INTERVIEW: ASAD PREMJEE, PARTNER IN METCO TEXTILE A LEADING FIGURE IN SPINNING SECTOR
Aug 27 - Sep 02, 2007
Asad Premjee, partner in METCO Textile, a large spinning unit located at Nooriabad Industrial area near Karachi. Asad, actually a young industrialist having a vision to take his business to a greater height, yet he has some reservations especially about continuation of government policies towards the textile sector.
Asad did his schooling from American school in Karachi, and then left the country for higher education in business management from St Thomas University in the United States. His family, the Premjee Family has been evolved in the business since the last two generations. As a business family they started from commodity trading business in the 1950's and then became pioneers in the steel re- rolling and ship-breaking industry of Pakistan under the name of Haydri Group since the early 1970's.
Recently, they have set up METCO Textile, the state of the art spinning unit at Nooriabad with the support of two reputable partners, Swiss and Japanese machines, with its own 5.2 Mega Watt captive power plant. Metco Textile is built on 20 acres and employs 675 people, with an annual turnover of around Rs750 million. Metco textile is producing top quality Hosiery Yarn, and is supplying to both the local and foreign markets.
A huge set up with 25000 spindles working with a rare combination of Japanese and Swiss technology to produce quality yarn on top of the line of various counts including 20-26 and 28. though a bulk of the produce is exported to China, Hong Kong and Russia yet catering to the needs of the local market seems more preferable which is equally good in terms of price because local markets saves various shipment hassles.
Replying to a question, Asad said that there were some interesting developments in the export sector as new openings are in the sight especially in Turkey, Eastern Europe. Asad was of the view that textile industry in Pakistan should not shy in opening trade with neighboring India, or China because their market is so huge that their industry cannot feed even their domestic demand. Hence it is an opening for Pakistan to go ahead with Free Trade Agreement because it would be beneficial for both the countries across the border.
Citing the example of import of long staple cotton for producing yarn of finer count, India could be a better choice in view of its close vicinity where trade could be transpired even through land route of Wahga border.
Cotton, which is the basic raw material for spinning industry, calls for dedicated efforts for producing better yield and free from contamination. While acknowledging a bumper cotton crop this year which initially estimated at 14 million bales this year. Asad however said a better crop is a good sign especially in view of declining the world cotton production, however it does not mean that we would get cotton at a cheaper price in this era of globalization. We are the part of the world market and the word about international prices moves faster than bullet hence the level of price be well tied up with the international prices. Actually, Pakistan being an agricultural country has the potential to achieve better results provided our growers are imparted awareness and knowledge to produce better harvest.
Speaking about outlook of textile industry in Pakistan, Asad Premjee pointed out gray areas, which are actually the cause of concern and hampering growth of this industry. For example, when METCO was set up we have to invest a sizeable amount on development a captive power plant of 5mw for self-power generation. The idea was to get cheaper electricity with ensured supply. However, with a short span of two years the cost of power generation has come at par with KESC due to increase in gas prices. Had the government ensured predictable power supply at a reasonable rate, the industrialist would have concentrate on their core business instead of bothering of power generation etc.
Since the industry has not been provided any sort of subsidy at least it should be supported through reducing the cost of production. The change of certain policies has also adversely affected the performance of the industry, he remarked.
When asked to point out the areas where the government has change its policies, he came out without a pause to refer the unchecked increase in interest rates of the banks' lending which is increasing under the instance of tightening of monetary policy by the central bank. Those who have borrowed say at 6 percent of interest rates have to bear the increased cost even to the level of 12 percent for their working capital. The cost of these basic elements should be predictable at least for export-oriented industries, he suggested.
Another factor, which is increasing the cost of production, is labor cost. Generally, it is said that wages in Pakistan are on the lower side as compared to other countries but practically speaking it is quite different from the general perception. Most of the labor from the rural areas left for their home when the crop of different agriculture produce is ready for harvesting. Hence the remaining workers use this for raising their wages.
Consequently, no fresh investment is arriving in the textile sector because of these irritants. In fact, a huge investment to the tune of $4-5 billion was injected in the textile industry following the phasing out of quota regime in the hope of getting more access in the EU and US market. However that expectations could not be fulfilled due to certain reasons especially due to uncompetitive prices on the back of cost of production in our country. this in a way has given a walk over to our regional competitors in the export market.
There is a need to arrest this growing cost difference between Pakistan and rest of the region to remain in the market, the place for movement for Pakistan products would be reduced further in the days to come, otherwise, Asad sounded a note of warning.
Asad was however full of appreciation of the economic decisions and policies of the present government which in general has given a strong financial base to the country and resultantly improved the image of the economy on international fronts, he remarked.