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The Pakistan Credit Rating Agency Limited
Press Release

Date
02-May-23

Analyst
Sehar Fatima
sehar.fatima@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Sefam (Pvt.) Limited

Rating Type Entity
Current
(02-May-23 )
Previous
(02-May-22 )
Action Maintain Maintain
Long Term A- A-
Short Term A2 A2
Outlook Stable Positive
Rating Watch - -

The ratings reflect Sefam (Pvt.) Limited’s reputable image as one of the leading players in the textile retail industry owning well-established brands. The Company was co-founded by Mr. Hamid Zaman and Ms. Seema Aziz and is an associated concern of the Sarena Group. Sefam previously owned 10 famous brands but with the recent spinoff to be finalized in this FY; Sefam shall be having two brands under its umbrella (Kayseria and Leisure Club). The Company aims to build around these brands with strategies in place to achieve long-term growth and cut down on non-productive expenses. The Company shall operate with a total of 149 shops spread across the country. The Company’s revenue base is dominated by local sales and is on a growing trajectory. During FY22, the top-line enhanced to PKR 25bln (FY21: PKR 19bln). The presence of an experienced & professional management team possesses considerable experience in the textile business. During FY22, net profitability has notably increased to PKR 2.8bln (FY21: PKR 2.1bln). During 1QFY23, the net profitability clocked in at PKR 870mln. Margins reflect a comfortable position over the years. The liquidity profile of the Company is considered strong owing to healthy coverages and low leveraging whereas, efficient management of working capital remains essential.
During 9MFY23, the textile exports were valued at $12.47bln compared to $14.24bln, reflecting a 12% decline YoY - the declining trend has been recorded in the last two quarters. The Country’s textile exports for the month of March clocked in at US$1.26bln, up 7% MoM. The decline in the previous overall exports is driven by attrition in the demand pattern of export avenues. The hike in cotton prices and low demand in international markets is also a challenge. During the month of March, value-added textile exports increased by 6% MoM to US$863mln mainly due to Readymade Garments and Knitwear increasing by 8% and 12% MoM respectively while towels decreased by 6% MoM. Basic textiles witnessed an increase of 8% MoM to US$230mln in Mar-23. In volume terms, Knitwear, Readymade Garments, Bedwear, and Towels increased by 18%, 13%, 5%, and 2% MoM respectively. Moreover, a slowdown is prevailing in textile demand amid burgeoning inflationary pressures in the exporting destinations, especially in the US and European countries. The demand pattern is expected to improve in the upcoming quarters.

About the Entity
Sefam (Private) Limited, incorporated in 1989, is part of the Sarena Group, most famous for its fashion brand Bareezé. 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 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 Company’s Managing Director whereas various brands are managed separately by dedicated teams.

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.