KARACHI, Jan 8: Nishat (Chunian) Limited, a Mansha Group listed company, has decided to set up a wholly-owned subsidiary in the United States of America with an equity investment of $1 million.

The decision was made at a meeting of the board of directors held on Tuesday. The purpose of setting up a subsidiary is to promote the company’s textile marketing and trading.

“As per the approval of State Bank of Pakistan, the company will initially make equity investment of up to $0.10 million, along with the seed money of $0.10 million,” the directors told the investors.

They added that the investment would be raised up to $1 million, after taking necessary approvals from the SBP.

Another major decision taken by the board on Tuesday was to decide “in principle to reorganise, reconstruct and separate the investment from textile business of the company to more effectively manage its affairs keeping in view the best interests of the company shareholders.”

Accordingly, the board approved appointment of a consultants’ consortium to study the company's business model and to recommend a ‘viable and workable’ proposal for consideration and approval of the board of directors.

Analyst Bilal Qamar at JS Global in a report on Nishat (Chunian) released on Monday stated that the company was expected to witness a turnaround in current financial year with 76 per cent growth in earnings in second quarter (2Q13), over the first quarter.

Strong core business performances, led by improved yarn exports and recognition of dividend income from the company’s subsidiaries were thought to be the key earning drivers in 2013.

The analyst pointed out that revenue generated by higher yarn demand from China has been the ‘story of the year’ for the spinning industry in Pakistan. With local prices set well below China’s support price, the local spinning industry has benefited from increased exports to China.

As per the latest figures provided by Pakistan Bureau of Statistics (PBS), cotton yarn exports have increased in five months of the current financial year (July-Nov) by 38 per cent over similar period of last year.