Finance Essay

1114 words - 4 pages

FINANCIAL PERFORMANCE OF TEXTILE INDUSTRYPakistan's textile industry is going through one of the toughest periods in decades. The global recession which has hit the global textile really hard is not the only cause for concern. Serious internal issues also affected Pakistan's textile industry very badly. The high cost of production resulting from an instant rise in the energy costs has been the primary cause of concern for the industry. Depreciation of Pakistani rupee during last several years which has significantly raised the cost of imported inputs. Furthermore, double digit inflation and high cost of financing has seriously affected the growth in the textile industry.Pakistan is facing high cost of production due to several factors like the hike in electricity tariff, the increase in interest rate, energy crisis, devaluation of Pakistani rupee, increasing cost of inputs, political instability, removal of subsidy & internal dispute. The above all factor increase the cost of production which decrease the exports. Exports receipts decrease from $ 10.2 B to $9.6 B. The global recession also hit badly the textile industry. Double digit inflation also caused decrease in production in textile sector which cause the increase in unemployment level.Tight Monetary PolicyThe continuity of tight monetary policy cause an intensive increase in cost of production. As due to tight monetary policy the interest rate is not consistant &keeps on increasing which increase the cost of production & also the number of debt defaulter. Due to high interest rate financing cost increases which cause a severe effect on production. The withholding taxes of 1% also effect the production badly. The high cost of doing business is because of intensive increase in the rate of interest which has increased the problems of the industry. The record increase in markuprates is one of the major cause of defaults in servicing the loans availed by the industry, hence, the volume of non-performing loans has reached to an alarming situation. The increase in inflation causes the increase in the cost of production of textile good which return in downsizing. The double digit inflation causes reduction in exports of textile.Pakistan textile industry is facing an uncertain environment. Following few factors like increase in input cost of minimum wage by 50 percent, increasing interest rates, non-guaranteed energy supplies, lack of R and D and reduction in cotton production, put a negative impact on the industry's competitiveness internationally, because of the entire situations the companies are downsizing. Production units are being shut down and around 5000000 of the workers lost their jobs. After surviving load shedding now industries have face gas load shedding this also increase their cost so that's why our industry didn't progress and gets into loss.FINANCIAL PERFORMANCE OF CEMENT INDUSTRYCurrently the cement sector is utilizing only fifty per cent of its installed production...

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