The Pakistan Credit Rating Agency Limited
30-Jul-18
Analyst
Ayesha Qasim
ayesha.qasim@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Methodology | Corporate Ratings | Jun-18
- Methodology | Criteria | Rating Modifier | Jun-18
- Methodology | Correlation Between Long-Term And Short-Term Rating Scale | Jun-18
Related Research
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PACRA Assigns Initial Entity Ratings to Sarena Industries & Embroidery Mills (Pvt.) Limited
| Rating Type | Entity | |
|
Current (30-Jul-18 ) |
||
| Action | Initial | |
| Long Term | A- | |
| Short Term | A2 | |
| Outlook | Stable | |
| Rating Watch | - | |
Sarena Industries and Embroidery Mills (Private) Limited specializes in weaving, dyeing, printing, finishing and stitching. The company offers a variety of special finishes and is the only licensee for PROBAN® in Pakistan. The company employs experienced professionals, aided by comprehensive reporting who look after operations with autonomy. The company has a balanced sales mix and the greater part of the sales revenue comes from processing sales. Recent devaluation of the rupee enabled the company to capitalize on positive dynamics and was able to grow its revenue and margins in line with industry trends. The company has a strong financial profile categorized by a moderately leveraged capital structure and a relatively stretched working capital due to high net working capital days. A significant increase in Cashflows resulted in strong coverages for the company.
The ratings are dependent on the management’s ability to improve governance framework. Additionally, working capital management and ensuing borrowings should be monitored closely. Adverse movement in margins and/or coverages will negatively impact the ratings.
About
the Entity
Sarena Industries and Embroidery Mills (Private) limited incorporated in 1998, is a 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 which is equipped with ~100 looms and has processing facilities with the capability to process ~6mln mtrs. of fabric per month. 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.