TABLE OF CONTENTS

CONTENTS PAGE NO.

S/NO.

1 Gul Ahmed history and introduction 3

2 Products 4

3 Vision and Mission Statement 5

4 Analysis of mission statement 6

 Proposed Mission Statement 6

5 External factor evaluation matrix 7

6 Internal factor evaluation 8

7 SWOT Analysis 9

8 CPM – Competitive Profile Matrix 10

9 SWOT Matrix 11

10 Financial Ratios 12-15

 Profitability ratios 12
 Liquidity ratios 13-14
 Debt ratios 15

11 Space matrix 16-17

12 BCG Matrix 18

13 Evaluation of business model 19

14 Blue ocean strategy 20

 GUL AHMED

HISTORY:

When we talk about the story of textiles in the sub continent, it’s about Gul Ahmed. The group
started its trading in 1900’s. With all its creation and innovative work and experience, the group
decided to enter in to the field of manufacturing and Gul Ahmed Textile Mills LTD, which was in
the year 1953, was incorporated as private limited company. In 1972 it was listed on the Karachi
stock exchange. And since the company is doing rapid progress and become one of the best
composite textile houses in the world. The mill is presenting a composite unit with a capacity of
130,296 spindles, 223 wide width air jet looms and also a state of art processing unit and finishing
unit.

INTRODUCTION:

Gul Ahmed first started its trading in textiles in the early 1900's, and manufacturing was done in
1953 with the establishment of Gul Ahmed Textile Mills Limited. Gul Ahmed was listed on the
Karachi Stock Exchange in 1972. Fifty years since its beginning, the name Gul Ahmed is still
identical with quality, innovation and reliability. As it is also vertically integrated so Gul Ahmed is
also capable of producing different varieties, starting from cotton yarn to finished product involving
different processing techniques. The capacity of Gul Ahmed spindles is 120,000, and the spinning
units are able to produce a wide variety of yarns from 100% cotton yarn to poly-cotton, cotton-
viscose and other blends in both coarse and fine counts. The weaving units are completed with high
speed 250 air jet looms and can produce high quality fabrics in sheets, satins, percales, twills, drills,
voiles and an set of other finely woven fabrics including yarn dyed. Processing is assembled with
sharp and experienced technology to ensure quality printing, dyeing, and different finishing
treatments with facilities to add some extra value to products. The Gul Ahmed state of the art
stitching facilities is completed with regular and approved machines which manufacture products in
many varieties and styles. The large embroidery and quilting units add adaptability for enhancement
of products to supply to all sorts of customer needs and requirements. This help to encourage
systems that constantly checking and controlling production to achieve high standards.

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PRODUCTS:

1. Fashion Fabrics and Apparel

2. Home textiles, Beddings and Curtains.
3. Singed dyed and mercerised yarn
4. Combed and carded yam for knitting and weaving

Gul Ahmed’s fine textile products represent a unique fusion of the century old traditions of the east
and the latest textile technology of the west. The apparel line consists of fabrics such as lawns, linen,
chiffon, latha, khaddar and polyester cotton for the ladies collection. Gents collections are chairman,
texana, poplin etc. The home textile range of bed linen, cushions, kitchen items and curtains are in
plain dyed, printed up to 21 colours embroided and embellished in different styles through a
combination of latest technology, skills and craftsman ship of this traditional industry.

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 VISION AND MISSION STATEMENT

VISION STATEMENT
“Setting trends globally in the textile industry. Responsibly delivering products and services to
our partners.”
GUL AHMED VISION ANALYSIS:

The vision statement clearl y describes the dream or the future of the company that is
to be the world’s most well known textile industry and also to be the most appreciated
and positively graded brand by all levels of people around the world. T h e c o m p a n y a l s o
f o c u s e s i t s v i s i o n t o e m p l o y e e s a t i s f a c t i o n s , s o t h a t t h e employees will be
happy by responsibly delivering their products and services.

MISSION STATEMENT
“To deliver value to our partners through innovative technology and teamwork. Fulfilling our
social and environmental responsibilities.”

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 ANALYSIS OF MISSION STATEMENT

NO COMPONENT YES/NO

1 Customers Yes

2 Products/ services No

3 Markets Yes

4 Concern for survival, growth and profitability No

5 Technology Yes

6 Philosophy Yes

7 Self concept No

8 Concern for public image Yes

9 Concern for employees Yes

GUL AHMED MISSION ANALYSIS:

Gul Ahmed mission lacks three components

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 1) Product/services
2) Concern for survival , growth and profitability
3) Self concept

PROPOSED MISSION STATEMENT:

“To deliver value to our partners by fulfilling their fabric and textile necessitate through
innovative technology and teamwork. And recognize profitability and growth mutually by
fulfilling our social and environmental responsibilities.”
EXTERNAL FACTOR EVALUATION MATRIX: (EFE MATRIX)

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 WEIGHT RATING WEIGHTED
OPPORTUNITIES AVERAGE

1 To invest and venture into cosmetics market. 0.1 4 0.4

2 Expand local markets by reducing their cost 0.08 4 0.32

3 Open production plant to Bangladesh 0.06 3 0.18

4 Facilitation for overseas candidates for internships 0.07 4 0.28

5 Increase research and development 0.06 3 0.18

6 Involved in health awareness programs and 0.07 4 0.28

training drills

7 Ideas expansion internationally 0.08 4 0.32

8 Acquisition of small textile industries to make new 0.08 3 0.24

products

9 Sponsorship in sports events 0.1 4 0.4

THREATS

1 Law and order situation of the country 0.08 1 0.08

2 Economic instability 0.05 1 0.05

3 Rising production cost 0.02 2 0.04

4 Competitors 0.1 2 0.2

5 Changing preferences of customers 0.02 2 0.04

6 Energy crisis e.g electricity and gas 0.03 1 0.03

TOTAL 1 3.06

INTERNAL FACTOR EVALUATION MATRIX: (IFE MATRIX)

WEIGHT RATING WEIGHTED

STRENGTH AVERAGE
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 Brand name 0.1 4 0.4

1 Deliver value through innovative technology & 0.08 4 0.32

teamwork.

2 Enjoying a leading position in the world of textiles. 0.04 3 0.12

3 Unique designs and creativity 0.05 4 0.2

4 Have their own power generation plant 0.11 4 0.44

5 Efficient production capacity 0.04 3 0.12

6 Adopting the best practices to ensure a greener 0.03 4 0.12

society.

7 Export their products globally 0.06 4 0.24

WEAKNESSES

1 Sethiya culture 0.1 2 0.2

2 Targeting elite class 0.04 1 0.04

3 High prices 0.09 1 0.09

4 Marketing not vigorously 0.06 2 0.12

5 Lack of freedom and decision power 0.2 2 0.4

TOTAL 1 2.91

SWOT ANALYSIS

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 STRENGTHS WEAKNESSES

 Strong Brand Image  Sethiya culture

 Deliver value through innovative  Targeting elite class
technology & teamwork.  High prices
 Enjoying a leading position in the world of  Marketing not vigorously
textiles.  Lack of freedom and decision power
 Unique designs and creativity
 Have their own power generation plant
 Efficient production capacity
 Adopting the best practices to ensure a
greener society.
 Export their products globally

OPPORTUNITIES THREATS

 To invest and venture into cosmetics

 Law and order situation of the country
market.
 Economic instability
 Expand local markets by reducing their cost
 Rising production cost
 Open production plant to Bangladesh
 Competitors
 Facilitation for overseas candidates for
 Changing preferences of customers
internships
 Energy crisis e.g electricity and gas
 Increase research and development
 Involved in health awareness programs and
training drills
 Ideas expansion internationally
 Acquisition of small textile industries to
make new products

SWOT MATRIX

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1.
2.
3.
SWOT MATRIX 4.
5.
6.
7.
8.
OPPORTUNITIES (O)
1. To invest into
cosmetics market
2. Open their production
plant to Bangladesh
3. Facilitation for
overseas candidates for
internships
4. Increase research and
development
5. Involved in health
awareness programs
and trainings.
6. Expand local markets
by reducing their cost
THREATS (T)
1. economic instability
2. law and order situation
3. competitors
4. rising production cost
5. energy crisis
6. changing preferences
of customers
STRENGTHS (S)
Strong brand name
Deliver value through innovative
technology
Enjoying leading position in the
world of textiles
Unique designs and creativity
Have their own power
generation plant
Efficient production capacity
Adopting best practices to
ensure greener society
Export their products globally
SO- STRATEGIES
 Should expand local markets
by offering unique designs
and creativity. (S4,06)
 Should use more innovative
technology by increasing
their research and
development. (S2,04)
 Should give training on
health awareness with the
collaboration of CSR.
(S7,05)
ST- STRATEGIES
 Should export their products
globally by observing the
changing preferences of their
customers. (S8,T6)
 Should make more power
generation and saving plants
to minimize energy crisis.
(S5,T5)
FINANCIAL RATIOS
WEAKNESSES (W)
1. Sethiya culture
2. Targeting elite class
3. High prices
4. Marketing vigorously
5. Lack of freedom and decision
power
WO- STRATEGIES
 Should marketing
vigorously to invest into
cosmetics and expand
local market. (S4,01,06)
 Employees should be
given training on health
awareness and should be
given freedom & decision
power. (S5,05)
WT- STRATEGIES
 Instead of targeting elite
class and high prices, it
should offer special discount
offers during the period of
economic downturn so as to
retain the customers during
recession. (W2,W3,T1)
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We have calculated the following ratios by taking data from 2012 annual report of GUL AHMED
which is listed on Karachi Stock Exchange.

1) PROFITABILITY RATIOS:

(i) Increase Or Decrease In Sales:

The ratio is calculated by:
(Current sales-last year sales)/last year sales

2012 2011 2010

(1.1%) 29.18% 41.58%

In 2010 the company sale is increasing by 41.58% and same it is increase in 2011.but in 2012 it is
decreased by 1.1%.

(ii) Net Profit To Sales Ratio:

This is calculated by:
(Net profit/sales)*100

2012 2011 2010

(0.96%) 4.70% 2.43%

The Company net profit to sale is 2.43% but it increased to 4.70%.in 2012 it shows a
negative sign which shows that company earning is declining.

(iii) Gross Profit To Sales Ratio:

It is calculated by: (Gross profit/sales)*100

2012 2011 2010

14.14% 18.19% 16.12%

The company gross margin to sale is increased in 2011, but it decreased in 2012, which indicates
that company earning is declining.

(iv) Return On Equity:

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 This is the ratio showing the return obtained by investment of owner’s equity. It is
calculated by: Net profit/ total equity

2012 2011 2010

(5.23)% 28.80% 14.22%

The company did well in 2011, but in 2012 it decline by 5.23% which shows that company earning is
declining.

(v) Return On Capital:

The return on capital measures how the company is using its money to generate returns.

2012 2011 2010

19.52% 39.82% 27.87%

The company return on capital in 2010 was 27.87% which increase to 39.82% but it decline in 2012 by
19.52%.

(vi) Return On Assets:

This ratio indicates the earning on the investment of assets.
It is calculated by: Net profit/total assets

2012 2011 2010

3.49% 16.58% 7.93%

ROA was 16.58% which was decline in 2012 by 3.49%.

(vii) Earnings Per Share (Rupees):

The earnings per share show good measure of profitability. it shows how much profit is earn on
shares.

EPS is already calculated which is:

2012 2011 2010
(1.89) 9.42 3.76

The company EPS is declining in 2012 because of decline in net income.

2) LIQUIDITY RATIOS:

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 (i) CURRENT RATIO:

It measures the ability of company to meet its current liability.

It is calculated by: Current assets/ current liabilities

2012 2011 2010

0.99 1.03 0.97

Current ratio has improved in decline in 2012 as compared to 2011.the benchmark should be
2:1.The company current ratio in 2012 is below the benchmark.

(ii) QUICK/ACID TEST RATIO:

It measures the quick financial ability of company to meet its obligations. It is calculated
by:
Current assets (excluding inventory and prepaid expenses)
Current liability
2012 2011 2010
0.24 0.19 0.34

The company quick ratio increased to 0.24 as compare to 2011.

(iii) INTEREST COVER RATIO:

This can be calculated by:

Interest coverage ratio=EBIT/interest expense

2012 2011 2010

1.00 2.40 1.75

An interest coverage ratio below 1 indicates the company is not generating sufficient revenues to satisfy
interest expenses. But the company interest coverage is above 1 in consecutive 3 years.

(iv) INVETORY TURNOVER:

It shows the quick or slow inventory item, it is the holding period of inventory at warehouse before
sale. It is calculated by:

Times = sales/inventory
Days= 365/turnover (times)
2012 2011 2010
151days 134days 98 days

(v) FIXED ASSETS TURNOVER RATIO

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 2012 2011 2010
3.67 3.82 3.21

The company fixed assets turnover ratio was increased in 2012 which is 3.67 as compare to other
two previous years.

3) DEBT RATIOS:
(i) DEBT RATIO:
It shows the total claims of creditors against assets; it should be as low as possible as debt
increases leverage. It is calculated by:
Total liabilities/ total assets
2012 2011 2010
34.86% 34.64% 40.33%

Debt ratio in 2010 was 40.33%, but it decline in 2011 and 2012 this is a good sign which
indicates that the company is working to reduce their debt ratio.

(ii) FINANCIAL LEVERAGE RATIO

The financial leverage ratio is also referred to as the debt to equity ratio. The financial leverage
ratio indicates the extent to which the business relies on debt financing. it is calculated through
Financial Leverage Ratio = total debt / shareholders equity.

2012 2011 2010

2.25 2.67 2.40

The company financial leverage is decreased in 2012 as compare to 2011.

SPACE MATRIX
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 Financial Strength Environmental Stability

 return on investment 6  rate of inflation -2

 leverage 6  technological changes -2
 liquidity 6  price elasticity of demand -1

 working capital 6  competitive pressure -5

 cash flow 6  barriers to entry into market -3

AVERAGE 6 AVERAGE -2.6

Competitive Advantage Industry Strength

 market share -2  growth potential 6

 product quality -2  financial stability 6
 customer loyalty -3  ease of entry into market 3

 technological know-how -2  resource utilization 5

 control over suppliers and -2  profit potential 6

distributors
AVERAGE -1.4 AVERAGE 5.2

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X-axis = competitive advantage + industrial strength

= (-1.4) + (5.2)

= 3.8

Y-axis = financial strength + environmental stability

= (6) + (-2.6)

= 3.4

GRAPHICAL REPRESENTATION:

RESULTS
According to the SPACE matrix, the Gul Ahmed Company will adopt aggressive strategy in order to
capture more and more market share in order to become market leader not only in Pakistan but also
across the world.

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 BCG MATRIX

STARS QUESTION MARKS

High

Market
growth
CASH COWS DOGS

Low
Strong Weak

Relative Competitive Position

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 EVALUATION OF BUSINESS MODEL

A solid business model remains the bedrock of every successful investment. Quite simply, the
business model is how the company makes money. Gul Ahmed is in a growth market, and it has a
good relative overall position in a textile industry. It offers an unbeatable environment and friendly
and helpful staff to assist customers in any question or problem they might have with the quality and
creativity of the product. People buy Gul Ahmed product for what it represents and the status symbol
that comes along with it. Although various business models exist, the principles and structure of Gul
Ahmed is a good model to follow. Expanding abroad and realizing a greater market area is one of the
first strategic imperatives of a company. Understanding a company’s business model is crucial to
investing in individual securities if the purpose is to invest with the objective of outperforming a
benchmark return or for a high absolute return. A key point is that the numbers are a result of the
business operations; the business operations are not the result of the numbers.

BUSINESS MODEL ELEMENTS GUL AHMED

Product/service Textile, fabrics

customers Mass market, higher income crowd

delivery outlets

differentiation Brand, quality, creativity

profits High Price

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 BLUE OCEAN STRATEGY

CONCLUSION
STRATEGY 1:

Instead of targeting elite class and high prices, it should offer special discount offers during the period of
economic downturn so as to retain the customers during recession.

STRATEGY 2:

It should export their products globally by observing the changing preferences of their customers.

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