July 24, 2020 (MLN): The textile sector has an overwhelming impact on the economy, as it contributes nearly 60% to the country’s exports. However, just like any other sector, the textile industry has suffered the brunt of COVID-19 outbreak in terms of loss in productivity and demand, which has had an adverse impact on the economic dynamics of the country as well.
To shed further light on it, BMA Capital Management hosted a webinar on the Textile Sector, wherein it invited the Group CFO of Interloop Limited, Mr. Maqsood Muhammad to share his two cents on the matter.
According to the report published by BMA Capital, Mr. Maqsood said that Interloop had suffered immensely due to the pandemic, as it lost several export orders on account of lower international demand and trade restrictions imposed across the globe. Nevertheless, he informed that the exports had picked up after there was a gradual recovery in the EU, the company’s largest export market, and the USA.
The part of the company that was impacted the most by the COVID-19 outbreak was the denim division, he informed, as it lost more than half of its orders. On the contrary, the hosiery division was the most resilient, as only 15% of its orders were affected.
While the impact of Coronavirus is still being seen in various parts of the organization, Mr. Maqsood informed that the hosiery division has seen considerable improvement as it is operating at over 100% utilization, while the denim department is still recovering and currently operating at half of its total capacity.
Talking further about these two divisions, the CFO said that the hosiery department holds great potential as it is expected to grow by around 20-30% in the next year whereas the denim department is likely to operate at over 85% utilization during the ongoing fiscal year.
As of now, the denim division of the company is incurring losses, but that would change once Interloop manages to get new clients on board. The company is also looking forward to getting new orders for its hosiery division from three new clients.
With regards to the company’s energy requirement, Mr. Maqsood said that out of the total 22MW required, around 14MW is acquired via RLNG whereas the remaining is met by captive solar power units and WAPDA.
Speaking about the company’s future outlook, the CFO said that several countries are trying to diversify their textile orders from China to South Asian markets, which presents an extremely lucrative opportunity for the local textile manufacturers. Besides this, the company is very hopeful about the export potential of the country, especially in socks and the apparel segment.
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