It is not uncommon for companies in Pakistan, particularly companies owned by the country’s oldest business families, to want to leave behind a legacy. Think Syed Babar Ali of Packages Group wanting to set up Lahore University of Management Sciences, or Ali Habib of the Habib family spearheading the creation of Habib University in Karachi. Such was the case with the Treet Group for the Institute for Art and Culture.
On the website of Treet Corporation, which manufactures razors, the tagline is clear: “a company as old as Pakistan itself”. And they are right: in fact technically, the Ali Group was started before independence by Sir Syed Maratib Ali. He was a highly successful entrepreneur in the early part of the twentieth century and made his fortune supplying a variety of goods to the British government in India, specifically the British Indian Army.
Maratib had three sons: Amjad, Wajid, and Babar. Amjad, the eldest, went into politics and became Pakistan’s ambassador to the US in the 1950s and the United Nations in the 1960s. Wajid and Babar decided to stay in the family business. The aforementioned Packages Group is essentially the ‘Babar Ali’ branch of the family, while the Treet Group is the ‘Wazir Ali’ branch, named for their grandfather – Maratib Ali’s father – Wazir Ali, who first started the family business in 1858, in the Old City of Lahore the year it became evident that the Mughal Empire was dead for good.
Treet Corporation was set up in 1952, and is the sole manufacturer of razor blades and disposable razors in the country. Its first razor blade manufacturing unit was set up at Hyderabad in 1954, and the second unit was set up at Lahore in 1975. It was incorporated as a public limited company in 1977. Its razors are wildly popular, to say the least, with the company having an 85% market share of blades in Pakistan. The production capacity is 2.15 billion units of razors and blades per year, from just two plants in Hyderabad and Lahore.
But the Treet Group does not make just blades. Over the years the group has expanded into pharmaceuticals (Renacon Pharma), batteries (Treet Battery), and motorcycles (Treet Bikes). Some have done well (such as battery); others not so much, like the bikes. Regardless, the main focus is and always has been blades. In 2020, sales from blades made up 53% of all sales.
Treet is still a ‘Wazir Ali’ company: his son, Syed Shahid Ali is the chief executive office of Treet Corporation, while his grandson, Syed Sheharyar Ali is an executive director. And in 2007, the family decided to take an interesting turn into education. The subsidiary Global Arts Ltd (previously, Treet Services) was incorporated in October 2007, and converted into a public limited company in 2014.
Initially, the company was started to cater technical services, but quickly switched over into educational institutes. Specifically, the company’s job description was to “promote, establish, run manage and maintain, educational institutions, colleges of arts, research, sciences, information technology and business administration; higher level schools, academics, technical training centers and such other educational institutions as may be considered appropriate for the promotion and advancement of education in the country”.
The culmination of this effort was the Institute for Art and Culture, set up in Lahore in 2018. This art institute has a liberal arts education platform, and is unique in incorporating a tri-lingual approach, which includes English, Urdu and Punjabi. The institute has five schools: the school of Culture and Language, Digital and Cinematic Arts, Art, Architecture, and Short Term Academic Skill Development. Much of the faculty was poached from the much older National College of Arts. Naturally, Syed Shahid Ali is the chancellor of the school.
There was only one problem: Global Arts Limited is doing very poorly. In 2017, the company recorded a profit after tax of Rs1 million. In 2018 the company recorded a loss of Rs6.9 million, and in 2019 it recorded a loss of Rs8.4 million. This, after Treet invested around Rs1,605 million into Global Arts.
And to be fair, it is not like Treet Corporation itself is doing too great this year. Treet Corporation’s revenue stood at Rs6,040 million in 2020, compared to Rs6,760 million last year. Covid-19 hit the company hard with a net loss after tax of Rs190 million in 2020, against net profit after tax of Rs283 million in 2019.
The decision to sell the Global Arts in its entirety was taken in February 2020. To manage this, first Treet will have to make Global Arts its wholly owned-subsidiary, in order to completely divest from it. Currently, Treet owns 88.76% of Global Arts. The remainder is owned by Treet Holding Ltd., and Renacon Pharma. Global Arts also owns roughly 10% and 14% shares in Renacon and Treet Holdings respectively. The plan at the annual general meeting to be held on October 31, is to buy Global Art shares in Renacon and Treet, and buy shares in Global Arts from Treet Holding and Renacon. Then, the entire subsidiary will be sold for Rs1.8 billion. The company plans to make a sale in December 2020.
Why is Treet doing this? In the notice to the Pakistan Stock Exchange, the company said it wanted to reduce its borrowing costs. Once the subsidiary is sold, the company expects the finance cost to reduce by Rs300 million annually.
But that will also mean that there will be no legacy institution for the Treet Corporation.