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100% SUCCESS

CALIK COTTON CORPORATE PROFILE 2014

ÇALIK COTTONHEAD OFFICE

Keresteciler Sitesi, Fatih Cad.Ladin Sok. No: 17 34169 Merter/Istanbul

Tel: +90 212 459 26 26Fax: +90 212 459 26 77

Mail: [email protected]

COTTONC

ALIK

CO

TTO

N C

OR

PO

RA

TE PRO

FILE 2014

ABOUT USÇALIK HOLDING IN BRIEFOUR VISION, MISSION AND VALUES FINANCIAL AND OPERATIONAL INDICATORS ÇALIK COTTON IN BRIEFTHE YEAR 2014 AT A GLANCE

MANAGEMENTMESSAGE FROM THE CHAIRMAN THE CEO'S ASSESSMENT OF 2014SENIOR MANAGEMENT

OPERATIONSTHE COTTON SECTOR IN THE WORLD AND TURKEY IN 2014 OPERATIONS IN 2014

MARKETING AND SALES PRODUCT DEVELOPMENT

HUMAN RESOURCES

121216182022

24242628

303034343640

100% SuccessWe 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.

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

CORPORATE PROFILE 2014 ÇALIK COTTON 10

ABOUT US MANAGEMENT OPERATIONS

ÇALIK COTTON CORPORATE PROFILE 2014 11

FOR DETAILS, CALIKCOTTON.COM


ÇALIK HOLDING IN BRIEF

ENERGY

Çalık EnergyYEDAŞ ARAS EDAŞ Keds

MINING

Lidya Mining Polimetal Mining

CONSTRUCTION AND REAL ESTATE

Gap ConstructionÇalık Real Estate

FINANCE

Aktif BankBKT (Banka Kombetare Tregtare)

TEXTILES

Gap Güneydoğu Textile Gap MarketingÇalık Cotton

TELECOMS

Albtelecom Eagle Mobile

A pioneering corporation that continues its ascent with a strong performance in a number of sectors…

AMERICATEXTILES (GAP MARKETING, ÇALIK COTTON)



5Continents

6Sectors

USD 7.5 Billion Total Assets

24,000Employees

A local force which extends across 5 continents:Çalık Holding

KOSOVO

LIBYA

UZBEKISTAN

KAZAKHSTAN

TURKMENISTAN

GEORGIA

RUSSIA

ENERGY (ÇALIK ENERGY-EPC)FINANCE (BKT)

IRAQENERGY (ÇALIK ENERGY-EPC) CONSTRUCTION (GAP CONSTRUCTION)

ALBANIA ENERGY (ÇALIK ENERGY-EPC)

TELECOM (ALBTELECOM)FINANCE (BKT)

ENERGY (ÇALIK ENERGY-EPC)

CONSTRUCTION (GAP CONSTRUCTION)

ENERGY (ÇALIK ENERGY-EPC)CONSTRUCTION(GAP İNŞAAT)

CONSTRUCTION (GAP CONSTRUCTION)FINANCE (İJARA LEASING)

ENERGY (ÇALIK ENERGY-EPC) CONSTRUCTION (GAP CONSTRUCTION)TEXTILES (GAP MARKETING, ÇALIK COTTON)

INDIATEXTILES (ÇALIK COTTON)

DUBAICONSTRUCTION (GAP CONSTRUCTION)TEXTILES (GAP MARKETING)

ENERGY (ÇALIK ENERGY-EPC)

S.ARABIACONSTRUCTION

(GAP CONSTRUCTION)

CONSTRUCTION (GAP CONSTRUCTION)FINANCE (AKTIF INVESTMENT BANK)

ITALYTEXTILES

(GAP GÜNEYDOĞU TEXTILE)

BANGLADESHTEXTILES

(GAP GÜNEYDOĞU TEXTILE)

QATARCONSTRUCTION

(GAP CONSTRUCTION)




Established in 1981 by Ahmet

Çalık of the Çalık family, which

has held an active track record in

commerce since the 1930s, Çalık

Holding currently has operations

in fields such as energy, mining,

construction and real estate,

finance, textiles and telecoms.

One of the largest industrial

corporations in Turkey, Çalık

Holding provides employment to

24 thousand people in around 17

nations. As a pioneering Turkish

investor in Central Asia, the

Balkans, the Middle East and

Africa, the Çalık Group has total

annual consolidated assets of

USD 7.5 billion.

Displaying a consistent growth

performance in Turkey and other

countries since its establishment,

the Group acquired the Albanian

telecom operator and Internet

provider Albtelecom in 2007;

the Yeşilırmak Electricity

Distribution Company (YEDAŞ)

providing electricity to five

Turkish provinces, in 2010; the

Kosovo Electricity Distribution

Company in 2012; and ARAS

EDAŞ, operating in seven

provinces, in 2013.

Çalık Holding’s Energy Group,

which maintained its business

volume in 2013, due to its

credibility in the world energy

One of the largest industrial corporations in Turkey, Çalık Holding provides employment to around 24 thousand people in 17 countries.

ÇALIK HOLDING IN BRIEF



the first prize winners in the

“Best Commercial Renovation/

Redevelopment Turkey”

category of the European

Property Awards 2013,

among the most prestigious

real estate awards in Europe.

Çalık Real Estate is active in

land development and urban

transformation.

Carrying out its operations

in line with proven growth

strategies, Çalık Holding’s

subsidiary Lidya Mining

increased its stake in Polimetal

Mining to 80% from 50% in

2013; Polimetal’s other parent

company is Alacer Gold. In the

same year, gold production at

the Çöpler Gold Mine - which

belongs to Anagold, another

Lidya Mining subsidiary

-increased by 43% over the prior

year to exceed 270 thousand

ounces.

Conducting projects from

an innovative, sustainable

perspective, Aktif Bank

established Aktif Bank Sukuk

Asset Lease Company in 2013 to

issue lease certificates. With the

“Active Point” project, Aktif Bank

shot ahead of numerous global

giants to win the first prize

in the “Physical Distribution”

channels category of the

European Financial Management

& Marketing Association

(EFMA) awards. Çalık Holding’s

subsidiary BKT, which operates

in Albania and Kosovo, won for

the third time the “Best Bank”

award bestowed by The Banker,

a highly-esteemed international

financial markets magazine.

In line with its strategy to focus

on its core businesses, the Group

divested itself of the Turkuvaz

Media Group.

Renowned for its authority,

strong reputation and robust

financial structure due to its

worldwide operations, Çalık

Holding cooperates with the

globe’s prominent companies.

Çalık Holding stands out as a

strong leading player in its core

businesses for its deeply-rooted

institutional structure, rich

corporate culture, highly skilled

human resources, pioneering

enterprises, innovative approach

and sound strategies. The

Holding continues its operations

in all business lines with the

target of attaining sustainable

growth.

sector and a work ethic that

sets it apart from competitors,

is among the most-preferred

companies in the energy-rich

regions of Central Asia, Middle

East and Africa. Çalık Energy

continued the construction

of three power plants begun

in 2013 in the Turkmen cities

of Ahal, Lebap and Mari.

Additionally, the Group signed

agreements for the construction

of two new power plants in Ahal

and Derweze. Having become

the biggest EPC contractor in

Georgia with the Gardabani

project in 2013, the Group

completed two more power

plants with a total capacity of 2

thousand MW in Iraq in the same

year. In 2013, the Adacami HEPP

Project was also completed in

the Turkish city of Rize.

GAP Construction has become

the EPC contractor of the

“Turkmenbashi International

Seaport,” worth USD 1.5 billion,

and consisting of six ports and

one shipyard. The Seaport was

designed in 2013 as a logistics

hub on the route connecting

Asia to Europe.

The project “Tarlabaşı 360”

by the Çalık Group subsidiary

Çalık Real Estate, was among



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.

To be the most valuable Turkish enterprise in three aspects: employees, management practices and business portfolio.

OUR VISION



To enrich all stakeholders in Turkey and in other countries we do business in, through our innovative, courageous and prudent business understanding.

OUR MISSION

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.

OUR VALUES



SHAREHOLDERS’ EQUITY SALES TOTAL EXPORTS

2013 2013 20132014 2014 2014

16.0 114.4 8.1

5.7

52.6

0

(USD MILLION) (USD MILLION) (USD MILLION)

2013 2014

34.3

35.9

TOTAL ASSETS

(USD MILLION)

FINANCIAL AND OPERATIONAL INDICATORS



2013 2014

86%

117%

GROWTH

(USD MILLION)

In 2014, Çalık Cotton’s total

assets reached USD 35.9

million, while shareholder

equity grew by 181% over the

previous year, reaching USD 16

million. The Company employs

a total of 16 individuals.

Cotton prices, set in

international markets, are

subject to fluctuation and,

thus, financial risk. Çalık

Cotton protects its cotton

through hedging mechanisms,

minimizing the potential effects

of these risks.

16

16

2014

2013

NUMBER OF EMPLOYEES

NUMBER OF EMPLOYEES



Established in 2011 under the

umbrella of Çalık Holding, Çalık

Cotton conducts national and

international trade in cotton,

and provides consultancy

services in all areas related to

cotton.

Çalık Cotton has become

the first Turkish company to

obtain the AQSIQ certificate,

necessary for exporting to

China

Çalık Cotton’s core business

is cotton trade and the

Company conducts its

business operations towards

supporting Turkey’s position

in the world cotton market.

Within this scope, Çalık Cotton

has become the first Turkish

company to obtain the AQSIQ

certificate, necessary for

exporting to China; and has

also obtained the increasingly

esteemed Better Cotton

Initiative (BCI) and Control

Union (CU) Organic Cotton

certificates.

By capitalizing on the long

term business know-how and

expertise of Çalık Holding, Çalık

Cotton has reached success

in the sector within a short

period. Carrying out operations

in a number of significant

global markets such as Turkey,

Çalık Cotton conducts operations in key manufacturing areas of the USA, China, Turkmenistan, India and Turkey, and in all important world markets.

4Number of Export Destinations

USA, China, Turkmenistan

and India, the Company

continues its efforts

to provide swift, high quality

service to its clients.

Çalık Cotton expanded its

trade network in 2013 by

purchasing cotton and yarn.

The Company bought 12

thousand tons of cotton

from Turkmenistan to sell to

domestic yarn manufacturers.

In 2013, Çalık Cotton also

started to buy yarn from India,

and now the Company offers

yarn alternatives to domestic

fabric manufacturers.

Eco-friendly products

Çalık Cotton forges ahead with

eco-friendly products and a

state-of-the-art technology

infrastructure. Collaborating

with Çalık Denim and Crailar

Technologies Inc., the Company

has implemented an important

project based on a new type

of fiber called “Crailar.” Crailar

is a natural, environmentally-

friendly fiber made with less

water and no chemicals. The

Çalık Denim facilities have

already manufactured the first

examples of this fabric using

two tons of Crailar fiber.

ÇALIK COTTON IN BRIEF



volume, which pushed down

cotton prices globally and in

Turkey. An investigation has

been launched into possible

dumping of US cotton into

Turkey. Turkish yarn factories

should continue to monitor

this situation; if dumping is

confirmed, it is expected that

cotton sellers in the domestic

market will raise their prices.

Cotton prices are witnessing

a downward trend, due to

the decision by China, which

accounts for 60% of the world’s

cotton stocks, to decrease

its cotton purchases. As well,

India’s status as of 2014 as

the world’s biggest cotton

producer, and high levels of

ending inventory worldwide are

driving prices downward.

Globally, record levels of

beginning inventory in

cotton, and expectations of

few problems in the future

cotton supply create a

certain safeguard for textile

industrialists. For this reason,

purchases are at current need

level as industrialists choose

not to build up inventory levels.

Bangladesh preserves its

prominent position in textile

manufacturing: at the moment,

the country is the world’s

second-biggest cotton

importer.

The USA remained the world’s

biggest cotton exporter in

2014.

The nature of the textile sector

makes it a driving engine of

development and international

trade. As the sector’s

production and consumption

areas are vast, its weight in

global trade increases more

than any other sector’s, almost

year after year. The sector’s

impact on the world and

on Turkish trade is certainly

economic, but also cultural and

social.

Domestic Developments:

Investment in new machines

at Turkish yarn factories have

enabled cotton consumption

to rise from 1.40 million tons in

2013 to 1.44 million tons in 2014.

However, China, the world’s

largest cotton importer, placed

a quota on cotton imports

and decreased its import

THE YEAR 2014 AT A GLANCE

24 CORPORATE PROFILE 2014 ÇALIK COTTON


Esteemed stakeholders,

Cotton is a key raw material

in the textile sector, one of

international trades’ main

pillars. This commodity’s

impact on global and Turkish

commerce is not limited to the

economic arena, but also has

cultural and social implications.

With enterprises in nearly

20 countries, in such areas

as textiles, energy, telecom,

construction, finance, the media

and mining, Çalık Holding

stepped into the cotton sector

in 2011. With the Çalık Cotton

brand, Çalık Holding capitalizes

on its years of experience and

expertise, in line with its vision

of becoming the foremost

representative of Turkish

enterprise and entrepreneurship.

As a result of the Group’s

business development

experience, the Company closed

the year 2014 with important

achievements.

Çalık Cotton procures cotton

from Turkey as well as from

regions and countries such

as the USA, India, Central

Asia, Africa and Greece, and

offers these products to

yarn consumers of yarn in

domestic and foreign markets.

In addition to the cotton trade,

the Company is also active in

consultancy services.

As the only company in its field

with 100% domestic capital,

Çalık Cotton has embraced

the twin missions of promoting

and exporting Turkish cotton

across the world. Within this

framework, the Company took

important initiatives in the

export field in 2014, adding

Egypt and Bangladesh to

its already-existing export

destinations, such as China. As a

result, the Company contributed

significantly towards lowering

the Turkish current deficit in

cotton trade. The Company

currently has operations in

the USA, China, Turkmenistan,

Tajikistan and India. In addition,

we strive to expand our cotton

supply network and are pleased

to retain our leading position

among international traders

marketing Turkmen cotton in

Turkey.

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.

25ÇALIK COTTON CORPORATE PROFILE 2014


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.

At Çalık Cotton we believe that

the growth strategy we pursue

will carry us even further in

2015, adding value for all of our

stakeholders. With its young

staff, the Company resolutely

continues its efforts to enhance

the Turkish cotton sector and

carry out manufacturing at

world standards.

With the belief that working

together will yield even higher

achievements, I would like to

extend my gratitude to all the

stakeholders, customers and

associates who have contributed

to our operations, and hope

that 2015 delivers positive

developments in both the

domestic and global markets.

Best regards,

MAHMUT CAN ÇALIK Chairman

Decisively forging ahead with

operations that carry the Turkish

cotton sector forward, the

Company began manufacturing

“better cotton” during the year,

in cooperation with its supply

partners. Çalık Cotton also

offers certification services for

“better cotton,” whose share in

the world market rises daily. The

Company is proud to be the top

seller of Turkish “better cotton.”



Distinguished investors,

Esteemed business partners and

associates,

The year 2014 was a period

when Çalık Cotton extended

its footprint in all the areas it

operates, and diversified its

services to step into a number of

areas crucial for the future of the

cotton market.

In this direction, we made

significant process, in particular

in the field of exports. After

focusing on domestic sales in

2012 and 2013, we started to

export products in 2014. We

started our export drive with

sales to China in April, and then

added Egypt and Bangladesh

in May and June. All of these

export destinations were

chosen for strategic purposes.

In order to acquire a prominent

position in the cotton sector,

it is import to be present in

China and Bangladesh, the two

top importers of cotton in the

world. In addition, Egypt, which

we know very well due to Çalık

Holding’s textile investments,

stands out as a safe and

promising export destination.

While making such progress in

exports, we did not omit the

issue of imports. In 2014, we

expanded our sales volume as

regards cotton from all origins.

Çalık Cotton sold 37 thousand

tons of Turkmen cotton in Turkey

in 2014, thus maintaining our

leadership among international

traders in this field.

We took additional measures

to extend our cotton supply

network. The first among

these was feasibility studies

concerning Greece, which

were followed by operational

processes. The Company has

also designated itself the vision

of becoming the company

that imports African cotton

to Turkey. African nations are

relatively new cotton producers,

and five countries account for

900 thousand tons out of the 1.6

million tons of cotton produced

in the continent. As such, the

Company places a special

emphasis on Burkina Faso,

Benin, Mali, Ivory Coast and

Tanzania, which constitute 54%

of the market.

World cotton supply and

inventory figures, and cotton

prices used to follow a normal

trajectory until two seasons

ago. However, the world’s

largest cotton importer, China,

placed a quota on its cotton

imports, thus bringing down

the commodity’s price across

the world. The downtrend in

cotton prices poses a significant

financial risk for the entire textile

sector as well as the Company.

During the year, in order to

protect ourselves against such

financial risks we set up a

hedge mechanism, reinforcing

our resolve for consistent and

safe growth. In this regard, the

Company has hedged against

falling prices via forward

contracts for 6 thousand tons of

cotton. In Turkey, Çalık Cotton

is among the rare pioneering

firms to employ this insurance

mechanism, which is rather

widespread in the world.

A key development in the year

2014 was the production of

“better cotton” jointly with a

local supply partner. As more

and more world-renowned

brands give their support to

THE CEO’S ASSESSMENT OF 2014



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

replacing conventional cotton

production with better cotton,

we expect that the trend towards

“better cotton” production will

head upwards in the coming

years. The Company believes

that “better cotton” will assume

a very significant position in the

global market in the short and

long term, and has redefined

its vision in favor of “better cotton”. As such, Çalık Cotton

is the Company which produces

and sells the highest volume

of “better cotton” in Turkey

through strategic partnerships.

Human resources is another

field where we try to create

a difference. The Company

has developed its Talent

Management Program to recruit

the best talent and gain their

loyalty. Boasting a very young

and dynamic, yet highly skilled

and specialized workforce, we

first strive to ensure employee

satisfaction in all the fields

we operate in, and then to

reach world-class service and

production standards. In

this regard, I believe that our

investments will bear fruit in

2015, a year when we shall

focus on reinforcing our service

infrastructure at Çalık Cotton.

Our mission is to bring Turkish

cotton production up to world

standards and thus to market

more Turkish cotton across the

world. Our clients’ trust, business

partners’ and investors’ belief,

and our employees’ diligence

will be our biggest advantages

in reaching this goal. I hope that

this new period will be one of

success and that the year 2015

will bring peace and prosperity

to all of our stakeholders.

Best regards,

CÜNEYD HARMANŞAGeneral Manager



SENIOR MANAGEMENT

MAHMUT CAN ÇALIK Chairman

MEHMET ERTUĞRUL GÜRLERDeputy Chairman

CÜNEYD HARMANŞAGeneral Manager



The World Cotton Sector

Global cotton (fiber)

production declined from 28

million tons in 2011-12 to 26

million tons in the following

two seasons. Production is

expected to remain at that level

in the current season. However,

global cotton production fell

to 22.8 million in 2011-12, the

lowest level in the last ten

years, before increasing slightly

from 2012-13 onwards to reach

the order of 23.5 million in the

last season. It is expected that

the increase in consumption

will continue in the current

season to hit the figure

of 24.4 million.

THE COTTON SECTOR IN THE WORLD AND TURKEY IN 2014

World Cotton (Fiber) Data (Million tons)

2011-12 2012-13 2013-14 2014-15

Production 27.76 26.91 26.22 25.99

Consumption 22.65 23.47 23.75 24.22

Exports 9.99 10.18 8.87 7.45

Imports 9.87 10.08 8.84 7.45

Period-End Inventory 16.07 19.59 22.14 23.91

World S/U (excl. China) % 45.9 41.3 41.8 52.3

China S/U % 82 140 182 181.3

COTLOOK A INDEX (US cents/pound) 100 88 91 63-91;75

Parallel to these developments in world cotton production and

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,



and further unexpected

developments could arise in

the coming period.

Although production rose and

consumption fell in the season

2010-11, and supply fell by

just 300 thousand tons over

the previous season, cotton

prices showed a higher-than-

anticipated increase due to

a supply bottleneck, as large

amounts of cotton inventory

were not physically released

to the market, triggering

considerable panic. As a result

the Cotlook A Index seasonal

average rose to 164 US cent/

lb. This rise in prices continued

in the first three quarters of the

season 2011-12, then started

to fall rapidly from its peak in

April, down to slightly above

its levels two seasons ago. This

extraordinary rise in prices,

which started in the second

half of the season 2010-11 and

reached a peak in the first three

quarters of the season 2011-

12, is the result of not only the

aforementioned developments

but also speculation. This

assumption is confirmed when

we break down the Stocks-

to-Use (S/U) Ratio into the

categories of “China” vs “world

excluding China”:

In the seasons 2009-10 and

2010-11, S/U ratios for the

world outside China fell by

18 percentage points to 39%,

before increasing to 57%.

The Chinese S/U fell first by

13 points to 26%, and then

dropped further to 22%.

Following the extraordinary

jump in cotton prices, world

cotton production tilted

upwards in the season 2011-12,

which brought up the S/U for

the world excluding China to

59%, and prices dropped down

to the order of 100 US cent/lb.

In the same season, China

pursued a very wise strategy

by importing large volumes of

cotton at low prices, although

its domestic production

increased. As such, it brought

its S/U to the level of 72%. In

the following 2012-13 season,



S/U was 49% in the world

outside of China versus 116%

in China. It is being estimated

that, in the last season, as a

result of China’s strategy to

“build inventory at low prices,

dominate the speculation-

prone cotton markets with

this vast inventory and shape

markets in line with national

(Chinese) interests,” S/U of

the world excluding China has

probably fallen to 47% while

China’s S/U has risen to 160%.

In the current season (2014-

15) the S/U of the former is

expected to increase by 7

percentage points to 54%,

and China’s S/U is anticipated

to drop by only 2 points to

158%. In that case, China will

continue to control more than

half (58.4%) of global stocks.

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

THE COTTON SECTOR IN THE WORLD AND TURKEY IN 2014

be taken as an indicator of the

risk that countries except China

face due to the aforementioned

strategy. In the current

season, the Cotlook A Index is

expected to fluctuate between

63 and 91 cent/lb to an average

75 cents. Although this picture

seems to be advantageous for

consumers, this unprecedented

abnormality in stocks located in

China and the world excluding

China could be easily upended

by any abrupt change in

Chinese policy.

The Turkish Cotton Sector

In Turkey, the Turkish Statistical

Institute (TÜİK) obtains data

on cotton from the relevant

ministries, and then processes

and publishes them. In this

respect, cotton cultivation

areas and seed cotton field

productivity is calculated by

Ministry of Food, Agriculture

and Livestock via field studies

on the basis of the plots

registered with the Farmer

Registry System, as well as

observations based on Remote

Perception System which will

be extended to cover the whole

country. The amount of seed

cotton by province calculated

in this manner is reported to

TÜİK, which reports three news

bulletins featuring estimates.

The third estimate is later

recorded in annual statistical

tables as the most accurate

value.

In this regard, the Ministry

comes up with an estimated

Average Cotton Gin



Chart 2. Turkish (Seed) Cotton Figures

Unit2009-

102010-

112011-

122012-

132013-

142014-

15

Cultivation Area thousand

ha 420 481 542 488 451 490

Seed Cotton Production*

thousand tons 1,725 2,150 2,580 2,320 2,250 2,350

Seed Cotton Productivity kg/da 411 447 476 475 499 480

Fiber Production**thousand

tons 638 817 955 858 878 846

Fiber Productivity** kg/da 152 170 176 176 195 182

Cotton Gin Productivity*** % 37 38 37 37 39 38

*Figures calculated by TÜİK based on Cultivation Area and Estimated Avg. Productivity (Seed Cotton Production Volume = Cultivation Area x Seed Cotton Productivity)**Figures calculated by TÜİK based on Est. Avg. Cotton Gin Productivity: (Fiber Production Volume = Seed Cotton Production/ Avg. Cotton Gin Productivity) (Fiber Productivity = Seed Cotton Production * Avg. Cotton Gin Productivity)***Figures calculated by National Cotton Council (UPK) based on TÜIK data (Est. Avg. Cotton Gin Productivity = Cotton Fiber Production Volume/ Seed Cotton Production Volume)

Chart 3. Turkish Cotton Fiber Data

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

Cultivation Area, thousand ha* 420 481 542 488 451 490

Fiber Productivity, kg/da* 152 170 176 176 195 182

Fiber Production, thousand tons**

638 817 955 858 878 846

Beginning Inventory, thousand tons***

0 12 392 578 585 1186

Imports, thousand tons** 760 895 612 618 877 653

Consumption, thousand tons** 1,300 1,250 1,275 1,350 1,331 1,368

Exports, thousand tons** 86 82 106 119 115 71

Ending Inventory, thousand tons***

12 380 578 585 1.186 1363

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.)

Productivity for the country

as a whole. TÜİK employs this

figure to calculate the Cotton

Fiber Production Volume, and

publishes the latter figure along

with Average Seed Cotton

Field Productivity in annual

production statistics. The

volume and value of cotton

fiber imports and exports

are published by the Ministry

of Economy; however, TÜİK

statistics feature only the value.

Until recently, Domestic Cotton

Consumption figures were

collected by the rural branches

of the Ministry of Economy in

the form of registered cotton

bale numbers and weight, and

this data was shared with the

relevant institutions. However,

this practice was ended two

seasons ago as the number

of registered bales started

being collected on the basis

of reports by cotton ginning

companies. The data collected

in the light of these figures for

the last six years is as follows

(Chart 2):



MARKETING AND SALES

Çalık Cotton’s target audience

in the cotton sector, which

holds an important place in the

national and global economy,

are domestic and overseas

yarn manufacturers, denim

manufacturers, firms involved

in cotton trade and their

agents.

Çalık Cotton carries out

its operations in the major

production areas in the United

States, China, Turkmenistan,

India, and Turkey as well as in

all major global markets.

By capitalizing on its position

as a 360-degree service

provider and its fast and stable

growth in the industry, Çalık

Cotton aims to offer services in

all major consumption markets

so as to become a leader in the

cotton market. In this regard,

the Company also expends

efforts to supply and sell

cotton locally in China.

Via its office in the United

States, Çalık Cotton organizes

the sale of American cotton

through immediate shipment

and advance shipment.

Likewise, it provides local

quality and logistical services

through its Turkmenistan office.

As for the supply of Turkish

cotton, the GAP (“Southeastern

Anatolia Project”) / Urfa region

has become the largest cotton-

producing area in Turkey. Çalık

Cotton’s regional office ships

cotton either directly or from a

warehouse under supervision,

by using experience gained as

a result of its long presence in

the region. Cottons of domestic

and foreign origin are stored

in cotton warehouses in the

OPERATIONS IN 2014



Malatya Organized Industrial

zone, Gap/Urfa Region and

Mersin Free Zone.

Çalık Cotton continues as ever

to offer services to its valuable

business partners, based on its

philosophy centered on trust

and quality in the global cotton

market.

The Company is fully cognizant

of the historical and industrial

significance of cotton. As for

other fibers, the Company

aims for high quality and

distinguished production, price

and service levels in terms of

both product and added value.

Çalık Cotton is aware of the

importance that the products

it markets have on the lives of

customers and, accordingly,

strives to offer added value

to clients with its products

and help them gain time and

value through long-term

collaboration.

As a modern Company which

constantly upgrades and

innovates itself to face intense

competition, Çalık Cotton’s

target is to offer its clients in

the textile market both high

quality products and services

through swift customer

services and sustained quality

standards.

Çalık Cotton continues as ever to offer

services to its valuable business

partners, based on its philosophy centered on trust

and quality in the global cotton

market.



Better Cotton Production

Since 2005, manufacturers

strive to correct the

undesirable social and

environmental conditions and

effects associated with the

production of cotton, one

of the most-consumed daily

commodities across the world.

Global stakeholders focused

on making cotton production

environmentally, socially and

economically sustainable,

and on expanding this high

quality production across the

world, established in 2005

the non-profit organization

named Better Cotton Initiative

(BCI) to secure the future of

the cotton sector. Upon the

establishment of the Better

Cotton Practices Association

(İPUD) in 2014, Turkey became

a part of the better cotton

initiative, as part of a strategic

partnership agreement with the

Council. The ultimate goal of

this initiative is to guarantee a

safer future for the sector.

İPUD defines “better cotton”

as a product cultivated with

the aim of reducing the

environmental footprint, and

improving the living standards

of farmers. As such, it is a

globally recognized standard

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.

World-renowned brands’

support to BCI and their

commitment to reduce

conventional cotton production

in favor of better cotton,

suggest that this trend will

continue its ascent and “better

cotton” production will

increase in the coming years.

With the belief that “better

cotton” will hold a crucial

position in the world market

in future years, Çalık Cotton

has redefined its vision to

add “better cotton” alongside

organic cotton. As part of its

strategic partnerships, the

Company offers “better cotton”

products to buyers, already

becoming the biggest seller of

“better cotton” in Turkey.

OPERATIONS IN 2014

PRODUCT DEVELOPMENT



Çalık Cotton’s human

resources policy is to

recruit the right person for

the right job in line with a

customer-focused approach,

to promote employees with

high potential, to measure

employee performance with

the performance management

system, to conduct intelligent

career planning with the right

in-house advancements,

and to maintain a long-term

collaboration with employees

in order to sustain the company

culture.

In order to always stand by

its employees, the Company

pursues a modern human

resources policy that inspires

trust among them by offering

information in an ethical

manner; remains open to new

ideas to enhance its mission

and vision; and continuously

empathizes with employees.

All training programs are

developed in due consideration

of the Company’s future

position and growth potential.

In order to play a positive role

in the advancement of every

single employee, training

requirement analyses are

conducted and in-house and

outside training programs are

organized accordingly. In-

house training programs can

be divided into two categories:

a) Corporate Vision and

Culture Programs

Corporate Vision and Culture

Programs offer information

to newly-recruited personnel

as regards the corporate

vision and cultural structure

of the Company. These

training programs focus on

the Company’s track record,

current position, future

plans and service and work

philosophy.

HUMAN RESOURCES



b) Professional Proficiency

Programs

Professional Proficiency

Programs include training

programs to educate both the

newly-recruited personnel and

existing employees.

While well-experienced and

successful personnel play

a role in almost all training

programs, the Company

occasionally seeks the support

of professional training

companies.

Talent Management

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.

Talented individuals are those

who have the potential to fill

the technical and administrative

positions that are of sufficient

importance and information

to play a critical role in

the future of Çalık Cotton.

Talent management has

been designed to recruit the

workforce that Çalık Cotton

requires to meet its strategic

targets, to train employees who

can offer backup for certain

key positions within the firm,

and to ensure the loyalty of

critical human resources to the

Çalık Cotton family.

In line with its mission, vision

and policy, Çalık Cotton aims

to recruit “the very best.”

All functions are filled by

highly skilled employees with

the necessary information

and experience, who can

represent the Company, fulfill

their responsibilities and are

good team members. With

an average age below 35, the

Company personnel consists

of university graduates, most

of whom are fluent in English.

The Company also has two

employees who speak Chinese.

ABOUT USÇALIK HOLDING IN BRIEFOUR VISION, MISSION AND VALUES FINANCIAL AND OPERATIONAL INDICATORS ÇALIK COTTON IN BRIEFTHE YEAR 2014 AT A GLANCE

MANAGEMENTMESSAGE FROM THE CHAIRMAN THE CEO'S ASSESSMENT OF 2014SENIOR MANAGEMENT

OPERATIONSTHE COTTON SECTOR IN THE WORLD AND TURKEY IN 2014 OPERATIONS IN 2014

MARKETING AND SALES PRODUCT DEVELOPMENT

HUMAN RESOURCES

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100% SUCCESS

CALIK COTTON CORPORATE PROFILE 2014

ÇALIK COTTONHEAD OFFICE

Keresteciler Sitesi, Fatih Cad.Ladin Sok. No: 17 34169 Merter/Istanbul

Tel: +90 212 459 26 26Fax: +90 212 459 26 77

Mail: [email protected]

COTTON

CA

LIK C

OT

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CO

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OR

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OFILE 2014

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