H. Sadar Ali Akhtar Ali Pvt. Ltd (hereinafter referred to as ‘HSA’ or ‘the Company’) was incorporated in Pakistan on 11th August 1985, under the repealed Companies Ordinance 1984 (Now Companies Act, 2017). The Company’s registered office is located at 14- G.T Road, Hide Market, Lahore, the tannery is located at Mauza Halloki, Lahore. The Company has another manufacturing unit located at Niaz Nagar Kasur and a branch office located at Din Garh Kasur.

Founded in 1941 as a family-run leather business, HSA has steadily evolved over the decades into a cutting-edge leather processing and production facility. Through continuous innovation and dedication to quality, the Company has established itself as one of the leading manufacturers and exporters of finished leather in the country. Today, HSA is recognized for its expertise in leather craftsmanship, its commitment to sustainable production practices, and its strong global presence in the leather industry.

The principal activity of the Company is to manufacture and sell tanned, finished leather, leather products, and ready-made garments. The Company manufactures all types of finished leather such as Cow, Sheep, Goat, and Buffalo. HSA has another division of Denim which was established in 2017 and it is an exportoriented unit. There are ~450 machines installed in factory and all jeggings including of ladies, gents, and kids are manufactured and exported.

H. Sadar Ali Akhtar Ali Pvt. Ltd. is a family-owned Company with ownership distributed among family members. The CEO, Mr. Mian Naeem Akhtar, holds a direct stake of ~3.0%. While his sons, Mian Ahsan Ali, Mian Mohsin Ali, and Mian Hassan Ali, respectively hold stakes of ~26%, ~25%, and ~25%. Additionally, Mr. Mian Saleem Akhtar (Director), who is the brother of the CEO, owns ~ 21% of the Company's shares.

HSA has distinguished itself as an industry leader by fostering an ethical and responsible corporate culture. With a strong commitment to innovation, the Company continuously enhances the quality and diversity of its leather products, ensuring excellence in craftsmanship while meeting global standards. This dedication not only strengthens HSA’s stability but also reinforces its long-term growth and market presence. A key factor in its success is the Company’s unwavering adherence to sustainability and responsible production practices. This commitment has earned HSA a prestigious Gold rating certification from the globally recognized Leather Working Group (LWG)—a testament to its leadership in environmental stewardship and ethical business operations. Through these initiatives, HSA continues to solidify its position as a trusted name in the leather export market, shaping the industry’s future with integrity, innovation, and sustainability at its core.

With decades of industry expertise, HSA's sponsors brings a deep understanding of business dynamics, guiding the Company toward sustained success. Over the years, HSA has strategically expanded its operations beyond traditional leather manufacturing, diversifying its revenue streams through value-added segments. At present, the Company stands as a key player in the production of premium leather jackets, denim garments, and twill garments, catering to evolving market demands and fashion trends. This diversification not only strengthens HSA’s market presence but also enhances its ability to serve a broader customer base, reinforcing its position as a leading name in the leather and textile industry.

HSA maintains a strong financial profile, underpinned by a substantial equity base, reflecting the Company’s resilience and long-term stability. This robust financial foundation not only enables sustainable growth but also underscores the sponsors’ capacity to provide support whenever required. With prudent financial management and a well-capitalized structure, HSA remains well-positioned to navigate market fluctuations and seize new opportunities, reinforcing its standing as a reliable and forward-thinking industry leader.

Board of Directors consists of five members, including Mr. Mian Naeem Akhtar, who serves as the CEO. Currently, the board is entirely composed of members from the sponsoring family, with no independent directors. While this structure fosters strong family leadership and continuity, it also highlights opportunities for further improvement by incorporating independent directors. Introducing independent board members could enhance governance, bring diverse perspectives, and strengthen strategic decision-making, further reinforcing the Company's commitment to transparency and sustainable growth in the industry.

HSA benefits from the extensive experience of its leadership, with Mr. Mian Naeem Akhtar, the CEO, bringing over five decades of expertise in the leather industry. Similarly, Mr. Mian Saleem Akhtar, serving as Director, has accumulated more than four decades of industry knowledge. Both leaders have been deeply involved in the Company since the time of their ancestors, ensuring continuity and a strong foundation built on tradition and craftsmanship. The board as a whole possesses vast experience in tannery operations, with a solid understanding of market dynamics and production techniques. Additionally, diversity in expertise within the board adds further value, allowing the Company to adapt to evolving industry trends and maintain its position as a leader in leather manufacturing.

The Board of Directors meets quarterly, adhering to regulatory requirements to ensure compliance and strategic oversight. These regular meetings foster full attendance, strengthening board engagement and effectiveness in decision-making. Additionally, detailed minutes are meticulously recorded, preserving transparency and accountability in governance. While existing practices reflect a commitment to corporate oversight, there remains room for further enhancement to optimize operational efficiency and governance standards.

M/S. Muniff Ziauddin & Co. is the external auditor of the Company. Auditors are QCR rated also appears on the SBP panel in A category. The auditors have expressed an unqualified audit opinion on the financial statements for the year ended June 30th, 2024.  The Company has taken a proactive approach to ensuring financial integrity by establishing an Internal Audit Department. This department plays a critical role in overseeing and evaluating financial controls, identifying risks, and ensuring compliance with regulatory standards. By conducting independent assessments and providing recommendations, the Internal Audit Department strengthens accountability, enhances operational efficiency, and safeguards the organization's financial health.

A well-designed organizational structure exists in the Company. In the first tier, operations are segregated into 7 broad departments: (i) Leather Wing, (ii) Accounts & Taxation, (iii) HR, (iv) MIS & IT, (v) Internal Audit, (vi) Administration, and (vii) HSA Apparel (Denim). Clear lines of responsibility are defined for each department.

Overall management control is in the hands of board of directors. Mr. Wajih ud din, serving as CFO, brings over 36 years of seasoned expertise to the role. Mr. Ahsan oversees finance and denim operations, Mr. Mohsin manages the technical aspects of leather production, and Mr. Hassan is responsible for the Company's marketing endeavors.

With the support of a highly qualified and experienced team of professionals, HSA is continuously strengthening its core capabilities while expanding its footprint both within Pakistan and internationally. The Company's strategic approach to growth is driven by a clear and well-defined management framework, ensuring operational efficiency and alignment with its long-term goals. By leveraging its expertise and structured leadership, HSA remains committed to innovation, quality excellence, and market expansion, solidifying its reputation as a leading force in the leather and apparel industries.

Currently, the Company is using an ERP solution SHerp _ with version 17.12. Sherpa ERP is a cloud-based business management software built for small and medium-sized businesses (SMBs). Sherpa automates manual processes and brings customer, sales, inventory, and financial data into one platform

HSA embraces a balanced and environmentally friendly growth strategy, integrating sustainable development principles into all aspects of its operations. The Company is dedicated to minimizing environmental impact through responsible practices and innovative solutions. As part of its sustainability commitment, HSA has invested in an imported, state-of-the-art Waste Water Treatment Plant, ensuring efficient water management and pollution control. Additionally, the Company fully complies with ISO 45001:2018, an internationally recognized standard for occupational health and safety, demonstrating its commitment to both environmental responsibility and workplace safety. Through these initiatives, HSA continues to lead by example, fostering an eco-conscious business model that aligns with global sustainability efforts while strengthening its competitive edge in the industry.

Renowned for its exceptional craftsmanship and strict adherence to quality standards, Pakistan's leather goods are highly sought after both domestically and internationally. The industry's recent growth trajectory showcases its resilience and adaptability, even amidst economic challenges. Investments in advanced manufacturing techniques and sustainable practices have significantly enhanced production efficiency. The sector has also benefited from substantial investments in state-of-the-art equipment and technology. As Pakistan continues to prioritize this vital sector, it is well-positioned to solidify its status as a leading player in the global leather market. Ongoing efforts to expand market reach, diversify product offerings, and maintain stringent quality controls will contribute to sustained growth and success. Pakistan's leather industry is segregated into 5 major divisions including: i). Tanned Leather, ii). Apparel & clothing, iii). Gloves, iv). Footwear and v). other products. In terms of sector share, apparel & clothing of leather contributed (~31%) in total export market, accompanied by leather gloves (~35%), tanned leather (~17%), all three aggregating to ~82.82%. Leather footware (~15%) in FY24 having huge potential arising due to Trade war between USA & China & having GSP status for Europe has also stuck in low growth zone due to incompetent policies of government. Aggregating all sectors, the overall performance of the Leather Sector in terms of exports declined by ~9.01% compared to the previous year, indicating a concerning trend.

HSA has firmly established itself as one of the largest leather exporters in Pakistan, maintaining its market leadership through consistent revenue growth at an accelerating pace. With a commitment to innovation and expansion, the Company has successfully broadened its horizons, strategically venturing into new business areas over the years. This diversification, coupled with HSA’s focus on quality, sustainability, and operational excellence, has reinforced its position as a trusted name in the leather industry—both domestically and internationally.

During 9MFY25, HSA recorded a topline of PKR 6,789mln, reflecting an year-over-year (YoY) growth of ~10%, compared to PKR 8,223mln in FY24. This sustained growth highlights the Company’s expanding market presence and strong revenue trajectory. A significant ~85% of total revenue is derived from export sales, underscoring HSA’s global footprint in the leather industry. Additionally, ~15% of total sales come from the local market, which is also considered indirect exports, further strengthening the Company’s contribution to international trade.

During 9MFY25, the Company experienced a decline in profitability. The gross margin fell to ~18%, compared to ~22% in FY24, indicating higher production costs and pricing pressures. The operating profit margin also narrowed to around ~5.3%, down from ~8.2% in FY24, reflecting increased operational expenses and lower revenue growth. Additionally, the net profit margin stood at ~2.7% in 9MFY25, slightly lower than ~3.0% in FY24, suggesting reduced overall profitability due to increased taxes in period under review .

HSA's management is committed to establishing a strong and sustainable presence in both local and international markets by investing in cutting-edge technology and advanced machinery. These strategic enhancements aim to optimize production lines, improve efficiency, and elevate product quality, reinforcing the Company's competitive edge. As part of its sustainability initiatives, HSA has planned to install a solar power project with a capacity of 1100 KWT, designed to generate sufficient renewable energy to meet the entire manufacturing facility’s needs. This eco-friendly investment aligns with the Company’s vision of reducing its carbon footprint while ensuring long-term operational sustainability. Additionally, the management conducts periodic reviews of business performance, utilizing projections and forecasts to make informed strategic decisions. This proactive approach enables HSA to navigate market challenges, capitalize on growth opportunities, and maintain its position as a leading industry player.

During 9MFY25, HSA’s gross working capital days reached ~155 days, compared to ~167 days in FY24. This slight decrease reflects stabilized working capital utilization over the period. The Company's average inventory days have remained relatively consistent over the last three years, fluctuating between ~120 to ~134 days, indicating steady inventory turnover and management practices. Meanwhile, average receivable days reached ~31days in 9MFY25, a marginal decrease from ~33 days in FY24, highlighting efficient receivables collection. However, the net working capital cycle increased to ~89 days in 9MFY25, up from ~74 days in FY24. Despite this increase, HSA maintains a structured approach to working capital management, ensuring financial stability and liquidity optimization.

During 9MFY25, HSA generated free cash flows from operations (FCFO) of  PKR ~264mln, compared to PKR ~769mln in FY24. The decline reflects fluctuations in operational cash generation, influenced by market conditions and lower profitability in review period. The interest coverage ratio stood at ~3.9x in 9MFY25, lower than ~5.6x in FY24. Meanwhile, the core-debt coverage ratio improved significantly to 1.4x in 9MFY25, up from 0.2x in FY24, reflecting an enhanced ability to service core debt. These financial metrics highlight HSA’s commitment to maintaining liquidity and debt management efficiency, ensuring sustainable financial operations.

In 9MFY25, HSA maintained a moderate leveraged capital structure, with a leveraging ratio of ~32%, compared to ~26% in FY24. Over the past three years, the Company's leverage levels have remained relatively stable, reflecting a balanced approach to debt utilization. A significant portion of the Company's debt ~84% as of 9MFY25 (compared to ~92% in FY24)—consists of short-term borrowings, reinforcing HSA’s reliance on flexible financing for operational needs. Additionally, the Company has secured both long-term debt and short-term borrowings at concessionary rates under the State Bank of Pakistan (SBP) schemes, optimizing its financial costs and supporting liquidity management.