In the midst of declining production in the industry due to gas outages, Ashfaq Textile Mills Limited (ATML) has planned to double its production capacity and will invest Rs1 billion to place itself at a competitive position among the textile exporters.
As part of its expansion plan, the company has recently purchased seven acres of land. Currently, the company is operating 240 Sulzer looms and plans to add 260 more, according to Sheikh Ashfaq Ahmad, chief executive officer of ATML. The company will import the machinery from Switzerland at a cost of Rs3 million per machine.
ATML has been a listed company in the Karachi Stock Exchange since 1991. It is one of few companies operating without borrowing from banks, managing to keep the operational cost at manageable levels.
In fiscal year 2012-13, the company’s share price was Rs 10.71; last Wednesday it closed at Rs15 per share. This year the company gave a 33% bonus to its shareholders. According to the annual report 2012-13, the company’s net profit was Rs68.5 million.
In an interview to The Express Tribune, Ahmad said that the company decided to expand its capacity after successfully receiving large amounts international orders.
He voiced hope that with successful expansion the company will fulfil international market requirements.
He said that expansion will be carried out gradually, because the company was doing it on its own without borrowing from the banks. He said the policy of zero bank borrowing was benefiting the company in many ways. Ashfaq said the industries that had obtained loans have to pay a minimum 10% interest, something that ends up being very troublesome for them.
Ahmad said his company was constantly hiring people and the expansion plan will also benefit the unemployed youth.
While other industrialists complain about the adverse implications of the energy crisis, Ashfaq said that there was no doubt that the energy crisis has hit their business the hardest “but we are not relying on the government for electricity.”
The company has installed heavy generators which can run the whole factory without any interruption.
Ashfaq admitted that the energy crisis did increase the cost of production. To operate a factory on electricity from the national grid costs is Rs 13 per unit but to operate the factory on heavy diesel generators costs Rs34 per unit.
“We have no other businesses,” says Ashfaq, “we are just relying on this mill.” He hoped that after approval of the GSP-plus status, industry expected a huge improvement in cash flow.
He demanded of the government to release the billions of rupees to exporters on account of duty drawbacks that were withheld to artificially increase tax revenue.
He said “by withholding taxpayer’s money, the government had breached their trust.”
He demanded a permanent solution to perpetual energy crisis. “an effective solution could substantially increase textile exports which currently stand at $14 billion. If the government could overcome energy crisis, we would have the capacity to increase textile exports $25 billion.
Published in The Express Tribune, November 17th, 2013.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ