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Gul Ahmed Textile Mills Limited

One of the largest exporters of textiles and fabrics in Pakistan, GATM is a composite textile mill engaged in the manufacture, spinning and processing of textile and yarn. Opening its first 'Ideas' store in 2003, the company was amongst the first-and subsequently one of the most successful-composite mills that went down the retail path. While many have followed suit, Gul Ahmed remains the pioneer of the "original lawn", a phrase that ushered in an era of innovation and growth in the value-added textile segment of the country.

Performance 1Q FY14

During the quarter ended September 30, 2013, Gul Ahmed achieved net sales of Rs 7,051 million-an increase of 21 percent over the corresponding period. This is indicative of the windfall that was soon to come the company's way, with ever improving export sales and a steady demand at home amidst rapidly improving local operational environment.

The company's gross profit during the quarter has increased to Rs 1,228 million representing growth of nearly 30 percent year on year. Growth in profit after tax comes out to 136 percent when compared to the corresponding period.

The only red flag on Gul Ahmed's horizon at the moment is likely to be the domestic cotton prices, which witnessed a sharp uptick during the second half of the year. While procurements during this period will effectively increase the firm's average inventory costs for the upcoming period, Gul Ahmed wisely held off on making major purchasing and will likely be able to curtail some of these costs as we head deeper into the glut season.

Highlights FY13:

During FY13, Gul Ahmed's books managed to turn green once more off the back of improved revenues-with both local and export sales having increased by 29 and 16 percent, respectively. The year also saw Europe witnessing some semblance of revival from the economic crises, and the subsequent increase in demand for processed textiles from abroad and the depreciation of rupee against the greenback also contributing to the aforementioned increase in exports.

Total sales in the first two quarters contributed 44 percent to the annual numbers whereas third and fourth quarter sales contributed 27 and 29, respectively. The second and third quarters in particular remained exceptionally lucrative for Gul Ahmed due to increase in local demand which centers on the firm's winter offerings. Additionally, incremental increase in prices of khaddar, linen and other winter suiting during the period under review also helped the company's cause.

Gul Ahmed's performance on the whole has been consistently improving off the back of the sector's improved fundamentals, with the firm's gross profit margin having increased by nearly 33 percent in the space of the last 12 months.

During the year, a substantial reduction of 11 percent in the company's finance cost, allowed for the profit before tax for the period to jump to Rs 841 million versus loss before tax of Rs 1.4 million reported in the last fiscal year. Profit after tax for the year ended up touching Rs 700 million mark-a substantial improvement compared to the loss after tax of Rs 240 million reported in the previous fiscal year.

For Gul Ahmed, this performance comes as a respite after the abysmal performance of FY12, when the energy crises and dwindling foreign demand combined together to pour salt on the firm's wounds. However, the firm has hopefully moved on from the era of red bottom lines for good-having managed to expand their export reach during the last fiscal year while maintaining a stronghold on the local processed textiles sector at the same time.


Going forward, Gul Ahmed Textile Mills will be one of the bigger players who are likely to emerge victorious from Pakistan's entrance into the clutches of nations who enjoy tariff-free access to the European markets. Unlike some other players (read Nishat Chunian) GATM already has the necessary infrastructure in place to enjoy immediate benefits from the tariff removal-which will effectively benefit exporters of value-added textiles, home linens and garments the most.

Copyright Business Recorder, 2013


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Foreign Debt $62.649bn
Per Cap Income $1,512
GDP Growth 4.24%
Average CPI 8.6%
Trade Balance $-2.197 bln
Exports $1.729 bln
Imports $3.926 bln
WeeklyNovember 23, 2015
Reserves $19.713 bln