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

The assigned ratings reflect Sarena Textile (Pvt.) Limited’s (“STIL” or “the Company”) diversified product portfolio, established position in value-added textile manufacturing, and strong export-oriented business model. STIL is a semi-vertically integrated textile manufacturer engaged in the production and export of fabrics and apparel. The Company possesses integrated capabilities spanning Weaving, yarn dyeing, denim manufacturing, fabric processing, and garment production. The Company has established a niche position in specialized protective textiles through its exclusive license to produce flame-retardant clothing for critical sectors such as oil, gas, and petrochemicals under its Sarena® brand. STIL also supplies uniforms and technical apparel to the Pakistan Army, Rangers, Police, and Navy (Marines). Dyed and printed fabrics constitute the Company's primary product line, while workwear garments represent its highest value-added and most profitable business segment. Owing to their superior profitability, workwear garments deliver the highest margins and account for the greatest value addition within the Company's product portfolio. The Company maintains long-standing relationships with established international customers, with exports primarily concentrated in Europe while maintaining a presence across North America, Asia and Africa, backed by certifications including OEKO-TEX and ISO 9001.
The Company continues to strengthen its sustainability profile through its Sarena 360 initiative, complemented by ongoing investments in renewable energy and environmentally responsible manufacturing practices. During 9MFY26, the Company's topline revenue marginally declined by 3.8%, mainly attributable to local sales. Export sales remained the principal revenue contributor, accounting for approximately 75% of total turnover. Profitability weakened materially, with profit after tax declining to PKR 307.7mln (9MFY25: PKR 1.2bln), underpinned by the Company's strategic transition away from lower-margin toll manufacturing operations, compounded by supply chain disruptions arising from the US–Iran conflict during the latter half of the period. Furthermore, the Company is actively exploring expansion into new high-potential markets, which is anticipated to drive business growth, diversify revenue streams, and reinforce its long-term sustainability.
Short-term borrowings increased to PKR 17.0bln (9MFY25: PKR 12.3bln), primarily reflecting elevated working capital requirements associated with the Company's operating cycle. To optimize its energy mix, STIL currently meets approximately 4MW of its 7MW power requirement through solar generation and plans to add another 1MW solar facility. The remaining requirement is met through LESCO, solid-fuel captive generation, SNGPL and diesel generators. The Company's financial risk profile remains adequate, supported by satisfactory cash flow generation. Although the working capital cycle remains extended, it is considered consistent with prevailing industry dynamics. STIL continues to maintain a leveraged capital structure while demonstrating adequate cash conversion efficiency.
The ratings are dependent on the Company’s ability to sustain its operations and gradually improve business volumes. Prudent working capital management and generating sufficient cash flows/profitability from core operations while maintaining comfortable coverages remain critical. The adherence to the debt matrix at an optimal level is a prerequisite for assigned ratings.

About the Entity
Sarena Textile Industries Limited operates as part of the Sefam group and originates from the Ali Group of Industries. Mr. Hamid Zaman holds majority ownership at 53.34%, while Ms. Sarah Zaman, Mr. Mustafa Ahmad Zaman, Waleed Ahmed Zaman, Omar Badi Zaman, Bilal Ahmed Zaman, and the Zaman Foundation each hold a 5.0% stake. The remaining 16.66% is equally held by Mr. Tariq Zaman and Ms. Ambreen Zaman. Mr. Mustafa Ahmad Zaman holds the Group CEO position, while Mr. Asif Masood serves as the CEO of the Company.