CALIK COTTON CORPORATE PROFILE 2014 CALIK COTTON CORPORATE 2014 PROFILE COTTON CALIK
COTTON
ÇALIK COTTON HEAD OFFICE Keresteciler Sitesi, Fatih Cad. Ladin Sok. No: 17 34169 Merter/Istanbul Tel: +90 212 459 26 26 Fax: +90 212 459 26 77 100% SUCCESS Mail: [email protected] www.calikcotton.com 12 ABOUT US 12 ÇALIK HOLDING IN BRIEF 16 OUR VISION, MISSION AND VALUES 18 FINANCIAL AND OPERATIONAL INDICATORS 20 ÇALIK COTTON IN BRIEF 22 THE YEAR 2014 AT A GLANCE
24 MANAGEMENT 24 MESSAGE FROM THE CHAIRMAN 26 THE CEO'S ASSESSMENT OF 2014 28 SENIOR MANAGEMENT
30 OPERATIONS 30 THE COTTON SECTOR IN THE WORLD AND TURKEY IN 2014 34 OPERATIONS IN 2014 34 MARKETING AND SALES 36 PRODUCT DEVELOPMENT 40 HUMAN RESOURCES 100% Success
We qualified in just three months for the AQSIQ certificate, granted to only one or two out of 10 applications received each year.
In 2013, we set the vision of starting to sell in China, and we achieved it.
In 2014, we became a member of the Better Cotton Practices Association (IPUD), the Turkish branch of Better Cotton.
In 2014, we became the first company to export Turkmen cotton to Egypt.
We transported cotton from Turkmenistan to the Lloyd market in UK, under an insurance policy that also covered Iran. Capitalizing on the support of international powerhouse Çalık Holding, we reinforce our successful and stable position in the cotton trade, day by day.
We believe that accessibility is of primary importance, and strive to stand by our clients whenever they need us. As such, we serve our clients with local employees in every country where we operate. TRUST As a highly-skilled and specialized, yet young and vibrant team focused on success, we have a dynamic structure. We consistently take swift action through employees who inspire trust, respect their work, and share a team spirit.
We go beyond borders with our rhythm and pace, and complete our overseas operations successfully. EXCITEMENT Çalık Cotton, with cotton trade as its core business, runs its operations with a view to strengthening Turkey’s position in the world cotton market.
As such, Çalık Cotton has become the first company to receive the AQSIQ certificate, required to export cotton to China, and has obtained the increasingly esteemed Organic Cotton Certificates issued by the Better Cotton Initiative (BCI) and the Control Union (CU). QUALITY We have a superior performance, as one of the companies least affected by exchange rate fluctuations.
In 2014, we expanded our market share by a significant margin. By focusing solely on cotton trade, we continue to work towards our goal of finding new suppliers, countries and markets. PERFORMANCE ABOUT US MANAGEMENT OPERATIONS
10 CORPORATE PROFILE 2014 ÇALIK COTTON FOR DETAILS, CALIKCOTTON.COM
ÇALIK COTTON CORPORATE PROFILE 2014 11 ABOUT US MANAGEMENT OPERATIONS
ÇALIK HOLDING IN BRIEF
A pioneering corporation that continues its ascent with a strong performance in a number of sectors…
AMERICA TEXTILES (GAP MARKETING, ÇALIK COTTON)
ENERGY FINANCE
Çalık Energy Aktif Bank YEDAŞ BKT (Banka Kombetare Tregtare) ARAS EDAŞ Keds
MINING TEXTILES
Lidya Mining Gap Güneydoğu Textile Polimetal Mining Gap Marketing Çalık Cotton
CONSTRUCTION AND REAL ESTATE TELECOMS Gap Construction Albtelecom Eagle Mobile Çalık Real Estate
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RUSSIA CONSTRUCTION (GAP CONSTRUCTION) KAZAKHSTAN FINANCE CONSTRUCTION (AKTIF INVESTMENT BANK) (GAP CONSTRUCTION) FINANCE (İJARA LEASING)
TURKMENISTAN 5 UZBEKISTAN ENERGY (ÇALIK ENERGY-EPC) ENERGY CONSTRUCTION (ÇALIK ENERGY-EPC) (GAP CONSTRUCTION) CONSTRUCTION TEXTILES (GAP MARKETING, Continents (GAP İNŞAAT) ÇALIK COTTON) KOSOVO ENERGY (ÇALIK ENERGY-EPC) FINANCE (BKT)
ITALY GEORGIA TEXTILES ENERGY (ÇALIK ENERGY- (GAP GÜNEYDOĞU TEXTILE) EPC) ALBANIA ENERGY (ÇALIK ENERGY-EPC) IRAQ TELECOM (ALBTELECOM) ENERGY (ÇALIK ENERGY-EPC) FINANCE (BKT) CONSTRUCTION (GAP CONSTRUCTION)
S.ARABIA LIBYA CONSTRUCTION ENERGY (GAP CONSTRUCTION) INDIA 6 (ÇALIK ENERGY-EPC) DUBAI TEXTILES CONSTRUCTION QATAR CONSTRUCTION (GAP CONSTRUCTION) (ÇALIK COTTON) (GAP CONSTRUCTION) CONSTRUCTION (GAP TEXTILES CONSTRUCTION) (GAP MARKETING) BANGLADESH Sectors TEXTILES (GAP GÜNEYDOĞU TEXTILE)
USD 7.5 Billion A local force which Total Assets extends across 5 continents: 24,000 Çalık Holding Employees
ÇALIK COTTON CORPORATE PROFILE 2014 13 ABOUT US MANAGEMENT OPERATIONS
ÇALIK HOLDING IN BRIEF
Established in 1981 by Ahmet Displaying a consistent growth Çalık of the Çalık family, which performance in Turkey and other has held an active track record in countries since its establishment, One of the commerce since the 1930s, Çalık the Group acquired the Albanian largest industrial Holding currently has operations telecom operator and Internet corporations in fields such as energy, mining, provider Albtelecom in 2007; construction and real estate, the Yeşilırmak Electricity in Turkey, Çalık finance, textiles and telecoms. Distribution Company (YEDAŞ) Holding provides providing electricity to five employment One of the largest industrial Turkish provinces, in 2010; the to around 24 corporations in Turkey, Çalık Kosovo Electricity Distribution Holding provides employment to Company in 2012; and ARAS thousand people 24 thousand people in around 17 EDAŞ, operating in seven in 17 countries. nations. As a pioneering Turkish provinces, in 2013. investor in Central Asia, the Balkans, the Middle East and Çalık Holding’s Energy Group, Africa, the Çalık Group has total which maintained its business annual consolidated assets of volume in 2013, due to its USD 7.5 billion. credibility in the world energy
14 CORPORATE PROFILE 2014 ÇALIK COTTON FOR DETAILS, CALIKCOTTON.COM
sector and a work ethic that the first prize winners in the channels category of the sets it apart from competitors, “Best Commercial Renovation/ European Financial Management is among the most-preferred Redevelopment Turkey” & Marketing Association companies in the energy-rich category of the European (EFMA) awards. Çalık Holding’s regions of Central Asia, Middle Property Awards 2013, subsidiary BKT, which operates East and Africa. Çalık Energy among the most prestigious in Albania and Kosovo, won for continued the construction real estate awards in Europe. the third time the “Best Bank” of three power plants begun Çalık Real Estate is active in award bestowed by The Banker, in 2013 in the Turkmen cities land development and urban a highly-esteemed international of Ahal, Lebap and Mari. transformation. financial markets magazine. Additionally, the Group signed agreements for the construction Carrying out its operations In line with its strategy to focus of two new power plants in Ahal in line with proven growth on its core businesses, the Group and Derweze. Having become strategies, Çalık Holding’s divested itself of the Turkuvaz the biggest EPC contractor in subsidiary Lidya Mining Media Group. Georgia with the Gardabani increased its stake in Polimetal project in 2013, the Group Mining to 80% from 50% in Renowned for its authority, completed two more power 2013; Polimetal’s other parent strong reputation and robust plants with a total capacity of 2 company is Alacer Gold. In the financial structure due to its thousand MW in Iraq in the same same year, gold production at worldwide operations, Çalık year. In 2013, the Adacami HEPP the Çöpler Gold Mine - which Holding cooperates with the Project was also completed in belongs to Anagold, another globe’s prominent companies. the Turkish city of Rize. Lidya Mining subsidiary Çalık Holding stands out as a -increased by 43% over the prior strong leading player in its core GAP Construction has become year to exceed 270 thousand businesses for its deeply-rooted the EPC contractor of the ounces. institutional structure, rich “Turkmenbashi International corporate culture, highly skilled Seaport,” worth USD 1.5 billion, Conducting projects from human resources, pioneering and consisting of six ports and an innovative, sustainable enterprises, innovative approach one shipyard. The Seaport was perspective, Aktif Bank and sound strategies. The designed in 2013 as a logistics established Aktif Bank Sukuk Holding continues its operations hub on the route connecting Asset Lease Company in 2013 to in all business lines with the Asia to Europe. issue lease certificates. With the target of attaining sustainable “Active Point” project, Aktif Bank growth. The project “Tarlabaşı 360” shot ahead of numerous global by the Çalık Group subsidiary giants to win the first prize Çalık Real Estate, was among in the “Physical Distribution”
ÇALIK COTTON CORPORATE PROFILE 2014 15 ABOUT US MANAGEMENT OPERATIONS
OUR VISION
To be the most valuable Turkish enterprise in three aspects: employees, management practices and business portfolio.
Our Group derives its strength through its business perception shaped by courage, innovation and prudence. Drawing on this fact, the vision of Çalık Cotton is composed of three components.
1. To be the most preferred workplace, employing the best.
2. To be an exemplary Group with its management understanding and systems.
3. To own a superior and high return business portfolio.
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OUR MISSION
To enrich all stakeholders in Turkey and in other countries we do business in, through our innovative, courageous and prudent business understanding.
OUR VALUES
Çalık Group exists to enrich its stakeholders. The Group undertakes all its operations in line with this goal, with an innovative, courageous and prudent spirit. Çalık is a family, internalizing its country’s high values and paying respect to all colors of the geographies where it has a presence.
ÇALIK COTTON CORPORATE PROFILE 2014 17 ABOUT US MANAGEMENT OPERATIONS
FINANCIAL AND OPERATIONAL INDICATORS
TOTAL ASSETS
(USD MILLION)
35.9
34.3
2013 2014
SHAREHOLDERS’ EQUITY SALES TOTAL EXPORTS
(USD MILLION) (USD MILLION) (USD MILLION)
16.0 114.4 8.1
52.6 5.7 0
2013 2014 2013 2014 2013 2014
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GROWTH 2014
(USD MILLION) NUMBER OF EMPLOYEES
16 117%
86%
2013 2014
In 2014, Çalık Cotton’s total Cotton prices, set in 2013 assets reached USD 35.9 international markets, are million, while shareholder subject to fluctuation and, NUMBER OF EMPLOYEES equity grew by 181% over the thus, financial risk. Çalık previous year, reaching USD 16 Cotton protects its cotton 16 million. The Company employs through hedging mechanisms, a total of 16 individuals. minimizing the potential effects of these risks.
ÇALIK COTTON CORPORATE PROFILE 2014 19 ABOUT US MANAGEMENT OPERATIONS
ÇALIK COTTON IN BRIEF
Established in 2011 under the USA, China, Turkmenistan umbrella of Çalık Holding, Çalık and India, the Company Cotton conducts national and continues its efforts international trade in cotton, to provide swift, high quality and provides consultancy service to its clients. services in all areas related to cotton. Çalık Cotton expanded its trade network in 2013 by Çalık Cotton has become purchasing cotton and yarn. Çalık Cotton the first Turkish company to The Company bought 12 obtain the AQSIQ certificate, thousand tons of cotton conducts necessary for exporting to from Turkmenistan to sell to operations in key China domestic yarn manufacturers. manufacturing Çalık Cotton’s core business In 2013, Çalık Cotton also is cotton trade and the started to buy yarn from India, areas of the Company conducts its and now the Company offers USA, China, business operations towards yarn alternatives to domestic Turkmenistan, supporting Turkey’s position fabric manufacturers. India and Turkey, in the world cotton market. Within this scope, Çalık Cotton Eco-friendly products and in all important has become the first Turkish Çalık Cotton forges ahead with world markets. company to obtain the AQSIQ eco-friendly products and a certificate, necessary for state-of-the-art technology exporting to China; and has infrastructure. Collaborating also obtained the increasingly with Çalık Denim and Crailar esteemed Better Cotton Technologies Inc., the Company Initiative (BCI) and Control has implemented an important Union (CU) Organic Cotton project based on a new type certificates. of fiber called “Crailar.” Crailar is a natural, environmentally- By capitalizing on the long friendly fiber made with less term business know-how and water and no chemicals. The expertise of Çalık Holding, Çalık Çalık Denim facilities have 4 Cotton has reached success already manufactured the first in the sector within a short examples of this fabric using Number period. Carrying out operations two tons of Crailar fiber. of Export in a number of significant Destinations global markets such as Turkey,
20 CORPORATE PROFILE 2014 ÇALIK COTTON FOR DETAILS, CALIKCOTTON.COM
ÇALIK COTTON CORPORATE PROFILE 2014 21 ABOUT US MANAGEMENT OPERATIONS
THE YEAR 2014 AT A GLANCE
The nature of the textile sector volume, which pushed down Globally, record levels of makes it a driving engine of cotton prices globally and in beginning inventory in development and international Turkey. An investigation has cotton, and expectations of trade. As the sector’s been launched into possible few problems in the future production and consumption dumping of US cotton into cotton supply create a areas are vast, its weight in Turkey. Turkish yarn factories certain safeguard for textile global trade increases more should continue to monitor industrialists. For this reason, than any other sector’s, almost this situation; if dumping is purchases are at current need year after year. The sector’s confirmed, it is expected that level as industrialists choose impact on the world and cotton sellers in the domestic not to build up inventory levels. on Turkish trade is certainly market will raise their prices. economic, but also cultural and Bangladesh preserves its social. Cotton prices are witnessing prominent position in textile a downward trend, due to manufacturing: at the moment, Domestic Developments: the decision by China, which the country is the world’s Investment in new machines accounts for 60% of the world’s second-biggest cotton at Turkish yarn factories have cotton stocks, to decrease importer. enabled cotton consumption its cotton purchases. As well, to rise from 1.40 million tons in India’s status as of 2014 as The USA remained the world’s 2013 to 1.44 million tons in 2014. the world’s biggest cotton biggest cotton exporter in However, China, the world’s producer, and high levels of 2014. largest cotton importer, placed ending inventory worldwide are a quota on cotton imports driving prices downward. and decreased its import
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ÇALIK COTTON CORPORATE PROFILE 2014 23 ABOUT US MANAGEMENT OPERATIONS
MESSAGE FROM THE CHAIRMAN
Çalık Cotton procures cotton from Turkey as well as internationally, from regions and countries such as the USA, India, Central Asia, Africa and Greece; and offers these products to yarn consumers in domestic and foreign markets.
Esteemed stakeholders, of becoming the foremost As the only company in its field representative of Turkish with 100% domestic capital, Cotton is a key raw material enterprise and entrepreneurship. Çalık Cotton has embraced in the textile sector, one of As a result of the Group’s the twin missions of promoting international trades’ main business development and exporting Turkish cotton pillars. This commodity’s experience, the Company closed across the world. Within this impact on global and Turkish the year 2014 with important framework, the Company took commerce is not limited to the achievements. important initiatives in the economic arena, but also has export field in 2014, adding cultural and social implications. Çalık Cotton procures cotton Egypt and Bangladesh to With enterprises in nearly from Turkey as well as from its already-existing export 20 countries, in such areas regions and countries such destinations, such as China. As a as textiles, energy, telecom, as the USA, India, Central result, the Company contributed construction, finance, the media Asia, Africa and Greece, and significantly towards lowering and mining, Çalık Holding offers these products to the Turkish current deficit in stepped into the cotton sector yarn consumers of yarn in cotton trade. The Company in 2011. With the Çalık Cotton domestic and foreign markets. currently has operations in brand, Çalık Holding capitalizes In addition to the cotton trade, the USA, China, Turkmenistan, on its years of experience and the Company is also active in Tajikistan and India. In addition, expertise, in line with its vision consultancy services. we strive to expand our cotton supply network and are pleased to retain our leading position among international traders marketing Turkmen cotton in Turkey.
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Çalık Cotton forges ahead towards its goal of becoming a leader in all major markets by capitalizing on its position as a 360-degree service provider, and its rapid and consistent sector growth.
Decisively forging ahead with At Çalık Cotton we believe that With the belief that working operations that carry the Turkish the growth strategy we pursue together will yield even higher cotton sector forward, the will carry us even further in achievements, I would like to Company began manufacturing 2015, adding value for all of our extend my gratitude to all the “better cotton” during the year, stakeholders. With its young stakeholders, customers and in cooperation with its supply staff, the Company resolutely associates who have contributed partners. Çalık Cotton also continues its efforts to enhance to our operations, and hope offers certification services for the Turkish cotton sector and that 2015 delivers positive “better cotton,” whose share in carry out manufacturing at developments in both the the world market rises daily. The world standards. domestic and global markets. Company is proud to be the top seller of Turkish “better cotton.” Best regards,
MAHMUT CAN ÇALIK Chairman
ÇALIK COTTON CORPORATE PROFILE 2014 25 ABOUT US MANAGEMENT OPERATIONS
THE CEO’S ASSESSMENT OF 2014
Distinguished investors, While making such progress in World cotton supply and Esteemed business partners and exports, we did not omit the inventory figures, and cotton associates, issue of imports. In 2014, we prices used to follow a normal expanded our sales volume as trajectory until two seasons The year 2014 was a period regards cotton from all origins. ago. However, the world’s when Çalık Cotton extended Çalık Cotton sold 37 thousand largest cotton importer, China, its footprint in all the areas it tons of Turkmen cotton in Turkey placed a quota on its cotton operates, and diversified its in 2014, thus maintaining our imports, thus bringing down services to step into a number of leadership among international the commodity’s price across areas crucial for the future of the traders in this field. the world. The downtrend in cotton market. cotton prices poses a significant We took additional measures financial risk for the entire textile In this direction, we made to extend our cotton supply sector as well as the Company. significant process, in particular network. The first among During the year, in order to in the field of exports. After these was feasibility studies protect ourselves against such focusing on domestic sales in concerning Greece, which financial risks we set up a 2012 and 2013, we started to were followed by operational hedge mechanism, reinforcing export products in 2014. We processes. The Company has our resolve for consistent and started our export drive with also designated itself the vision safe growth. In this regard, the sales to China in April, and then of becoming the company Company has hedged against added Egypt and Bangladesh that imports African cotton falling prices via forward in May and June. All of these to Turkey. African nations are contracts for 6 thousand tons of export destinations were relatively new cotton producers, cotton. In Turkey, Çalık Cotton chosen for strategic purposes. and five countries account for is among the rare pioneering In order to acquire a prominent 900 thousand tons out of the 1.6 firms to employ this insurance position in the cotton sector, million tons of cotton produced mechanism, which is rather it is import to be present in in the continent. As such, the widespread in the world. China and Bangladesh, the two Company places a special top importers of cotton in the emphasis on Burkina Faso, A key development in the year world. In addition, Egypt, which Benin, Mali, Ivory Coast and 2014 was the production of we know very well due to Çalık Tanzania, which constitute 54% “better cotton” jointly with a Holding’s textile investments, of the market. local supply partner. As more stands out as a safe and and more world-renowned promising export destination. brands give their support to
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Established in 2011, Çalık Cotton adheres to a business philosophy that prioritizes cutting-edge production technology and customer satisfaction, built upon the Group’s more than 30 years of experience in textiles.
BCI and commit to gradually Human resources is another infrastructure at Çalık Cotton. replacing conventional cotton field where we try to create Our mission is to bring Turkish production with better cotton, a difference. The Company cotton production up to world we expect that the trend towards has developed its Talent standards and thus to market “better cotton” production will Management Program to recruit more Turkish cotton across the head upwards in the coming the best talent and gain their world. Our clients’ trust, business years. The Company believes loyalty. Boasting a very young partners’ and investors’ belief, that “better cotton” will assume and dynamic, yet highly skilled and our employees’ diligence a very significant position in the and specialized workforce, we will be our biggest advantages global market in the short and first strive to ensure employee in reaching this goal. I hope that long term, and has redefined satisfaction in all the fields this new period will be one of its vision in favor of “better we operate in, and then to success and that the year 2015 cotton”. As such, Çalık Cotton reach world-class service and will bring peace and prosperity is the Company which produces production standards. In to all of our stakeholders. and sells the highest volume this regard, I believe that our of “better cotton” in Turkey investments will bear fruit in Best regards, through strategic partnerships. 2015, a year when we shall focus on reinforcing our service CÜNEYD HARMANŞA General Manager
ÇALIK COTTON CORPORATE PROFILE 2014 27 ABOUT US MANAGEMENT OPERATIONS
SENIOR MANAGEMENT
MAHMUT CAN ÇALIK Chairman
MEHMET ERTUĞRUL GÜRLER Deputy Chairman
CÜNEYD HARMANŞA General Manager
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ÇALIK COTTON CORPORATE PROFILE 2014 29 ABOUT US MANAGEMENT OPERATIONS
THE COTTON SECTOR IN THE WORLD AND TURKEY IN 2014
The World Cotton Sector World Cotton (Fiber) Data (Million tons) Global cotton (fiber) production declined from 28 2011-12 2012-13 2013-14 2014-15 million tons in 2011-12 to 26 Production 27.76 26.91 26.22 25.99 million tons in the following Consumption 22.65 23.47 23.75 24.22 two seasons. Production is expected to remain at that level Exports 9.99 10.18 8.87 7.45 in the current season. However, Imports 9.87 10.08 8.84 7.45 global cotton production fell Period-End to 22.8 million in 2011-12, the Inventory 16.07 19.59 22.14 23.91 lowest level in the last ten World S/U (excl. years, before increasing slightly China) % 45.9 41.3 41.8 52.3 from 2012-13 onwards to reach China S/U % 82 140 182 181.3 the order of 23.5 million in the COTLOOK A INDEX last season. It is expected that (US cents/pound) 100 88 91 63-91;75 the increase in consumption will continue in the current season to hit the figure Parallel to these developments in world cotton production and of 24.4 million. consumption, the supply and inventory figures as well as cotton prices had followed a normal trajectory until two seasons ago. However, the world’s largest producer and consumer of cotton, China, abruptly changed its strategy in the last season,
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and further unexpected to fall rapidly from its peak in before increasing to 57%. developments could arise in April, down to slightly above The Chinese S/U fell first by the coming period. its levels two seasons ago. This 13 points to 26%, and then extraordinary rise in prices, dropped further to 22%. Although production rose and which started in the second Following the extraordinary consumption fell in the season half of the season 2010-11 and jump in cotton prices, world 2010-11, and supply fell by reached a peak in the first three cotton production tilted just 300 thousand tons over quarters of the season 2011- upwards in the season 2011-12, the previous season, cotton 12, is the result of not only the which brought up the S/U for prices showed a higher-than- aforementioned developments the world excluding China to anticipated increase due to but also speculation. This 59%, and prices dropped down a supply bottleneck, as large assumption is confirmed when to the order of 100 US cent/lb. amounts of cotton inventory we break down the Stocks- were not physically released to-Use (S/U) Ratio into the In the same season, China to the market, triggering categories of “China” vs “world pursued a very wise strategy considerable panic. As a result excluding China”: by importing large volumes of the Cotlook A Index seasonal cotton at low prices, although average rose to 164 US cent/ In the seasons 2009-10 and its domestic production lb. This rise in prices continued 2010-11, S/U ratios for the increased. As such, it brought in the first three quarters of the world outside China fell by its S/U to the level of 72%. In season 2011-12, then started 18 percentage points to 39%, the following 2012-13 season,
ÇALIK COTTON CORPORATE PROFILE 2014 31 ABOUT US MANAGEMENT OPERATIONS
THE COTTON SECTOR IN THE WORLD AND TURKEY IN 2014
S/U was 49% in the world be taken as an indicator of the areas and seed cotton field outside of China versus 116% risk that countries except China productivity is calculated by in China. It is being estimated face due to the aforementioned Ministry of Food, Agriculture that, in the last season, as a strategy. In the current and Livestock via field studies result of China’s strategy to season, the Cotlook A Index is on the basis of the plots “build inventory at low prices, expected to fluctuate between registered with the Farmer dominate the speculation- 63 and 91 cent/lb to an average Registry System, as well as prone cotton markets with 75 cents. Although this picture observations based on Remote this vast inventory and shape seems to be advantageous for Perception System which will markets in line with national consumers, this unprecedented be extended to cover the whole (Chinese) interests,” S/U of abnormality in stocks located in country. The amount of seed the world excluding China has China and the world excluding cotton by province calculated probably fallen to 47% while China could be easily upended in this manner is reported to China’s S/U has risen to 160%. by any abrupt change in TÜİK, which reports three news In the current season (2014- Chinese policy. bulletins featuring estimates. 15) the S/U of the former is The third estimate is later expected to increase by 7 The Turkish Cotton Sector recorded in annual statistical percentage points to 54%, In Turkey, the Turkish Statistical tables as the most accurate and China’s S/U is anticipated Institute (TÜİK) obtains data value. to drop by only 2 points to on cotton from the relevant 158%. In that case, China will ministries, and then processes In this regard, the Ministry continue to control more than and publishes them. In this comes up with an estimated half (58.4%) of global stocks. respect, cotton cultivation Average Cotton Gin As such, the world’s biggest producer and consumer of cotton has also come to hold over half of global stocks, which poses serious risks for the other nations producing and consuming cotton, and constitutes an issue that needs to be addressed urgently.
Indeed, the fall in cotton prices, despite the drop in S/U for the world outside of China, should
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Productivity for the country Chart 2. Turkish (Seed) Cotton Figures as a whole. TÜİK employs this figure to calculate the Cotton 2009- 2010- 2011- 2012- 2013- 2014- Unit 10 11 12 13 14 15 Fiber Production Volume, and thousand publishes the latter figure along Cultivation Area ha 420 481 542 488 451 490 with Average Seed Cotton Seed Cotton thousand Field Productivity in annual Production* tons 1,725 2,150 2,580 2,320 2,250 2,350 production statistics. The Seed Cotton Productivity kg/da 411 447 476 475 499 480 volume and value of cotton thousand fiber imports and exports Fiber Production** tons 638 817 955 858 878 846 are published by the Ministry Fiber Productivity** kg/da 152 170 176 176 195 182 of Economy; however, TÜİK Cotton Gin Productivity*** % 37 38 37 37 39 38 statistics feature only the value.
*Figures calculated by TÜİK based on Cultivation Area and Estimated Avg. Productivity (Seed Cotton Production Volume = Cultivation Area x Seed Cotton Productivity) Until recently, Domestic Cotton **Figures calculated by TÜİK based on Est. Avg. Cotton Gin Productivity: (Fiber Production Consumption figures were Volume = Seed Cotton Production/ Avg. Cotton Gin Productivity) (Fiber Productivity = Seed Cotton Production * Avg. Cotton Gin Productivity) collected by the rural branches ***Figures calculated by National Cotton Council (UPK) based on TÜIK data (Est. Avg. Cotton of the Ministry of Economy in Gin Productivity = Cotton Fiber Production Volume/ Seed Cotton Production Volume) the form of registered cotton bale numbers and weight, and Chart 3. Turkish Cotton Fiber Data this data was shared with the relevant institutions. However, 2009- 2010- 2011- 2012- 2013- 2014- 10 11 12 13 14 15 this practice was ended two Cultivation Area, thousand ha* 420 481 542 488 451 490 seasons ago as the number Fiber Productivity, kg/da* 152 170 176 176 195 182 of registered bales started Fiber Production, thousand 638 817 955 858 878 846 being collected on the basis tons** of reports by cotton ginning Beginning Inventory, thousand 0 12 392 578 585 1186 companies. The data collected tons*** in the light of these figures for Imports, thousand tons** 760 895 612 618 877 653 the last six years is as follows Consumption, thousand tons** 1,300 1,250 1,275 1,350 1,331 1,368 (Chart 2): Exports, thousand tons** 86 82 106 119 115 71
Ending Inventory, thousand 12 380 578 585 1.186 1363 tons***
Aegean St.1 (TL/kg)*** 2.82 5.74 3.72 3.51 4.10 3.55
Source: * TÜİK, 2013 ** Ministry of Economy, BİM *** Izmir Commodity Exchange (October-December Avg.)
ÇALIK COTTON CORPORATE PROFILE 2014 33 ABOUT US MANAGEMENT OPERATIONS
OPERATIONS IN 2014
MARKETING AND SALES
Çalık Cotton’s target audience By capitalizing on its position Likewise, it provides local in the cotton sector, which as a 360-degree service quality and logistical services holds an important place in the provider and its fast and stable through its Turkmenistan office. national and global economy, growth in the industry, Çalık are domestic and overseas Cotton aims to offer services in As for the supply of Turkish yarn manufacturers, denim all major consumption markets cotton, the GAP (“Southeastern manufacturers, firms involved so as to become a leader in the Anatolia Project”) / Urfa region in cotton trade and their cotton market. In this regard, has become the largest cotton- agents. the Company also expends producing area in Turkey. Çalık efforts to supply and sell Cotton’s regional office ships Çalık Cotton carries out cotton locally in China. cotton either directly or from a its operations in the major warehouse under supervision, production areas in the United Via its office in the United by using experience gained as States, China, Turkmenistan, States, Çalık Cotton organizes a result of its long presence in India, and Turkey as well as in the sale of American cotton the region. Cottons of domestic all major global markets. through immediate shipment and foreign origin are stored and advance shipment. in cotton warehouses in the
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Malatya Organized Industrial importance that the products zone, Gap/Urfa Region and it markets have on the lives of Mersin Free Zone. customers and, accordingly, strives to offer added value Çalık Cotton Çalık Cotton continues as ever to clients with its products continues as to offer services to its valuable and help them gain time and ever to offer business partners, based on its value through long-term philosophy centered on trust collaboration. services to its and quality in the global cotton valuable business market. As a modern Company which partners, based constantly upgrades and on its philosophy The Company is fully cognizant innovates itself to face intense of the historical and industrial competition, Çalık Cotton’s centered on trust significance of cotton. As for target is to offer its clients in and quality in other fibers, the Company the textile market both high the global cotton aims for high quality and quality products and services market. distinguished production, price through swift customer and service levels in terms of services and sustained quality both product and added value. standards. Çalık Cotton is aware of the
ÇALIK COTTON CORPORATE PROFILE 2014 35 ABOUT US MANAGEMENT OPERATIONS
OPERATIONS IN 2014
for sustainable cotton production. Farmers are trained to regulate the use of pesticides, utilize water resources more efficiently, enhance soil quality, and improve the living standards of the agricultural workforce, all in line with internationally recognized standards.
PRODUCT DEVELOPMENT World-renowned brands’ support to BCI and their commitment to reduce Better Cotton Production (BCI) to secure the future of conventional cotton production Since 2005, manufacturers the cotton sector. Upon the in favor of better cotton, strive to correct the establishment of the Better suggest that this trend will undesirable social and Cotton Practices Association continue its ascent and “better environmental conditions and (İPUD) in 2014, Turkey became cotton” production will effects associated with the a part of the better cotton increase in the coming years. production of cotton, one initiative, as part of a strategic of the most-consumed daily partnership agreement with the With the belief that “better commodities across the world. Council. The ultimate goal of cotton” will hold a crucial this initiative is to guarantee a position in the world market Global stakeholders focused safer future for the sector. in future years, Çalık Cotton on making cotton production has redefined its vision to environmentally, socially and İPUD defines“better cotton” add “better cotton” alongside economically sustainable, as a product cultivated with organic cotton. As part of its and on expanding this high the aim of reducing the strategic partnerships, the quality production across the environmental footprint, and Company offers “better cotton” world, established in 2005 improving the living standards products to buyers, already the non-profit organization of farmers. As such, it is a becoming the biggest seller of named Better Cotton Initiative globally recognized standard “better cotton” in Turkey.
36 CORPORATE PROFILE 2014 ÇALIK COTTON FOR DETAILS, CALIKCOTTON.COM
ÇALIK COTTON CORPORATE PROFILE 2014 37 ABOUT US MANAGEMENT OPERATIONS
38 CORPORATE PROFILE 2014 ÇALIK COTTON FOR DETAILS, CALIKCOTTON.COM
ÇALIK COTTON CORPORATE PROFILE 2014 39 ABOUT US MANAGEMENT OPERATIONS
HUMAN RESOURCES
Çalık Cotton’s human In order to always stand by conducted and in-house and resources policy is to its employees, the Company outside training programs are recruit the right person for pursues a modern human organized accordingly. In- the right job in line with a resources policy that inspires house training programs can customer-focused approach, trust among them by offering be divided into two categories: to promote employees with information in an ethical high potential, to measure manner; remains open to new a) Corporate Vision and employee performance with ideas to enhance its mission Culture Programs the performance management and vision; and continuously Corporate Vision and Culture system, to conduct intelligent empathizes with employees. Programs offer information career planning with the right to newly-recruited personnel in-house advancements, All training programs are as regards the corporate and to maintain a long-term developed in due consideration vision and cultural structure collaboration with employees of the Company’s future of the Company. These in order to sustain the company position and growth potential. training programs focus on culture. In order to play a positive role the Company’s track record, in the advancement of every current position, future single employee, training plans and service and work requirement analyses are philosophy.
40 CORPORATE PROFILE 2014 ÇALIK COTTON FOR DETAILS, CALIKCOTTON.COM
b) Professional Proficiency Talented individuals are those In line with its mission, vision Programs who have the potential to fill and policy, Çalık Cotton aims Professional Proficiency the technical and administrative to recruit “the very best.” Programs include training positions that are of sufficient All functions are filled by programs to educate both the importance and information highly skilled employees with newly-recruited personnel and to play a critical role in the necessary information existing employees. the future of Çalık Cotton. and experience, who can Talent management has represent the Company, fulfill While well-experienced and been designed to recruit the their responsibilities and are successful personnel play workforce that Çalık Cotton good team members. With a role in almost all training requires to meet its strategic an average age below 35, the programs, the Company targets, to train employees who Company personnel consists occasionally seeks the support can offer backup for certain of university graduates, most of professional training key positions within the firm, of whom are fluent in English. companies. and to ensure the loyalty of The Company also has two critical human resources to the employees who speak Chinese. Talent Management Çalık Cotton family. Talent management consists of processes such as supporting talented candidates designated to fill managerial positions at Çalık Cotton through career development programs, keeping track of their progress, and assessing their aptitude in new promotions. Career planning provides a crucial input for efficient talent management.
ÇALIK COTTON CORPORATE PROFILE 2014 41
12 ABOUT US 12 ÇALIK HOLDING IN BRIEF 16 OUR VISION, MISSION AND VALUES 18 FINANCIAL AND OPERATIONAL INDICATORS 20 ÇALIK COTTON IN BRIEF 22 THE YEAR 2014 AT A GLANCE
24 MANAGEMENT 24 MESSAGE FROM THE CHAIRMAN 26 THE CEO'S ASSESSMENT OF 2014 28 SENIOR MANAGEMENT
30 OPERATIONS 30 THE COTTON SECTOR IN THE WORLD AND TURKEY IN 2014 34 OPERATIONS IN 2014 34 MARKETING AND SALES 36 PRODUCT DEVELOPMENT 40 HUMAN RESOURCES CALIK COTTON CORPORATE PROFILE 2014 CALIK COTTON CORPORATE 2014 PROFILE COTTON CALIK
COTTON
ÇALIK COTTON HEAD OFFICE Keresteciler Sitesi, Fatih Cad. Ladin Sok. No: 17 34169 Merter/Istanbul Tel: +90 212 459 26 26 Fax: +90 212 459 26 77 100% SUCCESS Mail: [email protected] www.calikcotton.com