Sefam (Private) Limited ("SPL" or "the Company") was incorporated in Pakistan in January 1989 as a private limited Company.

Sefam, co-founded by Mr. Hamid Zaman and Ms. Seema Aziz, is an associated concern of the Sarena and Ali Group of Industries. The Company was established 35 years ago with the launch of its flagship brand, Bareezé. Over time, Sefam built a diverse portfolio of 10 prominent brands, including Bareezé, Minnie Minors, Leisure Club, Chinyere, Kayseria, Fred, Home Expressions, Rang Ja, and Savant. However, following an ownership restructuring and spinoff, several of these brands were transferred to a separate entity. As a result, Sefam now retains ownership of two brands under its umbrella: Kayseria (KY) and Leisure Club(LC).

Sefam (Private) Limited is a fashion retail company engaged in the design, stitching, and retailing of a diverse range of clothing for all age groups and genders. The company operates through an extensive nationwide network of retail outlets with Kayseria operating 73 outlets and Leisure Club managing 38 outlets. Recently, SPL has also launched 2 outlets under the brand Shahnameh, which specializes in Eastern wear for men.

Following the demerger transaction, Mr. Hamid Zaman holds a majority stake of 83.18%, while Mr. Tariq and Ms. Ambreen each hold an 8.41% share.

The stability of the ownership profile is considered adequate following the ownership transition. The ownership structure is largely anticipated to remain stable, as the majority of the ownership stake vests with a single sponsor. The establishment of a family constitution will further enhance stability in the ownership profile. The involvement of the second generation in the strategic affairs of the business further bodes well for the company's future.

The sponsor Group holds extensive experience and expertise in the textile and retail industry. They are viewed as the pioneers in introducing the concept of clothing brands in Pakistan. Apart from the textile industry, the Group has also diversified into corporate farming, energy, etc., through small-scale ventures. 

The financial strength of the company is primarily derived from its sponsoring company, Sarena Textile Industries (Pvt) Limited. The sponsors have demonstrated a willingness to support the Company in times of need, as evidenced by director loans.

The governance framework underwent a transition following the demerger, with the Sefam Board now comprising two members from the sponsoring family: Mr. Hamid Zaman and Mr. Tariq Zaman. The induction of an independent director would improve the overall governance framework of the Company.

Mr. Hamid Zaman serves as the Managing Director of the company. He holds a strong educational background from a prestigious university (MBA from Utah State University) and brings nearly five decades of experience in the textile industry.

The board members are the primary sponsors of the Company. They ensure their availability and provide valuable insights and guidance whenever needed in the day-to-day operations of the business.

M/s Arshad Raheem & Co. Chartered Accountants, who are not rated by the SBP but are QCR-rated by ICAP, are the external auditors of the Company. Auditors have issued an unqualified opinion for the period ending 30th June 2024.

The company has undergone a management overhaul with the recruitment of a new CEO dedicated to the retail segment, along with other vertical heads. The development of a mid-tier management team is underway, and this is expected to further enhance the corporatization of the organizational structure. The CEO directly reports to the group CEO, the group CFO reports to the Board of Directors (BOD), and the CFO reports to the group CFO. The other departmental heads report directly to the CEO.

Mr. Mustafa Ahmad Zaman is the Group CEO of Serena Textile Industries (Pvt) Ltd and Sefam (Pvt) Limited, with two decades of professional experience, supported by a skilled team. Last year, the company appointed Mr. Yameen Malik as the CEO of Sefam, bringing over three decades of experience in the retail industry. Before joining Sefam (Pvt.) Limited, he served as the Chief Commercial Officer at BEECHTREE | PEPPERLAND by HKB Retail (SMC) Pvt. Ltd. and as a business consultant at Maryum and Maria. Mr. Shahzad Sarfraz Khan is the Group CFO and brings over two decades of professional experience. Mr. Kanwal Shahzad, serving as the company’s CFO, has contributed six years of dedicated service to the organization, supported by a cumulative 16 years of professional expertise.

The company does not have any formal management committees in place. However, detailed brand-wise performance dashboards are maintained to assess and analyze real-time performance and address inefficiencies or any deviations from projected targets. These reports are submitted to and thoroughly reviewed by top management as needed. 

The company relies on a combination of in-house developed, external, and ready-to-use software for its Management Information System (MIS). Sefam deploys SAP ECC 6 as its Enterprise Resource Planning (ERP) system, utilizing three modules that support the tracking, management, and improvement of operational and quality processes.

The company has an in-house internal audit department that reports directly to the audit committee. The internal audit function submits reports to the committee on a quarterly basis, or earlier if required. Additionally, the Company has developed in-house software to track production, customer feedback and complaints, and worker efficiency. A major portion of the deployed modules has been developed internally and is regularly updated.

The textile exports of the country reached USD 16.7bln in FY24, a slight increase from USD 16.5bln in the previous year, reflecting a growth of 0.93% YoY. The highest contribution came from the composite and garments segment at USD 9.1bln, followed by the weaving segment at USD 6.5bln and the spinning segment at USD 1.0bln. During 8MFY25, the textile exports stood at USD 12.2bln. Pakistan's exports to the USA were USD 4.02bln in FY24 and USD 2.83bln in 8MFY25. Recently, the USA imposed a 29.0% tariff on Pakistani exports. The subsequent impact on the broader dynamics of Pakistan's textile industry, as well as the adaptability of textile manufacturers, will be assessed in due course. The fashion retail sector has become increasingly competitive, as reflected in the emergence of several new brands.

Following the demerger transaction, Kayseria and Leisure Club operate as the two primary brands under the umbrella of SPL. With 111 retail outlets spread across various regions and zones of the country, the company's market share is considered adequate.

During FY24, the topline of Sefam was recorded at PKR 5.4bln (FY23: PKR 24bln). This reduction is primarily attributable to the demerger of the company and the carve-out of some prominent brands. The company's revenues are entirely derived from local sales. The Kayseria brand is the volume leader in terms of business generation, contributing ~75.0% to revenues, with the remaining share attributed to Leisure Club. During 1HFY25, sales revenue stood at PKR 2.7bln.

During FY24, Sefam’s gross margin remained relatively stable at 41.2%, marginally lower than FY23’s 45.7%. However, the operating margin deteriorated significantly to -9.0% (FY23: 14.1%), primarily driven by elevated operating expenses. This contraction also impacted net profit margins, which fell to -1.7% in FY24 (FY23: 13.7%). Notably, performance improved in 1HFY25, with gross and operating margins recovering to 47.3% and 2.8%, respectively. The company generated a PAT of PKR 68mln as of 1HFY25 (FY24: loss after tax of PKR 647mln). The management of the Company is mindful of gradually reducing debt to unleverage their capital structure and manage inflated finance costs, thus creating a cushion in the company's profitability matrix.

SPL was operating with two brands, Kayseria and Leisure Club, while Shahnameh—a men's clothing brand—was incubated under the Leisure Club brand. Moving forward, it has been decided to establish Shahnameh as a separate brand from Leisure Club, making SPL a three-brand company in FY25. Shahnameh has already opened two shops as part of its initial rollout. According to SPL management presentation, the company plans to gradually improve its performance through the self-sustainability of its existing brands and by driving its brand repositioning strategy. Over the past year, the closure of underperforming retail outlets reflects the implementation of this strategy. The company continues to invest in research and development to create innovative designs and prints, aiming to capture the market through product diversification.

During FY24, net working capital days rose to 117 days (1HFY25: 102 days, FY23: 100 days), primarily due to elevated inventory days. Furthermore, the Company's room to borrow has improved due to the reduction of some short-term borrowings. During 1HFY25, short-term trade leverage stood at 41.2% (FY24: 44.9%).

The company’s FCFO amounted to PKR -168mln in FY24 (FY23: PKR 2.6bln), driven by a decline in operating profitability. However, during 1HFY25, FCFO was reported at PKR 458mln owing to an improvement in operating profits. During FY24, stressed coverages were observed, as the interest coverage ratio declined to -0.3x, while the debt coverage ratio stood at -0.3x. However, during 1HFY25, coverages have shown improvement, with interest coverage rising to 3.3x.

During FY24, the company’s short-term borrowings (STB) decreased to PKR 327mln. However, during 1HFY25, STB increased to PKR 449mln due to seasonal impacts. Management plans to reduce SPL’s debt and deleverage its balance sheet by the end of 1QFY26. The company currently maintains a negative equity position of PKR -118mln as of FY24 (1HFY25: PKR -51mln), which is expected to improve through profit generation in the upcoming quarters.