Lack of investment in IT impedes textile sector’s growth

Published: July 12, 2013
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Majority of the textile businesses in Pakistan are family-owned, which are usually slow to adapt to change, which is why the sector has suffered a lot for the past many years. PHOTO: FILE

Majority of the textile businesses in Pakistan are family-owned, which are usually slow to adapt to change, which is why the sector has suffered a lot for the past many years. PHOTO: FILE

KARACHI: Pakistan’s textile industry was stronger than ever to compete with any regional country, however, lack of investments in information technology was still one of the biggest impediments to growth, Al-Rahim Textile Industries Chief Executive Faisal Rahim Saya said.

“Today, you need to continuously invest to sustain the business. It’s not local or regional, it’s all global now, and only the super fit companies can sustain the onslaught of modern challenges,” Saya said in an interview with The Express Tribune.

Saya, 39, was with his father when he started textile business in 1991 by opening a factory in the SITE industrial area – one of the oldest industrial zones of the metropolis located near the Karachi port. Before entering the textile industry, his father was in the retail and wholesale businesses of car spare parts, sanitary items and hardware.

Saya is a commerce graduate, but was never able to complete his post-graduate studies because of business bindings. He manages the factory with his younger brother and has 1,400 workers. The factory, located in SITE’s Nooriabad area, mainly exports home textile products.

According to Saya, gone are the days when double-books were run. “Today, if you want to grow, you have to make your system transparent,” he said.

Majority of the textile businesses in Pakistan are family-owned, which are usually slow to adapt to change. Because the owners never update themselves or upgrade their businesses to keep up with changing times, the textile sector has suffered a lot for the past many years, he said, adding most textile firms never invest in information technology because such investments need massive one-time outflow while returns come over a long period.

Saya, however, said the textile industry had witnessed some major changes since 2005 when quotas were abolished. In the quota system, only selected manufacturers of value-added products were allowed to export.

Following the removal of quotas, many big names in the textile business went bankrupt, however, the textile industry took a turn for the better and become competitive. Now, WalMart and other leading global retail chains can buy anything from any country without any limitations or quotas.

Being a signatory to the World Trade Organisation (WTO), Pakistan had to adapt gradually to changes that the WTO advocated since its inception in 1996.

“We studied the reasons of downfall of strong companies in post-quota times,” he said, adding “had we not learnt from those case studies, we would have failed long ago.”

Zero-debt company

Al-Rahim Textile Industries is a zero debt company, as its owners believe in doing business purely on equity. The company, in its present state, does not need to borrow from banks, but Saya says they may borrow if they feel any urgent need for it.

The revenue of the company touched Rs6 billion in fiscal year 2011-12, and is expected to touch the same in fiscal year 2012-13, which ended on June 30 this year.

Future investment plans

“Karachi is the ideal location for investments and we wish to invest here, but are hesitant right now,” he said. “We are looking to import coal to run our captive power plants to power the factory and for that Karachi is ideal due to its proximity to ports. On the flipside, Punjab also has appeal because of relatively better security conditions.”

“We want to invest not only in our current units, but also in other
ventures. However, security conditions in Pakistan, especially in Karachi, are pulling us back from investing aggressively. We know we have to invest continuously if we want to sustain and grow our business,” he said.

Published in The Express Tribune, July 13th, 2013.

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Reader Comments (2)

  • Intikhab Raza
    Jul 13, 2013 - 3:37PM

    Mr. Faisal Saya has rightly highlighted many genuine concerns of industrialists operating in our country. Textile industries are the main victim, but so far no concrete solution found by government in terms of law and order crisis. Faisal Saya should have also suggested the ways industrialists can easily handle the existing energy crisis, especially in Punjab.

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  • F
    Jul 15, 2013 - 10:53AM

    This interview of Faisal Saya is very informative, and newspapers must focus on writing on subjects related with possible solutions. Textile industries need drastic measures to improve its performance and export ratio. As Faisal Saya said, our companies must try to stand on their own, rather than using the crutches of financial institutions and banks.

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