Gul Ahmed Textile Mills Limited, one of the oldest and established textile companies in Pakistan has now made an announcement to hive out its local business segment into a wholly-owned subsidiary.
The company in a notification to the Pakistan Stock Exchange stated that the Board of Directors of Gul Ahmed Textile Mills Ltd. have authorized the company to propose a plan and establish its local business segment into a wholly-owned subsidiary. Once finalized, it will be presented to the Board of Directors for their consideration.
Also, the company has been authorized to incorporate a wholly-owned subsidiary and appoint legal, financial and such other advisors and consultants as per the requirement.
An industry expert said, “The biggest benefit of hiving off local business (wholesale) to any business in the textile industry is to discourage credit – considering today’s market and financial situation, it is very tough to get payments recovered from parties.”
Furthermore he said that Gul Ahmed has grown so much that they are completely book in house and are outsourcing production as well.
As they hive off the local end of the business they can focus more on the in-house production and mix it with outsourced production to other vendors and also come up with a product for their retail end.
He said that local business is being hived off as there has been a decline in sales post-2019 and it has been an added expense for the company that takes more and gives less in return.