the industry to survive.

Pakistan is the world’s 4th largest producer and 3rd largest consumer of cotton (~12mln

bales/yr), with the third largest spinning capacity in Asia after China and India, and contributes 5% to the global spinning capacity. The Textile and Clothing Industry has been the main driver of the economy for the last 50 years in terms of foreign currency earnings and jobs creation.

Export of Textile and Clothing (Us $ millions)

GROUP PROFILE

Established in 1962 as a fabric trading business house, Yunus Brothers soon become one of the largest conglomerates in Pakistan. Yunus Brothers Group, with investment in Textiles, Cement, Construction, Real Estate, Energy, and Commodity trading business has an annual turnover which exceeds US $ 750 million.

Yunus Brothers Group is one of the largest export houses of Pakistan that has grown up remarkably over the last 50 years. The YB Group is engaged in diversified textile manufacturing activities consisting of Spinning, Weaving, Processing, Finishing and Stitching. The Group also owns one of the largest cement manufacturing plant and the second largest yarn manufacturing capacity in the Country. Besides manufacturing, the Group is also engaged in International Trading of various commodities.

OTHER BUSINESS:

Yunus brothers group consists of a number of industrial establishments other then ytml which include:

· Lucky textile mills

· Fazal textile mills limited

· Gadoon textile mills limited

· Lucky energy (private) limited

· Lucky cement limited

COMPANY PROFILE

YUNUS TEXTILE MILLS

Yunus Textile Mills Limited (YTM) is a vertically integrated textile mill located in Karachi, Pakistan. The company, with annual production capacity of 100 Million meters, is the largest exporter of Home Textile products from Pakistan. In addition to manufacturing, YTM also provides its customers design and distribution services with offices based in USA, France, Spain, United Kingdom and Canada.

At present YTM supplies directly to majority of leading retailers of USA and Europe and is producing products for various private and retail brands.

Following the footsteps of its parent company, Yunus Textile Mills Limited started its operations in 1998 and within a short span of time became Pakistan’s largest exporter of Home Textile products. In this short time frame, the company has transformed itself from a supplier of basic bedding products to a world renowned supplier of Home Textile Products to top tier retailers and brands across United States and Europe.

The latest addition to the fleet of Yunus owned companies is Yunus Textile Mills Spinning plant at Karachi, Pakistan, with a total initial investment of US $ 15 million.

4P's
PRODUCT, PRICE PROMOTION, PLACEMENT

GLOBAL PRESENCE

FOREIGN SUBSIDIARIES , OFFICES AND SHOW ROOMS IN:

— NEWYORK

— CANADA

— FRANCE

— SPAIN

SALES, MARKETING AND DISTRIBUTION OPERATIONS:

— Royale Linens, Inc – USA

— Royale Linens – France

— Yunus Textile Limited - Canada

— Enevaditta – Spain

US accounts for 65% of total sales followed by Europe, Canada and Australia are (relatively small markets).

EXPORT PRODUCTS

• Curtain And Draperies

• Bed And Comforters

• Cushions And Pillows

• Kids Zone

• Duvet Cover Sets

• Sheet Sets.

EXPORT MARKETS

US MARKET

The market is more thread count oriented. The most popular and volume driven products is bed in a bag. It consists of 8 components which include:

— comforter (76" x 86")

— flat sheet (81" x 96")

— fitted sheet (54" x 75" x 12")

— 2 pillowcases (20" x 30")

— 2 shams (20" x 26")

— Bed skirt (75" x 54" + 14")

— 18" x 18" square pillow

— 12" x 18" decorative pillow

These components are mostly printed but can be plain dyed also. Other products include:

— Independent Sheet Sets ( Flat Sheets+Pillow Cases)

— Embellished Cushions

— Duvet Sets(Duvet Cover +Shams)

— Curtains ( Lined ,Unlined, Eyelets, Tab Tops.etc)

REASONS FOR CONSUMER PREFERENCE FOR “BED IN A BAG”

— It is a complete solution

— It is convenient and easy to use

— US Consumers don’t want to wash bedding

— US Consumers believe in quick replacement rather than maintaining

— Cheap and easy solution

— US consumer is less hygiene conscious

— Market is less stringent about aesthetics

MAIN CUSTOMERS IN US

US market accounts for almost 60% share in business of Yunus Textile Mills. Their major customers are retailers. Following are some major customers of YTM in US market:

— Wal-Mart

— JC Penny

— Macy’s

— Sears

— Kmart

— Kohl’s

— Target

EUROPEAN MARKET (FRANCE AND SPAIN)

In European market the volume driven product is duvet sets. It consists of duvet cover and shams which are mostly printed. Plain open line sheets are also popular in these markets which are mostly dyed. Apart from that separately packed bedding components are also preferred in this market.

NATURE OF CONSUMER:

— More stringent toward aesthetics

— More hygiene and lifestyle conscious

MAJOR BRANDS IN EUROPE

Europe has Approx.40% Share in Business Value of YTM. Following are major UK retailers who are customers of YTM.

— IKEA

— ASDA

— Carrefour

— Casino

— Conforama

— EI Corte

— Eroski

— Coop Italia

OTHER ASPECTS OF PRODUCT AND SERVICES

· AFTER SALES SERVICES:

After sales services includes trouble shooting and negotiation for markdown on remaining stock.

· PACKAGING

Packaging is usually a clear PVC bag or some times more environment friendly options are used. Elaborate packaging is done for gift or fancy items.

· LABEL

The label inside the clear bag has a visual of all components inside to give customer and idea of the design and color coordination of components and final look.

Language for care instruction varies from retailer to retailer, depending on the target market

— For US : English and Spanish

— For Canada: English and French

— Europe: varies from country to country

— Big retailers insert 3-4 labels to cater wider audiences

EXPORT PRODUCT DESIGN

YTM has in house design studio and facilities for clients who want to avail it. Some clients provide their concept boards and designs are created keeping that concept story in mind. The design team presents these designs and gets them approved for further processing. Approx 40% of clients avail in house design facility while the remaining 60% provides designs of its own or give spec packs for working. Availing of in-house design facility is more favorable for YTM because it Binds the customer, adds value, and Saves costs to both sides.

Big retailers stick to one vendor for one design or product because the extended learning curve effect with production allows suppliers to reduce their costs and share these savings with customers. It includes following:

• Lower total costs

• Higher quality

• Reduced time to market

• Reduced risk of supply disruptions

Big retailers like IKEA train QA teams of the vendor (YTM) so as to cut cost of quality and inspection. These teams then act like eyes and ears for the customer while working in the local facility of the vendor.

NEW PRODUCT DEVELOPMENT

Tools used for new product development are market intelligence i.e. gathering of data regarding customer preferences via sources like sales and marketing team and any other information which is publically available (fashion, color, design, style forecasts).YTM has a (Dedicated Product Development team looking after all the aspects of latest trends in styling, confectioning and packaging requirements.

Market insights are gathered on consumer behavior and product preferences by visiting stores. This helps in generating ideas regarding product possibilities .based on these insights and observations in-house product solutions are developed.

EXPORT PROMOTION

OFFICIAL WEBSITE

YTM maintains its official website to handle customer queries

TRADE FAIRS

YTM promotes itself via following events:

— HEIMTEXTIL(FRANKFURT, GERMANY)

— INTERTEXTIL SHANGHAI (CHINA)

— US MARKET WEEK: “HOME TEXTILES TODAY”, PROMOTES YTM ON 5^TH AVENUE.

Trade fairs help in getting familiar with prospect customers and vice versa. Huge efforts and travelling costs are involved.

TDAP: promotional efforts are there but not as big or effective when compared internationally.

PERSONAL SELLING IS “MOST EFFECTIVE”

CERTIFICATIONS

Certifications also play an important role in successful ordering and attracting customers .certifications communicate an assurances of quality and standard of service level offered.YTM has following certifications:

· ISO 9000:2008

— UKAS: quality management

· OEKOTEX 100

— TESTEX,ZURIC: tested for harmful substances

· SA 8000:2008

— SGS

· GSV (C-TPAT)

— GLOBAL SECURITY VERIFICATION

· GOTS ( GLOBAL ORGANIC TEXTILE STANDARDS)

— IMO VERIFICATION

GREEN INITIATIVES

International customers give great importance and value to the fact the processes carried out by an organization are environment friendly and it performs CSR activities for the betterment of society in which they are carrying out their business. Green initiatives carried out by YTM are appreciated and attracts international buyers who wants to work with green organizations. Following are some environment friendly activities carried out by YTM:

CSR ACTIVITIES

Yunus Brothers Group operates the following charitable foundations and entities:

— Aziz Tabba Foundation

— Tabba Heart Institute

— Aziz Tabba Kidney Centre

— Welfare Programs For Employees

— Partnered With, “The Citizen’s Foundation”, to provide free of cost education to under privileged children

IMPORTANCE OF CERTIFICATIONS AND GREEN INITIATIVES:

Certifications play an important role in promotion and attracting a prospect customer. Some retailers’ pre qualify vendors on the basis of certifications and green activities carried out by them. For example:

— WITHOUT OEKOTEX YOU CANT SELL IN GERMANY

— EFFULUENT TREATMENT PLANT IS NECESSARY TO WORK WITH IKEA

Customer specific compliances are to be fulfilled to get qualified. Retailers rate their prospect vendors on basis of their green activities and certifications. YTM is category 2 supplier for NEXT CO.UK

Employee welfare programs and CSR activities are considered important factor internationally

EXPORT PRICING

v COMPETITIVE PRICING

v PREMIUM PRICING FOR SPECIALIZED OR CUSTOMIZED PRODUCTS

v UNDER PRICING TO DEFEND THE COMPETETION.

SWOT OF YUNUS TEXTILE MILLS

SWOT OF YUNUS TEXTILE MILLS

STRENGTHS

— Modern Infrastructure

— 4 decades of experience in Home Textiles

— Technical and Production capability to handle Volume Business

— In- house water treatment and power generation

— Financial Strength to hold Raw Material Inventory and Safety Stock

— Constant Expansion and investment in new technology

— Design and Product Development Support

— Dedicated Planning Department

— Advantages to Customers

— On Time Shipments

— Shorter Lead Time

— Warehousing and Inventory Management

WEAKNESS

· Less diversity in product

· Lack of branding activities

· Depend majorly on US market for business.

OPPURTUNITIES

— Develop a local brand

— Develop an international brand

— Explore New markets

THREATS

— Cost of doing business

— Un friendly government policies regarding textile sector

— Lack of lobbying by government

— Bad country perception

— Traveling adversaries

PORTER FIVE FORCES ANALYSIS

COMPETITIVE RIVALRY WITHIN THE INDUSTRY

Competition exists between local manufacturers for getting orders from international buyers.

• GulAhmed

• AlAbid

BARGAINING POWER OF CUSTOMERS

History and relationship with customer is important. Bargaining power is high for standard product and low for specialized product.YTM has a cost advantage when it comes to raw material.

BARGAINING POWER OF SUPPLIERS

YTM relies on chemical dealers and packaging suppliers .chemicals are mostly imported but are also bought locally. Bargaining power os suppliers is low since YTM is a huge customer and does bulk ordering.shipping lines and freight forwarders give quantity discounts to YTM.

Some of YTM’s suppliers are:

• Clariant

• BASF

• Packaging suppliers

• Cotton/ yarn suppliers

• Local suppliers for caustic soda and binders

THREAT OF NEW ENTRANTS

Cost of doing business is high which acts as entry barriers. Government policies also play an important role here.

THREAT OF SUBSTITUTE PRODUCTS

Bedding consumes more cotton than apparel which cannot be replaced by synthetics so threat of substitution by synthetics is less.

COMPETITIVE ADVANTAGE OF YTM

· COST EFFECTIVENESS

— Increased Automation

— Improving operational efficiency through better information systems

— Reducing production lead times to minimize inventory cost

· CUSTOMER SERVICE

— Global network to provide design and trend services locally

— Reduce production lead times for timely response to customer needs

— Dedicated Replenishment Analysis teams to provide inventory management solutions and supply chain information to customer

· ENVIRONMENT

— Efficient use and conservation of energy

— Effluent Treatment Plant

— Reducing packaging and/or finding alternative packaging solutions

— Solid waste management systems

RECOMMENDATIONS

The government is considering curative measures on the recommendations of stakeholders to address the problems and issues faced by the textile industry of the country for enhancing its production and exports. For the purpose of this, the Textile Ministry has consulted all textile sector associations and the chambers of commerce and industry. The ministry received recommendations for zero rating on import of textile machinery, zero rating exports, tariff reduction, incessant energy supply to textile units. Issues relating to the market access and quality products with timely delivery and single digit mark up and special power tariff for the textile industry has also been recommended. It has been suggested that textile policy might include the issue like duty free market access to European Union and United States as Pakistan is the largest importer of USA long staple cotton to the tune of $400 million to $500 million every year. In addition, the economic observes believe that the textile sector was passing through a difficult phase due to energy shortage in the country and needed curative measures for promotion.

Some other Specific Recommendations are given as under:

• Remedy though Foreign Direct Investment (FDI)

• Image Building of Pakistan to Attract Foreign Direct Investment (FDI)

• Focus on Value Addition

• Technology Up-gradation & Capacity Building

• Human Resources Development

• Reducing the cost of doing Business in Pakistan

• Need for Improving Textile Production

• Improvement in productivity

• Awareness of International Quality Standards

• Introducing concept of on-the- job-training

• Introducing efficient management techniques

• Subsidy removal should be taken a back

• Interest rate should be low down in order to survive this industry

• Electricity & gas tariff

• Removal of Energy Crisis

• Exploration of new Export Markets

REFERENCES:

· Official website of yunus textile mills: www.yunustextils.com

· March 2011, Sector study, textile sector-FY11, available at: www.packra.com

· May 2010,Research Journal of International Studies - Issue 14 ,available at : www.eurojournals.com/rjis_14_04.pdf

· Yasin Ahmed,Textile Industry Of Pakistan, available at:www.horizonpak.com./db/reports/research.pdf

Posted in: YUNUS TEXTILE MILLS EXPORTS

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Tuesday, December 27, 2011

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