Sarena Textile Industries (Private) Limited ("the Company" or "STIL) is a private limited company incorporated in 1994.

Sarena Textiles Industries (Pvt.) Limited serves as the flagship entity of The Sefam Group, a diversified textile conglomerate headquartered in Lahore, Pakistan. The Group is widely recognized for its ploneering role in introducing branded retail to the local market. The Group's origins trace back to Ali Embroidery Mills (Private) Limited, and over the years, it has expanded its footprint across various segments of the textile and appreal value chain. In addition to STIL, the Group's key business interests Include Sefam (Private) Limited, which manages its retail operations. Under Sefam the Group operates portfolio of retail brands, including Leisure Club, Kayseria, and Shahnameh, catering to diverse consumer segments across Pakistan.

The Company is engaged in the manufacture and sale of fabrics and garments used for fashion and workwear, with production operations divided into three main units: weaving, processing, and stitching/appreal. The Company offers a variety of special fabric finishes, such as Fire-Retardant Finish, Antistatic Finish, Chemical Protection Finish, etc., and is the only Licensee in Pakistan for PROBAN®, is a quality-controlled technological process that gives cotton and cotton-rich woven and knitted textiles flame-retardant properties that are durable for long-term use. The total energy requirement of the Company stands at 7MW, out of which 4MW is currently met through solar energy, while the remaining 3MW is fulfilled through LESCO, SNGPL, solid fuel captive power, and diesel generators.

The shareholding structure of Sarena Textile Industries (Pvt.) Limited has undergone a transition. Mr. Hamid Zaman transferred 30.0% of his ownership stake within the family and associated foundation. Post-restructuring, Mr. Hamid Zaman retains a majority shareholding of 53.34%. The remaining ownership is distributed among family members and the Zaman Foundation, with Ms. Sarah Zaman, Mr. Mustafa Ahmad Zaman, Waleed Ahmed Zaman, Omar Badi Zaman, Bilal Ahmed Zaman, and Zaman Foundation each holding a 5.0% stake. The remaining of 16.66% is equally divided between Mr. Tariq Zaman and Ms. Ambreen Zaman.

The Group has formalized its structure in alignment with the current management framework. The intra-family transfer of ownership stake reflects a formalized succession planning process and enhances continuity and stability within the Company's ownership structure. Moreover, the active involvement of the second generation in the strategic direction of the business further augurs well for the Company's long-term prospects.

The sponsor Group possesses extensive experience and expertise in the textile and retail industries and is widely regarded as a pioneer in introducing the concepts of brand in Pakistan. In addition to its core textile operations, the Group has also diversified into sectors such as corporate farming and energy through small-scale ventures.

STIL exhibits strong financial resilience, supported by a solid net worth and a consistent track record of sponsor backing.

Following the demerger, the Company's governance framework transitioned, with the Board now comprising sponsoring family members Mr. Hamid Zaman and Mr. Taria Zaman, along with Mr. Mustafa Ahmad Zaman (Group CEO) and Mr. Omar Badi Zaman. Additionally, the Company has recently onboarded three independent directors to the Board.

Mr. Hamid Zaman brings significant textile industry experience and a strong educational background from a prestigious university. His leadership, coupled with the active engagement of the second generation in strategic affairs, signals positive continuity for the Company.

There are formal board committees to assist the board on different matters. The board members are the primary sponsors of the Company. They ensure their availability and provide valuable insights and guidance whenever needed in the day-to-day operations of the business.

The Company has appointed Riaz Ahmad & Co., Chartered Accountants, as its external auditor. The firm is listed in the "A" category on the State Bank of Pakistan's panel of auditors. The auditors issued an unqualified opinion on the Company's financial statements for FY25.

The Company maintains a lean organizational structure to promote operational efficiency and effective communication. Key departments include: (i) Accounting, (i) Finance, (iii) Human Resources, (iv) Marketing, (v) Research & Development, (vi) Dyeing, and (vii) Weaving (viii) Appreal. The Group CFO reports directly to the Group CEO, while all functional department heads report to the CEO.

The Group's leadership is spearheaded by Mr. Mustafa Ahmad Zaman, who serves as the Group CEO of Sarena Textile Industries (Pt.) Limited and Seam (Pvt.) Limited. He brings with him over 24 years of professional experience, supported by a seasoned and skilled management team. Mr. Asif Masood, the CEO of the Company, has been associated with the Sarena Company for more than 28 years and brings extensive experience in the textile sector. The financial leadership is overseen by Mr. Shahzad Sarfraz Khan, the Group CFO, who also brings over 25 years of professional experience in financial management and strategic planning. Recently, Mr. Adnan Hassan has joined as the Chief Operating Officer (COO) of the Company. He possesses 15 years of industry experience, adding further depth to the operational leadership.

The Company has a formal management committee structure in place. Committee meetings are held on a monthly basis and are attended by relevant functional heads and key management personnel to ensure effective decision-making and operational oversight.

Sarena Textile deploys SAP ECC6 as their primary ERP solution, in addition to having Oracle (modified in-house) and S-Track, which is an in-house developed software. The Company has a comprehensive MIS in place with regular generation of reports to aid informed and timely decision-making.

Sarena Textile has an IS17025 accredited Quality Assurance Lab and is the only Licensee in Pakistan for PROBAN®, a quality-controlled technological process that gives cotton and cotton-rich woven and knitted textiles flame retardant properties.

Pakistan's textile exports recorded marginal growth of 0.26% during FY26, reaching USD 17.93bln compared to USD 17.88bln in FY25, according to the Pakistan Bureau of Statistics (PBS). Export growth was primarily driven by higher shipments of readymade garments (up 3.87% to USD 4.29bln), cotton yarn (up 12.40% to USD 765mln), and other textile materials (up 8.67%). However, key export categories, including cotton cloth (-7.55%), towels (-1.93%), knitwear (-0.88%), made-up articles (-0.71%), bedwear (-0.01%), and tents & canvas (-3.81%), registered declines, reflecting uneven demand across product segments. On a year-on-year basis, textile exports declined 16.71% in June FY26, falling to USD 1.27bln from USD 1.52bln in June FY25, indicating a slowdown in export momentum towards the end of the fiscal year. Meanwhile, Pakistan's overall exports declined 5.93% to USD 30.14bln, while imports increased 8.14% to USD 69.76bln, resulting in a wider trade deficit of USD 39.62bln during FY26. Despite resilient performance in selected value-added segments, the textile industry continues to face challenges from elevated production costs, subdued demand in certain export markets, and increasing competitive pressures, underscoring the need for supportive policy measures and cost competitiveness to sustain export growth.

Sarena Textile is an established leader in Pakistan's textile industry. The Company achieves higher margins than local competitors, primarily due to its strategic focus on the workwear niche, which enables a premium, value-added product mix.

The Company maintains a well-diversified sales portfolio across both local and export markets. During 9MFY26, revenue declined by approximately 4.6% to PKR 25.6bln (9MFY25: PKR 26.9bln), primarily reflecting a significant reduction in domestic sales. The export segment remained the key revenue driver, contributing approximately 75% of total sales, with export revenue increasing to PKR 19.2bln (9MFY25: PKR 17.9bln). Meanwhile, local sales declined sharply to PKR 3.6bln (9MFY25: PKR 10.5bln), resulting in a lower contribution to the overall revenue mix. The Company's core product portfolio continues to be led by dyed and printed fabric, with workwear garments forming the secondary yet strategically significant segment.

During 9MFY26, the Company's profitability moderated, with the gross margin declining to 17.2% (9MFY25: 21.1%) and the operating margin easing to 7.5% (9MFY25: 10.6%), reflecting pressure on overall operating performance. Although raw material costs declined to PKR 14.7bln (9MFY25: PKR 15.2bln), the contraction in margins indicates that the reduction in input costs was insufficient to offset other cost pressures and the decline in revenue. Consequently, the net margin weakened to 1.2% (9MFY25: 4.6%), reflecting lower earnings generation during the period.

Management expects capacity utilization to improve further over the coming year, supporting the Company's anticipated growth trajectory. Additionally, the Company is expanding its renewable energy initiatives to optimize energy costs and improve overall cost efficiency. It currently generates 4MW of electricity through its operational solar power system and plans to add another 1MW, increasing total installed solar capacity to 5MW.

The Company's working capital management remained liquidity-comfortable during 9MFY26, albeit more capital-intensive. Net working capital days increased to 131 days (9MFY25: 105 days), primarily driven by higher inventory holding of 78 days (9MFY25: 61 days) and an increase in receivable days to 92 days (9MFY25: 71 days). Trade payable days also increased to 38 days (9MFY25: 27 days), providing relatively greater supplier credit support. Despite the lengthening working capital cycle, the current ratio improved to 4.7x (9MFY25: 4.1x), reflecting a strong liquidity position and the Company's continued ability to comfortably meet its short-term obligations.

During 9MFY26, the Company's debt servicing capacity weakened, reflecting lower cash flow generation and profitability. FCFO to finance cost declined to 1.8x (9MFY25: 2.4x), indicating a reduction in cash flow coverage of finance costs. Similarly, EBITDA to finance cost (interest coverage) moderated to 2.3x (9MFY25: 2.7x), reflecting a comparatively lower ability to service finance costs from operating earnings. Although finance costs declined during the period, the reduction in operating cash flows and earnings outweighed this benefit, resulting in weaker overall coverage indicators. Nevertheless, the Company's coverage metrics remained at adequate levels, supporting its debt servicing capacity.

During 9MFY26, the Company's leverage ratio increased to 67.9% (9MFY25: 60.5%), primarily reflecting a rise in short-term borrowings to PKR 17.0bln (9MFY25: PKR 12.3bln) to support higher working capital requirements. Meanwhile, long-term borrowings declined to PKR 648mln (9MFY25: PKR 884mln), indicating continued repayment of long-term debt. The equity base marginally declined to PKR 8.6bln (9MFY25: PKR 9.0bln), though it continued to provide support to the Company's capital structure despite the increased reliance on short-term financing.