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The Pakistan Credit Rating Agency Limited
Press Release

Date
07-Sep-21

Analyst
Muhammad Fahad Iqbal
fahad.iqbal@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Assigns Positive Outlook to Gul Ahmed Textile Mills Limited

Rating Type Entity
Current
(07-Sep-21)
Previous
(03-Sep-20)
Action Maintain Maintain
Long Term A A
Short Term A1 A1
Outlook Positive Stable
Rating Watch - -

The assigned ratings incorporate Gul Ahmed Textile Mills Limited’s (Gul Ahmed) sound operating track record with a strong presence in the broader textile value-chain; enabling the Company to manage volatility in the textile business. Assigned ratings also reflect the presence of a seasoned senior management team that possesses considerable experience in the textile sector. Presence in retail with renowned brand "Ideas" in the local market adds up to a stronger business risk profile. 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 an established niche of quality-conscious institutional buyers. Recently, the revenues of all segments witnessed an increase due to enhanced opportunities for Pakistan for textile products locally and around the world. Despite the tough economic conditions due to the Covid-19 pandemic, the Company has significantly improved its profitability with remarkable growth in margins both locally and in export markets. The Company regularly undertakes BMR which has resulted in significantly enhanced capacity utilization and margins over the years. The liquidity profile of the Company is considered adequate with a manageable working capital cycle and sufficient cash flows to meet outstanding obligations while leveraging remains on the higher side. Furthermore, Gul Ahmed is in the process of merging with Worldwide Developers (Pvt.) Limited which will be capitalized this year.
The ratings are dependent on the Company's ability to sustain its business profile while maintaining its margins and strong. 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 the Bashir family, holding the majority stake in Gul Ahmed - Gul Ahmed Group through two corporates: Gul Ahmed Holdings (Pvt.) Limited (~67%) and Swisstex Chemicals (Pvt.) Limited (~3%). Gul Ahmed has a strong presence in the retail sector through one of Pakistan’s premier retail brand ‘Ideas’. It operates with over 108 retail outlets all over Pakistan. Gul Ahmed exports 64.3% of its total revenue while the rest is in the local market including retail.

About the Instrument
Overall control of the Company vests with a seven-member Board of Directors comprising four members of the Bashir family, one non-executive, 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 the French Republic in 2007. The CEO, Mr. Zaki Bashir, a graduate of Regent's Business School the 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 center.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.