Gul Ahmed plans to carve out business segments

KARACHI: Textile major Gul Ahmed has planned to carve out its local business segments, including retail business into one or more companies.

At a meeting, the Board of Directors of Gul Ahmed Textile Mills Limited authorised the company to explore the feasibility-viability of a potential carve-out of its local business segments, including retail business into one or more companies, a bourse filing said on Monday.

The company would be appointing advisors and consultants for evaluating the feasibility, including due diligence and valuation in this regard.

Gul Ahmed, among the country’s largest composite textile mills, has contributed around 2.5 percent in the value-added textile exports of the country. The main business segments include spinning, processing, and retail. The primary retail wing of the company operates under the title of Gul Ahmed Ideas.

The outgoing financial year was very difficult for the spinning business due to lower demand, both in local and international markets. Yarn sales declined by 12 percent as lower yarn demand from China severely affected the exports of yarn. This was further affected by artificial rupee-dollar parity.

Major portion of yarn produced was used in-house to take advantage of vertical integration.

In the processing area, sales suffered due to political situation in the first quarter. Steep depreciation of the euro against dollar in the third quarter slowed down the company’s export sales to Europe. European retailers picked up goods slower than the forecast due to cash flow constraints on account of the currency crisis.

According to the last annual report, Gul Ahmed Textile Mills was the subsidiary of Gul Ahmed Holdings (Private) Limited. The Holding Company owns 66.78 percent shares of the company and was the ultimate parent company of the group.