PACRA Maintains Entity Ratings of Gul Ahmed Textile Mills Limited

The ratings reflect Gul Ahmed Textile Mills Limited’s (Gul Ahmed) established business profile with strong presence in the broader textile value-chain; enabling the Company to manage volatility in textile business. Presence in retail with renowned brand "Ideas" in local market adds up to stronger business risk. The entity has achieved a sizable revenue base, while focus on value added products brings higher gross margins. This emanates from export market orientation, targeting established niche of quality-conscious institutional buyers. Nevertheless, this has led to customer concentration; longevity of relationship with big-name clients in addition to sustained quality would help manage the risk. The currency devaluation has boded well for the Company’s export-oriented topline while recurrent BMR has improved efficiency, depicted in improved gross margins. Meanwhile, hefty branding activities and competition in the local market has kept net margins relatively strained. Gul Ahmed's financial risk profile remains strong, characterized by robust cash flows, supporting improved working capital management and strong debt-servicing ability. While leveraging remains on the higher side, financing at concessionary rates by the SBP shields the Company against recent interest rate hikes.
The ratings are dependent on the Company's ability to sustain its business profile while maintaining strong margins and coverages. At the same time, prudent management of working capital needs and meeting financial obligations remain critical.

About the Entity
Gul Ahmed Textile Mills Limited (Gul Ahmed) - listed on Pakistan Stock Exchange, commenced operations in 1953. The Company is engaged in the manufacturing of yarn, fabric, garments and home textile products. Management control lies with Bashir family, holding majority stake (~70%) in Gul Ahmed - through Gul Ahmed Holdings. Gul Ahmed has strong presence in retail sector through one of Pakistan’s premier retail brand ‘Ideas’. It operates with over 100 retail outlets all over Pakistan. Gul Ahmed exports ~55% of its total revenue while rest is in local market including retail.

Overall control of the Company vests with a seven-member Board of Directors comprising four members of the Bashir family, one Group affiliate and two independent directors. The Chairman – Mr. Mohammed Bashir – has over 4 decades of experience in the textile sector. He is a founding member of Gul Ahmed Energy and Habib Metropolitan Bank Limited. For his services in textile, Mr. Bashir has been awarded Sitara e Imtiaz by the Government of Pakistan and he was awarded Grade d' Officier in the National Order of Merit by the President of French Republic in 2007. The CEO, Mr. Zaki Bashir, graduate of Regent's Business School UK, oversees the Company affairs with the help of an able management team. The Company has made separate business units for its business which includes (i) Spinning, (ii) Weaving (iii) Processing, Home Textile & Apparel and (iv) Retail; each is a full profit centre.