Executive summary

The textile industry is one of the most important sectors of Pakistan. It contributes significantly to the countrys GDP, exports as well as employment. It is, in fact, the backbone of the Pakistani economy. The textile industry of Pakistan has a total established spinning capacity of 1550 million kgs of yarn, weaving capacity of 4368 million square meters of fabric and finishing capacity of 4000 million square meters. The industry has a production capacity of 670 million units of garments, 400 million units of knitwear and 53 million kgs of towels. According to recent figures, the Pakistan textile industry contributes more than 60% to the country total exports, which amounts to around 5.2 billion US dollars. The Pakistan textile industry is currently facing several challenges. According to experts, there is a need for the industry to improve the quality of its products. There is also the need for greater value addition in its products. The growth in the textile exports of Pakistan is gradually declining. Textile exports in Pakistan grew from 8.92 billion USD in 2004-05 to 10.11 billion USD in 2005-06, reflecting a growth rate of 18%. As against this, in the current year, export growth has been only 5%. This is growing to be an issue of concern for the Pakistani government. . Pakistan is World's fourth largest cotton producer and the third largest consumer of the same. Cotton based textiles contribute over 60% to the total exports, accounts for 46% of the total manufacturing and provide employment to 38% manufacturing labor force. The Ministry of textile Industries (MINTEX) is currently in the process of implementing and finalizing various initiatives for the growth of the industry. The story of textiles in the subcontinent is the story of Gul Ahmed. The group began trading in textiles in the early 1900s. With all its know-how and experience, the group decided to enter the field of manufacturing and Gul Ahmed Textile Mills Ltd. was incorporated as a private limited company, in the year 1953. In 1972 it was subsequently listed on the Karachi Stock Exchange. Since then the company has been making rapid progress and is one of the best composite textile houses in the world. Fateh Textile Mills Limited engages in manufacturing, bleaching, dyeing, printing, buying, selling, and dealing in textile, yarn, cloth, and fabric products made from raw cotton and polyester fibers in Pakistan. Fateh Textile Mills Limited now ranks as one of the largest textile manufacturing and exporting Unit in Pakistan. The Company is marketing its products throughout the world specially in Europe, United States

of America and Far-east. The Crescent Textile Mills Limited engages in manufacturing textile mill products. The company involves in spinning, combing, weaving, dyeing, bleaching, printing, stitching, buying, selling, and dealing in yarn, cloth, and other goods and fabrics made from raw cotton and synthetic fibers in Pakistan. It also operates a cold storage facility for farmers. The company was founded in 1950 and is based in Lahore, Pakistan. Liquidity ratios is a financial metrics that is used to determine a company's ability to pay off its short-terms debts obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts. Efficiency ratios are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios can calculate the turnover of receivables, the repayment of liabilities, the quantity and usage of equity and the general use of inventory and machinery. Profitability ratios are financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. For most of these ratios, having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well. Leverage ratio are used to calculate the financial leverage of a company to get an idea of the company's methods of financing or to measure its ability to meet financial obligations. There are several different ratios, but the main factors looked at include debt, equity, assets and interest expense. The equity ratio is a financial ratio indicating the relative proportion of equity used to finance a company's assets.