The Impact of Energy Crises on the Textile Sector of Pakistan (2005-2010)

Textile industry of Pakistan has been most adversely affected by the energy crisis hence affecting the exports and international investments in the textile sector. To study the impact of energy crisis on the textile industry, the years under consideration have been divided into two time periods i.e 2005-2007 which is the time period before crisis and 2007-2010 represents the time period after energy crisis. The hypothesis to be tested is the performance of the textile sector has declined after energy crisis. To test the hypothesis, secondary data was collected from 1) annual reports of textile firms that had been chosen randomly as a sample 2) The financial statement analysis report of State Bank of Pakistan (SBP). Ratio analysis was conducted for each of the firm and their average of taken as industry average. Horizontal analysis of profitability ratios, liquidity ratios, solvency ratios and turnover ratios was analyzed which supported the hypothesis being tested and hence it was concluded that the performance of the textile sector has declined from 2007-2010. The paper only confirms that a relationship exists between energy crisis and the textile sector and its direction is negative. However, the intensity of their impact was not measured.

Problem Statement
Among many factors that directly impact stock prices, our area of research is whether energy crisis can be regarded as one of the key determinant of fluctuation in stock market of Pakistan.

Comment [h1]: I think this is here by mistake. This was an abstract of one of the studies that you conducted.

Why this Research is Worthwhile to Conduct

Many researches have been conducted that link energy crisis with profitability of different industries in Pakistan like food industry, textile industry, etc. but such researches are limited to determining the analysis regarding its economic aspect. But no formal research is done to directly link the impact of energy crisis has on KSE index as a whole. So our research is primary research and conducted with the intention to measure this impact as well as to determine that to what extent, this crisis have led to fluctuations in stock prices in Pakistan. This research will appeal to a wide range of individuals and groups especially investors who have invested their money in trading securities. Other potential beneficiaries and users of this research can be government because they apply legislations according to prevailing stock market conditions, general public as they are interested in buying shares of companies, potential new entrants and investors, and different companies as well. Many factors are responsible for creating fluctuations in stock market which includes political instability, business conditions, market psychology, supply and demand of shares, crisis in a

Comment [h2]: Good start. Please try to expand or rephrase this to make it sound more research oriented. WHETHER there is a connection between the two and HOW much of a connection is there are two different things. Do not limit the scope. Try to form an overall broad general statement that explains what is this project/research about.

country, inflation and deflation, etc. But primary focus of our research is to quantify the impact caused by energy crisis on the stock market and conducted with the intent to provide sufficient knowledge and deep understanding of this impact. If we are going to list down major and potential factors that causes stock market to fluctuate badly then we will see through our research that whether energy crisis comes in these major factors or it has just minimal impact on KSE and further we are going to analyze that to what extent, electricity and gas crisis can impact stock prices in Pakistan. Major focus of our research is to analyze this impact as well as to determine the appropriate methodology to determine the level of this impact.

A Brief Overview of the Paper

As mentioned earlier, since its a primary research no direct articles or literature review exists which measures the impact energy crisis has on stock prices of companies in Pakistan. Our research therefore intends to fill this gap by conducting theoretical paper in this area from FY2007 to 2013. We intend on carrying out our research on two prime variables, energy crisis being our independent variable which takes into account the electricity and gas shortfalls. While stock market will be our dependent variable and KSE 100 will be the barometer for market behavior pertaining to the stock prices. The fluctuations in the energy shortfalls will be measured against the changes in KSE 100 index on semi-annual basis. We will study the impact of stock market as a well as its effect on the individual sectors in the stock market. Regression, co relational and ttest analysis will be used to measure the direction and to quantify the impact energy crisis has on stock market. Our research will be using a number of public sources for data collection purposes to ensure its authenticity. This includes Federal Bureau of Statistics of Pakistan (including figures from WAPDA, KESC, KANUPP, CHASNUPP and other private undertakings such as KAPCO and HUBCO), Pakistan Energy Handbook, Pakistan Economic Survey, Economic Indicators of Pakistan issued by State Bank of Pakistan and website and information available from the site of KSE itself.
Comment [h3]: Primary research does exist but on slightly different but related topics.

Comment [h4]: Define the regions that you will take for the purpose of measuring the crisis because the shortage affected different regions differently.

Comment [h5]: Why semi-annual?? Why not monthly or annual or weekly or daily?? Justify this basis. Comment [h6]: Form a hypothesis of which sectors are more affected and which ones are not.

Comment [h7]: Have you consulted these resources? Is the data easily available?

General Feedback: Good start.

Try to define your methodology more precisely. Think of some research models, factors and variables that you can think of. We dont only need to find a link between crisis and performance, we also need to precisely measure the link in isolation from other factors. So try to think more on how can we better explore the data we will get. Create a few hypothesis scenarios and then we can test them and see if they hold or not and why..

Things to focus on 1. Limitations of your research a. Data availability b. Scope (i.e. you cannot pinpoint the precise changes in the stock market and isolate the factors affecting the market (govt policies, terrorism, company financial performance, global recession etc). c. More limitations 2. Problem statement is a good start, but it needs to be a bit more comprehensive. It feels limited to only exploring a link, but we want to do so much more than just find a link, we need to look at what why and how etc.. 3. Title of the project. Should summarize everything
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