The Pakistan Credit Rating Agency Limited
Press Release


Sehar Fatima

Applicable Criteria

Related Research

This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Sarena Textile Industries (Pvt.) Limited

Rating Type Entity
(29-Jul-22 )
(30-Jul-21 )
Action Maintain Upgrade
Long Term A A
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Sarena Textile Industries (Private) Limited specializes in weaving, dyeing, printing, finishing and stitching. The Company offers various finished products and has created a niche where it processes and produces specialized cloth for fire resistant and other uniforms. The company is also licensee for PROBAN® in Pakistan. The Company employs experienced professionals, aided by comprehensive reporting, who look after operations of the Company with complete autonomy. The Company has established its presence in the overseas market and also considered a strong player in local market as the revenue is balanced almost equally between the local and export market. Captive clientele in shape of group companies, provide an advantage in local sale. The Company’s performance showed resistance, compared in the relative universe. In FY22, revenues depicted increase along with strengthened operating profit. Despite of increase in finance costs, bottom-line demonstrated a significant increase. The Company has a strong financial profile characterized by strong coverage and improving working capital management. Almost all of the borrowings of the Company are on SBP concessional rates, safeguarding it from volatility of interest rate. Working capital cycle reduced considerably driven by lower inventory days. During 9MFY22 (Jul21- Mar22), Pakistan textile exports surged to $14.2bln (recording a growth of 25%) as compared to $11.3bln in the same period last year. This is attributable to an increase in demand for textile products internationally and the channeling of export orders toward the Pakistani market. On a YoY basis, the exports of raw cotton, cotton (carded or combed) and cotton cloth recorded notable growth.
The ratings are dependent on the management’s ability to improve its operations and margins amidst tough prevailing conditions in Pakistan and internationally. Maintaining good working capital management practices and strong coverages is important. Adverse movement in margins and/or coverages will impact the Strengthening of equity base will remain vital in rating upgrade.

About the Entity
Sarena Textile Industries (Private) Limited, incorporated in 2001, is part of the Sefam and Ali Group of Industries, most famous for its fashion brand Bareezé. The Company has its plant located at Sheikhupura Road. The Company has 185 Looms inclusive of 100 Toyota Air Jet looms and 85 Sulzer Air Jet looms. Ownership of the Company lies with the four children of Mr. J.A Zaman (late). Mr. Zaman founded Ali Embroidery Mills (Private) Limited in 1972, which later became the launching pad for Sefam & Sarena Group of Industries. The Group has expanded its operations over the years and owns many well-known retail brands, such as, Bareezé, Leisure Club, Minnie Minors, Chinyere, Home Expressions and Kayseria, among others.

Majority of the ownership (84%) lies with Mr. Hamid Zaman and Ms. Seema Aziz, both of whom are educated from prestigious universities and have a diverse background in the textile industry. Operations of the company are looked after by the Chief Executive Officer, Mr. Asif Masood.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.