Karachi: The Board of Directors of Dewan Mushtaq Textile Mills Limited has disclosed its unaudited condensed interim financial statements for the first quarter ending September 30, 2023, highlighting the persisting challenges facing the company and the broader textile sector. As the largest contributor to Pakistan's export economy, the textile industry is currently grappling with numerous adversities, including exchange rate volatility and energy price hikes.

The company has reported zero net revenue for the quarter, continuing a pattern that has persisted since operations were suspended in July 2016 due to financial constraints. The prolonged cessation of manufacturing activities has been attributed to a liquidity crunch and working capital issues. These financial statements have been prepared on the basis that these conditions are temporary, with expectations for future recovery.

According to information available from the Pakistan Stock Exchange (PSX), Dewan Mushtaq Textile Mills Limited has approached its creditors in hopes of restructuring its liabilities. The company is optimistic that its restructuring proposals, which exclude interest payments, will be approved by financial institutions, thereby allowing resumption of operations.

The broader economic environment in Pakistan poses additional challenges, with inconsistent policies and rising energy costs impacting industrial stability. The textile sector, which accounts for approximately 60 percent of the country's exports and employs 40 percent of the workforce, has been particularly hard-hit. The industry's woes are further exacerbated by delays in sales tax refunds and power tariffs, which threaten to push manufacturers towards permanent closure, potentially leading to premature deindustrialization.

However, the extension of the GSP+ scheme for an additional four years offers a glimmer of hope. The scheme benefits Pakistan's textile industry significantly, with over 80 percent of the country's EU exports being textile-based. The company anticipates that government initiatives, such as internationally competitive energy tariffs and concessionary financing, will support the sector's recovery and encourage investment in capacity expansion and technological upgrades.