2019

Cluster Profile
Hosiery Products Cluster, Faisalabad

Turn Potential Into Profit

Small and Medium Enterprises Development Authority (SMEDA)
Ministry of Industries and Production (MoI&P)
Government of Pakistan


4th Floor, Building No. 3, Aiwana-e-Iqbal Complex, Egerton Road, Lahore
www.smeda.org.pk
P: 111 111 456



 Cluster Profile – Hosiery Products Faisalabad 1

Table of Contents`

1 Description of Cluster 2
1.1 Introduction 2
1.2 Defining the Products 2
1.3 Core Cluster Actors 2
1.4 Other Cluster Actors 3
1.5 Geographical Location 4
1.6 Current Cluster Scenario 4

2 Analysis of Business Operation 4

2.1 Production Process 4
2.2 Raw Materials 5
2.3 Technology Status and Quality Assurance 6
2.4 Marketing & Sales 6
2.5 Financing 7
2.6 Human Resource Management 7

3 Institutional Setup 7
3.1 Entrepreneurs’ Associations 7
3.2 Support Institutions 8

4 Major Issues and Problems 8

5 Investment Opportunities 9

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 Cluster Profile – Hosiery Products Faisalabad 2

1 Description of Cluster

1.1 Introduction
Faisalabad district has made rapid strides in terms of industrial development after
independence. It is also recognized as "Manchester of Asia" for its extensive development of
textile industry. This Industrial development has been made possible by the continued efforts of
pioneering entrepreneurs, business community, Government support and skilled work force.
Hosiery Products are one of the key segment of Textile Apparel Sector, which is a major sub
sector of Textile Industry. Predominantly, hosiery products are made of knitted fabric and
mainly comprises of undergarments and related accessories for male, females and children.
Modern Hosiery Products are usually tight-fitting by virtue of stretchy fabrics and meshes.
Since, Faisalabad being the hub of textile industry in Pakistan and is major producer of all kinds
of fabric to cater for the local demand as well as exports. The existence of strong base of textile
industry in Faisalabad has contributed to emergence of both downstream and upstream value
added textile production in Faisalabad. Likewise, manufacturing of hosiery products is also one
of the major part of this industrial landscape in Faisalabad. The location quotient of investment,
employment and number of textile industrial units have significantly contributed to flourish the
Hosiery Products Cluster. At the core of this cluster there are SMEs with exception of few large
units, approximately 800 Hosiery Units are presently operative and around 500,000 people are
directly and indirectly associated with the cluster. The basic reason for the development of this
cluster in Faisalabad is the existence of a huge infrastructure of Hosiery in formal and informal
sectors.

1.2 Defining the Products

The Hosiery Products are predominantly made from cotton, jersey and fleece fabrics. It mainly
includes the following products:
• Under Garments
• Gloves
• Socks
• Leggings
• Tights

1.3 Core Cluster Actors

The manufacturers of all types of Hosiery Product are the core cluster actors. The major
highlights of the cluster are as follows:

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Table 1: Hosiery Cluster, Faisalabad

Approximately 800 units

Number of Units • Large and Organized Sector: 10 Units
• Rest of all Small and Medium Size Units
Employment Generated About 500,000 people are employed by the cluster.
Production Capacity Approx. Rs. 900-1000 million
Total Investment Approx. Rs. 2500-3000 million
Capacity Utilization 80% to 90%
Source: Pakistan Hosiery Manufacturers Association (PHMA), Trade Development Authority of Pakistan
(TDAP) and Faisalabad Chamber of Commerce & Industries (FCCI).

1.4 Other Cluster Actors

The key cluster support actors who provide support services to the manufacturers of Hosiery
Products mainly includes the Raw Material Suppliers, Finishing & Packaging Material, Chemicals
and Dyes, and Machinery Suppliers.
Table 2: Other Support Actors, Hosiery Cluster, Faisalabad

Description Details
Raw Material Cotton Fabric, predominantly Knitted Jersey, Fleece and Ribs, is the
Suppliers basic raw material required for manufacturing of hosiery products.
There are large number of Textiles Mills who are operating in
Faisalabad. They are not only fulfilling the fabric requirements of
Hosiery Products Cluster Faisalabad but also supply the fabric to other
parts of country as well as exports.
Supplier of Packing The packaging material suppliers are concentrated in Karachi,
Material Faisalabad and Lahore. They produce the PPT Poly Bags and Vinyl Poly
Bags according to the requirements of cluster. Around 25 suppliers are
providing PPT polybags and Vinyl poly bags to this cluster.
Chemical and Dyes To support the large number of weaving/knitting units, suppliers of
Suppliers chemicals dye and coloring products have also mushroomed in the
Faisalabad region. Around 200 whole Sellers of Textile Chemicals & Dyes
are presently operating in Faisalabad.
Machinery Numerous textiles related machinery supplier are found on Railway
Suppliers Road market, Mansoorabad and Samundri road. Most of the machines
are imported and are second hand machines from China.

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1.5 Geographical Location

The cluster is spread around the city; however main concentrations of the hosiery
manufacturers are in the following areas:
• Jinnah Colony
• Ghulam Muhammadabad
• Satiana Road
• Mansoorabad
• Faizabad
• Chak Jhumra
• Khurrianwala
• Sheikhupuraroad
• Samanabad
• Dhudiwala

1.6 Current Cluster Scenario

Like the power loom sector, the hosiery exporters claim their segment is also on the downward
trends and manufacturers are direly needed Government support in reducing the cost of
production to become more competitive in both local and international markets. The hosiery
exporters had been facing financial losses as the rates of yarn had increased in the local market
and the exporters were not ready to purchase products on exorbitant rates.
Subsequently, unfavorable duty structure and taxation is also hampering the manufacturer
drastically. The availability of yarn at competitive prices is the major hurdle for small and
medium units.
The gas tariff is also burdened with various costs but exporters cannot pass on these system
inefficiencies to the international buyers. Dozens of Hosiery factories have been closed in
Faisalabad and hundreds of machines are being sold in parts at junkyards. The industry is still
working on semi-auto conventional production processes. The atomization and technological
advancement is direly needed for progression in the cluster.
Moreover, cluster is suffering from low production due to various internal and external factors
as discussed above. Some business owners are also concerned regarding the power shortages
that they believe is the main underlying reason for performing below capacity.

2 Analysis of Business Operation

2.1 Production Process

Majority of the Hosiery Product manufacturers procure yarn and converts it into grey fabric by
paying conversion charges to the auto / power loom or knitting units. The grey fabric is provided

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to printing and processing unit and printing charges are paid to get printing according to the
given designs and colors.
The other possible option used in the market is to directly buy printed fabric from the market
and convert it into Hosiery Products . Once the product is stitched, final inspection is done. All
the sheets are checked for any defective stitching or loose threads and then they are packed in
polyethylene bags along with insert, which is the printed material with brand name etc. and card
called stiffener.
Figure 1: Production Process Flow Diagram

Grey Fabric Dying Bleaching

Threading &
Final Stitching Cutting
Inspection

Packaging

2.2 Raw Materials

The major raw material for hosiery products include Carded Yarn and Double Knit Yarn count.
These raw materials are easily available from the different spinning mills in the Faisalabad on
credit or cash basis.
Table 3: Major Raw Material, Hosiery Cluster, Faisalabad

Description Sources
Fabric Cotton knitted fabric is used as raw material for the
manufacture of undergarments and other Hosiery Products.
Generally, yarn of count 20s-40s is being used for the
manufacturing of knitted Fabric used in production of Hosiery
Products.

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Packaging Material Packaging material are easily available in the local market.
Packaging material consists of stiffener, which is of cardboard
material, an insert, which is a printed material with company’s
name and design and polythene bag, which is the plastic cover.

Stitching and Other Stitching Thread, Buttons, Zips, Hooks and Elastic are the major
Accessories accessories required in manufacturing of Hosiery Products.
Suppliers of these items are easily available in Faisalabad.
Suppliers are also import these Items from China, Thailand,
Hongkong etc., as per the requirement of manufacturers.

2.3 Technology Status and Quality Assurance

Faisalabad is a pioneer in Hosiery fields and also have adopt modern technology according to all
other countries like Europe, USA and Russia. But technology advancement is only limited to
large r organized units, whereas majority of small size units are relying of low tech conventional
and local machinery. Although cluster has the advantage of abundant raw material and cheap
labor, however, the industry has not exploited the potential in real terms and has failed to make
real progress in the international markets. The old machines need to be changed for increased
productivity and better quality. For cutting procedure electric cutter is also being used, these
cutters are usually imported from Korea, Japan and Germany.

2.4 Marketing & Sales

Faisalabad Hosiery Cluster is targeting both local and international market; around 70 percent of
the total production is exported; whereas 30 percent is sold out in the domestic market. Major
export destination of the Hosiery Products Cluster, Faisalabad are Europe, USA, United Arab
Emirates, Spain, etc.
The major local markets for this cluster are upper Punjab and Karachi region. In order to target
local market, manufacturers have developed a network of distributers across the country.
Usually, 30 days’ credit cycle is maintained in context of local trade. The sales and distribution
network flow in local market trade is as follows;

Producer Distributer Wholesaler Retailer Consumer

Some of the manufacturers also have their own retail and distribution arrangements for
distribution of products.
Although, export agents and local sales agents are also working to facilitate sale of Hosiery
Products. But for export purposes majority of the items are directly exported by the

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manufacturers. Only a small proportion is exported through commercial agents or

intermediaries such as national and international import / export agents and traders. Generally,
60 days’ cycle is maintained for international trade.

2.5 Financing
Generally, investors rely either on their personal investment or friends and family sources of
financing. However, almost all the registered financial institutions of Pakistan have their
branches within the geographical area of the cluster and are providing the financing. However,
financing to hosiery manufacturers is predominantly limited to larger units. Banks are hesitant
to finance the SMEs of the cluster due to small scale of business risk factor. Beside this as most
of organizations are unorganized, therefore they are unable to furnish mandatory
documentation for lending levied by State Bank of Pakistan.
At present, no financial institution has developed / offered any customized lending scheme for
the requirement of hosiery product manufacturers. The available financial products are not
appropriate to cater the requirements of the cluster, especially due to current hike of interest
rates.

2.6 Human Resource Management

The Hosiery Unit sector is the labor intensive sector where the stitchers get on the job training
through Tailor Master. Middle level management is non- existent in this segment; the
entrepreneur himself is the manager. The stitcher in this segment does obtain professional
training. The Master supervisors and managers should be familiar with electronic gadgets
attached to high speed machines including (Jaui, Cutting, Press and Overlock).
The education level of workers / labor working in this cluster is very low, which is a major
hindrance in learning and accepting new tools and techniques. The industry is forced to work on
conventional lines. There are limited vocational training facilities for the training of workers of
this cluster.

3 Institutional Setup

3.1 Entrepreneurs’ Associations

Pakistan Hosiery Manufacturers Association (PHMA) Faisalabad Office

Address: 372/A,Gulistan colony #2,Sheikhupura Road, Faisalabad.
Tel: (+92) 41 8787400
Email: www.phmaonline.com
Web: [email protected]
Faisalabad Chamber of Commerce and Industry (FCCI)
Address: FCCI Complex, East Canal Road, Faisalabad

Small and Medium Enterprises Development Authority (SMEDA)

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Tel: (+92) 41 9230265-67

Fax: (+92) 41 9230270
Email: www.fcci.com.pk

3.2 Support Institutions

Junior Regional Business Consultant – SMEDA

Address: C/o FCCI, Faisalabad
Tel: (+92) 3236054754
Email: [email protected]
Web: www.smeda.org.pk
Trade Development Authority of Pakistan (TDAP) Faisalabad Office
Address: Taj Colony, Shiekhupura Road, Faisalabad
Tel: (+92) 419210202
Email: [email protected]
Web: www.tdap.gov.pk
Punjab Small Industries Corporation (PSIC) Regional Office
Address: Nalka Kohala Road, Faisalabad
Tel: +(92) 41 9220041
Email: [email protected]
Web: www.psic.gop.pk

4 Major Issues and Problems

Financial
No special financing scheme for Hosiery sector has been introduced by any of the financial
institution in Faisalabad. There are two types of systems on which industry is operating. The
units, which are comparatively structured and have a high number of looms, have good financial
strength. These units procure their raw material with their own investment, go for their own
production and earn good margins on the sale of fabric in the local market or by exporting it in
the form of fabric or made-ups.
Whereas, due to lack of finances the small units operate on conversion basis. These units don't
have the financial strength to procure raw material for themselves. The customers provide the
main raw material that is yarn and these manufacturing units just take the conversion charges
for converting yarn into fabric. In this case, the profit margins are limited. On the other hand
these small units get yarn on credit for 10 to 30days hence they procure and sell the product
and payback to yarn supplier.

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Marketing
There is no proper marketing mechanism. Lack of modern marketing and branding techniques is
an issue restricting the growth and development of this cluster, as there is not any specialized
marketing department even in medium level units.
Further, absence of websites, branding and product advertisement, non-participation in national
or international Exhibitions, lack of educated, certified and professionally trained / skilled
workforce makes things more difficult. Trade Development Authority of Pakistan needs to
enhance its cooperation with the manufacturers in international exhibitions.
Technology
Reliance on low technology for the production of fabric heavily influences the quality
standardization of Hosiery Products. Majority of manufacturers are using old machines and the
capacity of these machines is very limited, which is also hindering these units to compete in
both local and export markets.
Technology is not an issue for large scale manufacturers but it is a major constraint for some of
the medium and mostly all of the smaller units working on obsolete technology. The machines
are handmade and take lot of energy, time and manpower to produce designs and accessories
necessary for the Hosiery products.
Human Resource
Human Resources Development is the most critical area of intervention for this cluster. In order
to achieve high degree of value addition the focus has to be laid on structured training programs
with the objective to ensure a consistent supply of well-equipped workforce. Competent HR skill
will enable the cluster to compete in the international markets.
Due to lack of finance and infrastructural facilities at their end, the small companies can only
afford to employ ordinary level workforce. Hence, at the initial stage, an entrepreneur has to
work with relatively unskilled workers. Educated and skilled personnel do not prefer joining
small and medium enterprises, as SME cannot afford their high remuneration demands.
Utilities
The major component for production operation is electricity which is very expensive and affects
the price of finished goods. Same is the case with gas, which is necessary for different machines
and processes such as dyeing and printing etc. Apart from the high prices, the continuous
availability of gas and electricity is also an issue for the cluster.

5 Investment Opportunities

Keeping in view the strong presence of Textile Industry in the area, there is an ample
opportunity for investment in the cluster. Some potential projects for investment are as follows:
Ø Hosiery Stitching

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Ø Apparel Printing Facilities

Ø Online Trading Store
Following Pre-feasibilities studies related to Hosiery sector are available on SMEDA website and
can be downloaded for further information. These documents can be downloaded from
www.smeda.org.pk.
Ø Bed Linen Stitching
Ø Socks Manufacturing unit
Ø Yarn Dying
Ø Fabric Dying

Small and Medium Enterprises Development Authority (SMEDA)