PACRA Maintains Entity Ratings of Ali Embroidery Mills (Pvt.) Limited, , Assigns 'Rating Watch'

Ali Embroidery Mills (Private) Limited, part of the Sefam Group, specializes in Schiffli and Multi-Heads embroidery. The Company derives bulk of its revenue from embroidery services for its sister concern, Sefam (Private) Limited's associated brands “Bareeze” and “Kayseria”. The ratings reflect the Company’s adequate business profile characterized by modest, albeit growing, revenues on the back of stable demand for embroidered fabric as well as recent venture into retail market through its brand “The Embroidery Company”. Margins remain strong, though displaying stagnation over recent years. Since COVID-19 outbreak and subsequent lockdown, the Company performance is expected to suffer as the closure of retail shops impacted the demand and off take of the Company's products. However, conservative financial structure with minimal dependence on short-term borrowing bodes well for the financial risk profile. This is supported by prudent working capital management and strong coverages. The ratings further reflect the Company's association with well-established Sefam Group as well as sponsor's willingness to provide support when required, as demonstrated in the past.

The 'Rating Watch' signifies the prevailing uncertainty due to the outbreak of COVID-19 pandemic. This has impacted the entire textile chain as demand contracted due to shutdown in domestic and global markets and tough economic conditions. SBP measures have provided some respite in this regard. The Company’s production facilities have been shut down since March in line with the provincial Government’s directive of lockdown, though reopened recently. Similarly, gradual reopening of retail shops is considered beneficial but attaining historical revenue levels remains to be seen. PACRA is closely monitoring the situation and will take rating action accordingly.
The ratings are dependent on sustaining business performance amidst prevailing tough conditions. Full resumption of operations and maintaining strong financial profile amidst lower revenues is critical. Meanwhile, the Company’s overall governance structure and financial transparency need improvement.

About the Entity
Ali Embroidery Mills (Private) Limited, incorporated in 1972, is part of the Sefam Group, most famous for its fashion brand Bareezé. The Company was founded by Mr. J.A Zaman (late) and later became the launching pad for Sefam (Pvt.) Limited & Sarena Textile Industries. The Company’s production facilities are located at Sheikhupura Road, comprising 34 Schiffli machines and 72 Multi-Heads embroidery machines. The Group has expanded its operations over the years and owns many well-known retail brands, such as, Bareezé, Leisure Club, Minnie Minors, Chinyere, Home Expressions and Kayseria, among others.

The ownership of the Company lies with the five children of Mr. J.A Zaman (late). Operations of the company are looked after by the Chief Executive Officer, Mr. Tariq Zaman, who has diverse experience in textile, poultry, dairy and transportation sectors. He is assisted by a professional management team.