PACRA Maintains Entity Ratings of Sefam (Pvt.) Limited
The ratings reflect Sefam (Pvt.) Limited’s reputable image as one of the leading players in the clothing/home textile retail industry with several established brands. The Company operates a complete range of clothing brands targeting all segments of the retail market. The major portion of the Company's raw material is sourced from group companies, which allows it to maintain profitability while ensuring quality. The Company has managed to sustain growth in revenues and profitability based on strong branding, despite sluggish trend in the overall retail market amid economic slowdown and lower consumer spending. Withdrawal of zero-rated status of the textile sector has led the Company to increase its prices to pass on higher costs to its customers, capitalizing on its strong brand presence in the elite niche. Consequently, margins continued to maintain an upward trend owing to increase in prices and efficient operations. Ratings draw strength from the Company’s strong financial profile, recently augmented by the declaration of previously undeclared inventory under the amnesty scheme in FY19. Capital structure remains low leveraged while coverages stand robust along with efficient management of working capital. Meanwhile, declaration of inventory is likely to reflect in higher revenues and profitability, going forward.
The ratings are dependent on the Company’s ability to improve governance framework by hiring better financial auditors. Additionally, working capital management and ensuing borrowings should be monitored closely. Adverse movement in margins and/or coverages would be critical for the ratings.
Sefam (Private) Limited, incorporated in 1989, is part of the Sarena, Sefam and Ali Group of Industries, most famous for its fashion brand Bareezé. The Company operates a total of 10 brands which cater to different segments of the market. Additionally, the Company sells high end foreign brands (Ralph Lauren & Giorgio Armani) through its wholly owned subsidiary, S-Luxe (Private) Limited. Moreover, the Company also operates 6 ‘The Entertainer’ franchises across the country.
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 Sarena, Sefam & Ali Group of Industries. Mr. Hamid Zaman and Ms. Seema Aziz hold 42% of the Company, each. Meanwhile, Mr. Tariq Zaman and Ms. Ambreen Zaman hold the remaining 16% equally. Ms. Seema Aziz is the Managing Director of the Company whereas various brands are managed separately by dedicated teams.