The Pakistan Credit Rating Agency Limited
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Sehar Fatima

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

Rating Type Entity
(27-Jul-23 )
(29-Jul-22 )
Action Maintain Maintain
Long Term A A
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Sarena Textile Industries (Private) Limited, incorporated in 2001. The Company has established expertise in weaving, dyeing, printing, finishing, and stitching. The business manufactures a variety of completed goods and has carved out a market for itself by processing and manufacturing specialized materials for uniforms and fire protection. The company is also a licensee for PROBAN® in Pakistan. With the use of thorough reporting and the expertise of its staff, the company manages its operations independently. The Company has carved out a place for itself in the international market and is also regarded as a prominent name in the domestic industry, with revenue mainly inclined towards exports in 9MFY23. In the relative world, the Company's performance displayed resistance. Revenues during FY22, recorded good growth (PKR 25.4bln, FY21: PKR 15.5bln). The momentum continued in 9MFY23 (revenues: PKR 23.2bln) where the operating profit reflected good boast. The bottom line witnessed considerable growth to reach PKR 2.7bln in 9MFY23, despite an increase in finance costs. The Company has a solid financial standing with sufficient coverage. The Company’s previous moderate leveraging further declined recently attributable to an enhanced equity base. The Company utilized an export-related credit facility from SBP to obtain short-term borrowings totaling PKR 6.7bln. The remaining amount was availed by FIs through running finance. Going forward, the strategy is to further increase its penetration in Europe and North America where new customers may also be taken on board. With high-capacity utilization levels and volumes, the management is seeing growth momentum to continue. A keen focus on further dilution in leveraging is also a priority.
The management's capacity to continuously improve the operating profitability along with effective management of finance costs remains vital. Further, range bound leveraging with cushion in coverage is essential, going forward.

About the Entity
Sarena Textile Industries (Private) Limited is part of the Sefam and Ali Group of Industries. 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 the Sefam & Sarena Group of Industries. The Group has expanded its operations over the years. The majority of the ownership lies with Mr. Hamid Zaman, who is educated at a prestigious university and has a diverse background in the textile industry. The 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.