Softwood's Management Report October-December 2023

In the final quarter of 2023, the Pakistani currency achieved stability, and the positive advancements in textile exports indicate promising prospects for future expansion. On the other hand, textile sector faces the looming challenge of rising production costs attributed to the energy crisis. However, these can be managed by effective use of technology, innovative ideas and process improvements. But we have to be very vigilant and keep our fingers crossed in order to cope with current and future challenges.

Pakistan Textile Exports

The last quarter of the previous calendar year witnessed a gradual improvement in textiles exports as compared to the same timeline of year 2022 (source: PBS). This shows resilience and the potential for future growth. However, new challenges necessitate not only innovative thinking but also improved performance.

Pakistan Market Insights

In the local market, cotton prices remained stable during this period due to low purchases by textile mills. Karachi Cotton Association closed the spot rate by 17,300 PKR per Maund on 30-Dec-2023.

The Pakistani rupee achieved stability in the last few months of 2023 after remaining volatile most of the year, closing at 280.97 on Dec 31st, 2023. However, economic trends depict further depreciation of Rupee in the near future.

Due to the huge increase in energy, and gas prices, the textile chain is suffering from a severe crisis. More mills and power looms started closing down. The financial crisis in the market is severe.

Softwood is renovating its existing strategy and embarking on new ways to address the challenges and explore more opportunities like below:

• Knitwear Pilot Project Working:

Since knitwear export has been recorded more as compared to other textile products during last quarter. And future expectations of the hosiery business are more. Softwood has initiated preliminary working on a knitwear manufacturing pilot project. Before this, the organization has successfully started to manufacture trade orders. It is really helping to understand knits business manufacturing challenges.

It is also beneficial to serve buyers for low-quantity knitwear orders with better price margins.

• Denim & Non-Denim Price Challenge Strategy: Customer demands are increasing with better qualities and reduced prices. On the other hand, the overheads increase. This issue has become a challenge with decreasing USD to PKR conversion. With the collaboration of business partners, Softwood is trying fabric arrangements on conversions to take better control on the processes. It may help to meet buyer’s targeted prices and increase sales.
• Marketing Front: New markets (UK, Scandinavian & USA) have been added. There is great scope for Apparel and home textiles sales in these countries.
• Technological advancements for Process optimization: The future of Pakistan’s Apparel industry is intricately tied to technological advancements. Embracing automation, digitalization, and innovative manufacturing processes will enhance efficiency, reduce costs, and improve product quality. Following the above, the Softwood manufacturing unit has started automatic stitching machines in assembly, comprehensive planning sheets, reduced SAM and cut-to-pack lead time, increased efficiency, bare minimum garments rejections, and reduced cost.

For more technological advancements, the company has decided to add a software house business avenue which will explore potential areas of improvement within Softwood and also explore external opportunities. For that, internal training has been started.

• Employee’s Skill Development Program: Effective Managerial Skills training by GELC and Introduction to Management at LUMS have been conducted during this period. These proved fruitful for Managerial, production, and quality staff to understand gaps in performance and continuous improvements. It also helped to visualize quality expectations by buyers and focus on the long-term company goals.?