NoorTex Pvt Ltd.

NoorTex Private Ltd.

Group Members:
Aroosha Aslam
Haider Ali
Hamza Mazhar Sheikh
Hina Younis
Jhanzeb Asif
Mustafa Noor
Saman Aslam Khan
Section: H
Course: Industrial Marketing
Instructor: Ali Taimoor Baig

Lahore School of Economics

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Contents
Executive Summary.............................................................................................................3

Company Background.........................................................................................................4

Industry Analysis.................................................................................................................4

Macro-economic analysis....................................................................................................5

Tax issue..........................................................................................................................5
Education.........................................................................................................................5
Competitive......................................................................................................................6
Infrastructure....................................................................................................................6
Customer Relationship management...................................................................................7

Product:................................................................................................................................7

Pricing..................................................................................................................................9

Supply Chain.....................................................................................................................10

Forecasting Demand......................................................................................................10
Raw material..................................................................................................................10
Production and lead time...............................................................................................11
Warehousing and storage...............................................................................................11
Marketing channel partners...........................................................................................11
Logistics.........................................................................................................................11
Promotions.........................................................................................................................12

Buyer seller relationship:...................................................................................................12

NoorTex as a buyer:.......................................................................................................12
NoorTex as a seller:.......................................................................................................13
Appendix............................................................................................................................14

Bibliography......................................................................................................................16
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Executive Summary

This report is based on NoorTex, a textile company that produces cotton yarn. This report
aims to provide insight into the nature of activities and processes in context to Industrial
marketing. The report explores the dynamic realities of the textile industry in which NoorTex
operates.
Textile industry is currently Pakistan’s most important industry in terms of income.
NoorTex is a part of that industry’s production process that started working in 2003. It is a
spinning unit with currently 1500 spindles. Pakistan is fourth largest producer of cotton which
gives advantage not just in exports but in textile as well. Despite that Pakistan is not able to
enjoy its relative advantage because it exports low-value added cotton products due to high
energy prices.
NoorTex is a company that produces and sells cotton yarn, which is produced through an
industrial process called spinning. Spinning is basically the process of converting cotton fibers
into thread. And it has a lengthy process with a lot of steps such as; Blow Room, Bail Beaker,
Mixer, Condensing, Carding, Drawing, MVS. NoorTex differentiates itself with their superior
quality by using updated production technology, work efficiency, and with competitive pricing.
Being a business to business it targets corporate clients or wholesalers. And preferred way of
dealing with clients in one to one meeting. And foreign clients are dealt through email and
samples are shipped to them for testing.
The main customer base of NoorTex comprises of wholesalers and retailers who sell
cotton yarn and thread to weaving factories and textile industry. NoorTex focuses on quality and
offers customization according to the customer’s preferences. When it comes to pricing, prices in
textile industry keep on changing and as there is tough competition due to homogenous product,
the pricing strategy needs to be a dynamic one in which factors like cost, competition and
demand are taken into consideration.
Textile industry has a wide spread supply chain that even crosses international
boundaries. NoorTex lies close to the beginning of the supply chain. NoorTex as a company has
a well-established supply chain that includes foreign and local suppliers, local customers and
logistic partners.
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Company Background

NoorTex Pvt. Ltd was established in 2003 with its head office in Lahore, Punjab.
The head office is based in City towers, Gulberg, Lahore. NoorTex is a textile-based company
which started its operations with trading of cotton yarn. It now deals in all kinds of yarn products
and its production. NoorTex entered into manufacturing in 2007 and initially established a textile
doubling unit with 720 spindles, it was further expanded up to 1500 spindles in 2009. Textile or
yarn doubling is a process which basically means to double the yarn thread in order to increase
its strength for weaving process. Hence, NoorTex became a manufacturer business which adds
value to yarn products. In 2017, the company established a spinning unit with more than 10,000
spindles. The spinning unit is located near Gajumata, Ferozepur road.

Industry Analysis

Textile is one of the most significant manufacturing sectors. It has one of the longest
supplies and production chains which entails many opportunities for value-addition at every
stage of the process[ CITATION Kam18 \l 1033 ]. International economists have reported that
the global apparel market currently accounts for US$ 1.7 trillion. When it comes to Pakistan,
being an agriculture-based country, it has the advantage of being the fourth largest [ CITATION
Eco19 \l 1033 ] producer of cotton in the world. Hence, it has the advantage of obtaining local
raw material as well. The textile sector of Pakistan provides 40 percent of labor force
employment [ CITATION Eco19 \l 1033 ]. The textile sector also accounts for up to 62% of
national export (Ministry of Textile).

However, being the fourth largest producer of cotton in the world, Pakistan is not able to
enjoy its comparative advantage due to the fact that it exports low-value added cotton products.
Hence, the textile industry that suffers from high energy prices, struck up refunds and a tight
monetary policy and taxation, finds it difficult to compete in the foreign markets against
Bangladesh, India, Vietnam and other states in the market[ CITATION Kam18 \l 1033 ]. The
government needs to take serious measures and initiatives in order to safe guard the industry that
is the highest foreign exchange earner and employment provider in the country.
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Macro-economic analysis

There are numerous components whose variation is Pakistan’s external environment

would affect the functioning of the businesses. Pakistan is a developing country who is
struggling in terms of every single pillar that a country needs to stand up.

Tax issue

Overall, taxation has been a problem. This is because the businesses in Pakistan are not
registered. In addition, people whose salaries transact through their bank accounts, are paying
taxes in majority. That too because their taxes are deducted on the exercise of induced
compulsion. So, taxation is an issue. Main issue is of unregistered businesses not paying taxes.
Then, after Imran Khan becoming Prime Minister of Pakistan, new economic policies and taking
the loan from IMF of $6 billion had induced strict form of tax regulation. The new economic
policies called on for 17% sales tax being compounded at every process of business where an
invoice is printed. In addition, the policies also called on to demand the copy of N.I.C. (National
Identity Card) on an invoice generation of more than Rs. 50,000[ CITATION Das19 \l 1033 ].
Although, the allowance of invoice generation without N.I.C. Although, the sales tax policy is
already clocked at 4%. FBR (Federal Board of Revenue) and various chambers of commerce
have had negotiations and the current scenario is the leverage of no N.I.C copy on invoice till
December and 17% sales tax has been compulsory for all businesses. This instant rise in the
prices have resulted in low demand and decline in sales of businesses [ CITATION Tan19 \l
1033 ].

Education

There has been a huge issue of illiteracy in Pakistan since a long time. It is very difficult
for textile sector in Pakistan to upgrade its production process, because as the technicality
increases of the machinery it decreases the labor’s satisfaction as they are unable to cope up with
the technology, reason being the fact that the labor is illiterate to it is impossible for them to
understand the new technology unless they learn the language. Second reason of labor being
resistant to adopt the new technologies is that in Pakistan there is a general concept that if they
accept new technology there will be labor layoff, so to save themselves from that they try to stay
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resistant from learning it. And that causes problem in increasing the production capacity.
This year cotton production remained 9.9 million bales, and the target was 14 million bales,
while the domestic demand is of 15 million bales. This leaves us with a short fall of 5 million
bales which then Pakistan has to import on devalued currency, and just because of not being able
to increase the production capacity[ CITATION Sat19 \l 1033 ].

Competitive
There are approximately 14 firms that function spinning sector of textile. The highest
market share is occupied by Sapphire (20.08 mn) and Nishat (351.60 mn) [ CITATION Sta \l
1033 ]. They are the market leaders. NoorTex’s direct competitors are Ghazi textile and Hashim
Textile.

In this type of competition, the business clients are perfectly aware of the market
situation and the prices. Sudden variation in any factor will affect the firms equally on import
level. All firms must adhere to similar or congruent form of pricing. Greater price gap would
result in either decreased sales or decreased profits[ CITATION Sar19 \l 1033 ].

Infrastructure

In terms of infrastructure, Pakistan has improved a lot in terms of transportation and ease
of accessibility but there is still a lot of work needed in terms of other factors. One of them
being, energy supply. Pakistan is suffering from energy shortfall. This means that the supply is
less, and the demand is more. This leads to increase in use of backup power that is dependent
upon oil prices. Due to which, Pakistani energy rates for both electricity and gas provided to
industries have remained well above against our regionally competitive countries, influencing
Pakistani exports to a disadvantaged position in international market. Increased prices lead to
less sales hence, affecting the businesses. Production cost has increased from 30% to 59% in just
a year [ CITATION Sat19 \l 1033 ].
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Customer Relationship management

The main customer base of NoorTex consists of retailers and whole-sellers of cotton
yarn who sell cotton yarn to weaving factories and the weaving sector. NoorTex focuses on
delivering high quality and value to its customers by offering on time delivery and customization
according to customer’s preferences. The elements that go into customer relationship
management are explained under the following headings.

Product:
NoorTex focuses upon tangible producer goods that are used in the production of finished
goods. The core product line of NoorTex is cotton yarn. “NoorTex focuses upon tangible
producer goods that are used in the production of finished goods” [ CITATION Ras17 \l 1033 ].
There are 7 types of yarns that NoorTex produces; PC (Pure cotton), PP (Poly propylene), PV
(Polyester Viscose), Tinsel, Combed, Carded and Mic (Polyester cotton).

Product Description

Pure cotton It is made up of cotton exclusively

Polypropylene “Polypropylene (PP) is an interesting

yarn raw material for a number of
applications due to properties such as high
tensile strength, low weight compared to other
materials and its resistance against mildew
and the nocuous effects of water” [ CITATION
Ind \l 1033 ].

Polyester Viscose “It is a blend of polyester and viscose.

By blending viscose and polyester to make a
new fabric quality, poly-viscose largely
retains the pleasant drape and feel of standard
viscose, so its touch is quite natural to handle”
[ CITATION Pol \l 1033 ]

Tensil Tensil is not a natural fiber. It is made

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from man made fiber.

Combed (Process based) “Combed cotton is an extremely soft

version of cotton made by specially treating
the cotton fibers before they are spun into
yarn” [ CITATION Wha \l 1033 ]

Carded (process based) Carded cotton is cotton that goes

through a manufacturing process of drawing
out and aligning fibers in a parallel fashion
while removing impurities [ CITATION Ter19 \l
1033 ]

Mic (Polyester Cotton) “Poly cotton — sometimes known as

polycotton or poly-cotton — is a blend of
natural cotton and synthetic polyester. The
blend mixes cotton fibers with artificially
made polyester fibers.” [ CITATION Adv18 \l
1033 ]

The product can be customized according to the customer’s needs. Normally, the
products ordered are based on standardized specification. In addition, after sales service are only
in the case of product quality issue. In this case, the company is liable to take the affected
product back and replace it. Further, the Unique selling point of NoorTex is that they provide fast
delivery in comparison to their competitors. The delivery of the product is the responsibility of
the customer. There are no augmented features. Physical addition only includes packing.

These products are used in the production of fabric suiting, towels, knitted garments,
fabrics, canvas and tents. There is also a new product based on augmented properties; fire
resistant yarn. This is used is jackets used by rescue and fire departments.
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Pricing
Pricing is a very important part of product mix. Especially in the textile industry, as the
prices are not fixed can vary on the basses of the demand of yarn and supply of cotton. Noor
textile use cost-based pricing strategy for deciding the selling price of the yarn. The price of the
yarn also varies on the basses of quality and type of yarn, also known as the count.

For calculating the price of different types of yarns that Noor textile specializes in, all the
costs are added up along with the profit margin to calculate the final cost of the product. These
costs include Labor cost, electricity expense, raw material cost and the packaging cost. in case
the customer demands specific changes to customize the yarn as per there need additional
overhead cost are included in the final price of the product, also known as alteration cost in the
industry language.

The prices of different counts of yarn are based on the cost of the raw material and prices
Offred by the Noor textiles for the yarns the specialize in are as following:

Type of Yarn Price Per Pound

Pure Cotton (PC) Rs.10000-Rs.8000

Poly propylene (PP) Rs.5000-Rs.2000

Polyester Viscal (PV) Rs.100

Tensile Rs.10000

Comb Rs.5000-Rs.2000

Corded Rs.1500-Rs.1000

Mix-Polyester Cotton Rs.6000

The prices of Noor textile are almost alike the prices of their competitors such as
Sapphire textile, Benaco Textile. The point of differentiation that gives Noor textile its unique
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selling point is suppling small orders and delivering the product fast. Competitive to its
competitors who focus on large orders and give second priority to small or medium size orders.
For Noor textile the standard packing for each of the product is 100 pounds bag. Moreover, Noor
Textile also work on credit terms and allow its corporate clients or dealer a credit of 15 days and
30 days.

Considering the type of product Noor textile product the price of the product are no
stagnant for the whole year rather they are flexible based on overall demand of the product and
the price and availability of raw material as due to shortage of local supply of yarn, it is imported
and change in import tariff also effect the price.

Supply Chain
The textile industry has a complex production network which spans across many
businesses and also crosses International boundaries[ CITATION Bib11 \l 1033 ]. A supply
chain generally links many businesses/ companies together, like suppliers, intermediaries,
production facilities, logistic providers, vendors and customers. Within the supply chain there is
exchange of information, physical product and finances. The supply chain components and
decisions of NoorTex are as follows:
Forecasting Demand
Forecasting for the demand of Yarn product is based on seasons. Hence the yarn type that
is expected to have a high demand in summer is produced before summer approaches same is the
case with the yarn demanded in winter. Coarser yarn is used for warm cloths hence its raw
material is prepared before winter season actually starts. Fine yarn is used for summer cloths
hence it is prepared in February and March (a season before the actual season).
Hence the forecast of yarn demand is directly linked to the type of clothes that will be in
high demand in the coming season.
Raw material
Raw material is the basic component for any manufacturing business. When it comes to
NoorTex as it is a spinning and doubling company, its raw materials are as follows:
 Cotton fiber
 Paper cones (that carry the produced yarn)
 Poly poperine bags (for packaging)
 Cartons
Cotton fiber is obtained both from local suppliers as well as imported from foreign
suppliers. NoorTex imports fiber mainly from Bahrain, a textile company named ‘Manama
Textile Mills Company’ is the main supplier from Bahrain for NoorTex. The local supplier for
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fiber to NoorTex is ‘Ibrahim Fiber Company’ based in Lahore. The Paper cones are obtained
from various local suppliers in the market. PP bags and Cartons are also purchased locally.
The orders for raw material are placed according to the estimated forecast of volumes
needed for the demand of yarn to be fulfilled. The order is placed via e-mail as well as call. If the
raw material is ordered from Bahrain it takes 30 days, after the order has been placed for the raw
material to reach NoorTex, and it takes One day if the raw material is ordered from within
Pakistan.
Production and lead time
The raw material is converted into the product which is yarn thread. NoorTex currently
has the capacity to produce 18 bags per day, each bag weighs a 100 pounds. That means an
average order of 100 bags takes 5 and a half day to complete. However if the order is of
customized yarn, it can take longer. For example yarn on ‘baby cones’ instead of standard cones
can take upto 8 days to complete an order of 100 bags. Recently a towel company has placed an
order of 800 bags and it will take 45 days for NoorTex to complete that order.
Warehousing and storage
NoorTex has warehouses that have the capacity to store 2000 bags weighing 100 pounds
each, of finished product that is yarn. The yarn thread can be stored for as long as a year before it
loses its quality. NoorTex also has a capacity to store up to ten thousand kilos of fiber that is the
primary raw material.
A buffer stock of minimum 2000 kg of fiber (raw material) is maintained and at least 200
bags of the finished product is kept as the buffer stock, which can go up depending on the
foreseen demand.
NoorTex closely monitors changing government policies on cotton and other trends that
affect the supply and in turn affect the prices for raw material. If the price is expected to rise in
the coming days, NoorTex purchases cotton and keeps it in storage.
Marketing channel partners
The main channel partners or primary customers of NoorTex are retailers and
wholesalers, who buy yarn products from NoorTex and sell it to weaving factories. Hence
NoorTex does not directly deal with weaving industry, however some cloth producing
companies also purchase yarn from NoorTex, such as towel company.
Logistics
NoorTex has outsourced its logistics needs to a company i.e., ‘Malik Mushtaq Goods and
Transport Company’ the logistics partner is responsible for the transport of incoming raw
material and other goods that include equipment, packaging, cones. However NoorTex does not
offer transport or delivery to its customers, the customers send their own trucks or arrange for the
transport of their bought products.
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Promotions
Noortex have a sales force which works under sales department. Noortex communicates
with customers through meetings, calls and emails. Sales force team visits textile mills in
Pakistan which are or can be potential customers, personally with the concerning person from
marketing department to offer them their products and services.

If the customer is somewhere outside of Pakistan NoorTex sends sample of product to

them via mail so they can evaluate properly before finalizing order. Although till date NoorTex
have not finalized any export deal but they are trying to get it by sending their yarn samples to
foreign textile mills.

NoorTex prefers to visit their customers often during the commitment time period to
build a better relationship with their customers. In business to business dealings face to face is
considered to be more effective and easier and that is what NoorTex does.

Then there is textile fair that in Lahore happens at Expo center every year in which every
small and big company set up their stalls to attract new buyers, as many potential customers visit
these fairs to get knowledge about different textile companies. And NoorTex participates in it
every year.

Buyer seller relationship:

NoorTex as a buyer:
NoorTex purchases cotton Fiber, paper cone, PP bags, shoppers and carton. Cotton fiber
is purchased locally and internationally. A company named Manama in Bahrain is NoorTex’s
major supplier in the international market. NoorTex has been working with Manama since 2007..
The exchange process is usually done via calls and emails. The order is delivered through
shipment.

NoorTex have a long-term relationship with Manama and we intend to keep it. Cotton
Fiber is purchased locally from Ibrahim fibers. They only need a day’s notice to deliver
NoorTex’s product. They have always delivered our product on time. Manama also provide them
with an after sales service; if we ever find a fault in the quality of the product, they always take
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the claim. These terms have made NoorTex loyal to them. Rest of the products are bought locally
from different retailers and wholesalers at a cheaper rate.

NoorTex as a seller:
NoorTex sells cotton yarn to many different wholesalers and retailers. Our main focus as
a seller is on quality of the product. NoorTex provides the best quality product at a cheaper rate.
Many big textile groups such as Sapphire, Shafi textile and Bhanero textile mills are their
competitors. They work on a large scale but NoorTex manages to compete at their level.
NoorTex serve and provide their buyers with the same quality yarn at a better sales service than
our competitors.
NoorTex provides a short-term credit service; payment can be done 15 to 30 days after
delivery of the product. We also provide our buyers the facility to pay in installments, which our
competitors don’t provide as they take cash in advance. Urgent orders are also facilitated. They
also keep a capacity for urgent orders so that if demand increases, they can deal with it.
After sales service is also provided; after the delivery of the product if the customer
claims for an issue in the quality, we take the entire order back and fix the issue. In textile
business there is a rule, that companies don’t load the order after 5pm. If their buyers’ loading
truck reaches after 5pm, NoorTex loads the order to save them with any transportation cost.
NoorTex wants their buyers to remain committed to them. NoorTex take their claims
with open hands. In extreme cases such as if a customer is very upset with the order they
delivered, they refund the amount. All these services have helped NoorTex in building and
maintaining a good relationship with its buyers.
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Appendix
Questionnaire

1. What categories/ types of product do you offer to your customers?

a. Properties of yarn?
b. Do you offer anything other than yarn?
c. Do you offer homogenous yarn product or multiple yarn products & categories?

2. What makes up the complete offering or the ‘actual product’?

a. What payment methods and terms you offer to your clients?

b. What type of packaging is used?

3. How is the product delivered to different types of customers? national & foreign (if
any)

a. What is the delivery period for a routine order that you fulfil?

b. Please tell about your physical distribution channel, or other partners in the channel.

c. On what factors does the delivery period depend on?

4. How are the prices of your products determined?

a. Does the price depend on the volume of order & (or) on the relationship with your
customer?

b. Does the pricing decision depend on the prices offered by competitors?

c. Is raw material and labor cost a major determinant of the product’s price?
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5. How can a new customer reach you and how do you reach out to new clients?

a. Does the company have a retail outlet?

b. How do you maintain long term relationships with your clients and your suppliers?

6. From where is the raw material procured and how does it reach you?

a. How do you place orders? (Routine?) How early before the actual demand arises?

b. How long does it take for the raw material to reach you after you have placed order
with your supplier(s)?

7. How long does it take to covert the raw material into finished product?

8. For how long is the yarn stored? What storage facilities?

9. How much inventory of raw material, work in progress (if any) and finished product is
and can be held in the storage facilities?
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Bibliography

Dastgeer, G. (2019). Textile industry in crisis as owners face heavy taxes. The Express - Tribune.
Economic Survey of Pakistan. (2019). Retrieved from Ministry of Finance.
Javed, O. (2019). Enhancing textile exports. Pakistan Today.
Kazmi, K. H. (2018). Pakistan & Gulf Economist. Retrieved from pakistaneconomist.com.
Sarfaraz, S. (2019). Five export-oriented sectors: sales tax zero-rating regime abolished.
Business Recorder.
Sattar, S. (2019). Impact of PKR depreciation on exports. Business Recorder.
Tanveer, H., & Sattar, S. (2019). Textile sector in dire straits. Business Recorder.