Sefam (Pvt.) Limited

RATING REPORT | Apr-26

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
30-Apr-26 A- A2 Stable Maintain YES
02-May-25 A- A2 Stable Maintain YES
02-May-24 A- A2 Stable Maintain YES
02-May-23 A- A2 Stable Maintain -
02-May-22 A- A2 Positive Maintain -
About the Entity

Sefam (Pvt.) Limited ("SPL" or "the Company"), incorporated in 1989, offers a comprehensive range of Western and Eastern wear for men, women, and children. The Company's leadership is anchored by Mr. Hamid Zaman and Mr. Tariq Zaman, who serve as directors. Mr. Hamid Zaman holds the majority shareholding with a 53.18% stake, while Mr. Tariq Zaman and Ms. Ambreen Zaman each hold an 8.41% share. Mr. Yameen Malik is the CEO of Sefam, who brings more than thirty years of retail industry experience.

Rating Rationale

Sefam (Pvt.) Limited ("SPL" or "the Company") is a retail-focused entity operating two prominent brands: Kayseria (KY) and Leisure Club (LC). KY is the flagship in-house brand, focusing on unstitched and ready-to-wear women's clothing. LC offers western-style casual and semi-formal wear, primarily targeting kids, youth and young adults. The Company has also introduced Shahnameh, which specializes in eastern wear for men and currently operates as part of LC. A cost optimization strategy remains in effect, with the closure of underperforming retail outlets reflecting its measured execution. The management overhaul, including the CEO dedicated to the retail segment along with other vertical heads with extensive retail industry experience, continues to shape the Company's operational direction and long-term strategic priorities. The group companies remain SPL's prime suppliers, augmenting its supply chain matrix. During 1HFY26, the Company recorded net sales of ~PKR 3,446mln, up ~12.0% YoY compared to ~PKR 2,737mln in 1HFY25. Kayseria continues to contribute ~75.0% of revenues, with LC forming the remainder. E-commerce contributed ~20.0% of total sales, consistent with the prior period, while ~40.0% of retail outlets continue to operate under a franchised model. The Company maintained a healthy gross margin of ~47.0% in 1HFY26, reflecting improved cost absorption and a better product mix. However, the Company continues to face pressure from elevated operating costs. Operating profit turned positive in 1HFY26, against an operating loss during FY25, indicating a meaningful improvement in operating performance. Net profit improved during 1HFY26, compared to full year FY25. The management remains committed to enhancing the feedback mechanism for franchised outlets as the digital landscape evolves, recognizing that customer experience is crucial for capitalizing on emerging opportunities. The management is gradually rationalizing operating expenses, as reflected in the sequential improvement in profitability across periods. The financial risk profile of the Company is considered adequate with a stretched working capital cycle. The working capital requirements are primarily met through long-term loans from sponsors, while the remaining requirements are fulfilled through conventional borrowings. The Company currently maintains a negative equity position of ~PKR (66) mln as of Dec'25, compared to ~PKR (91) mln as of Dec'24, demonstrating gradual recovery through profit generation across successive periods. The improvement in the equity position reflects the progressive nature of the financial recovery, though sustained profitability will be essential to restore a positive equity base over the near term.

Key Rating Drivers

The ratings are dependent upon the management's ability to improve profitability, generate sufficient cash flows, and maintain coverages at an optimal level. The near-term trajectory of profitability will be closely watched, particularly the sustainability of margin recovery and the pace at which the equity position is restored. Any meaningful deterioration in operating performance, working capital management, or debt servicing ability could exert negative pressure on the ratings.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Sefam (Pvt.) Limited


Rating Analysis

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Profile
Legal Structure

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


Background

Sefam (Pvt.) Ltd was co-founded by Mr. Hamid Zaman and Ms. Seema Aziz and operates as an associated concern of Sarena Textile Industries (Pvt.) Limited, part of the broader Sarena and Ali Group of Industries. The Company pioneered branded fashion retail in Pakistan through its flagship brand, Bareezé, and subsequently developed a diversified portfolio of ~10 brands. Following a strategic restructuring and demerger, several brands were carved out into a separate entity. Consequently, SPL’s current portfolio comprises two core brands: Kayseria (KY) and Leisure Club (LC).


Operations

Sefam (Pvt.) Ltd is engaged in the design, stitching, and retailing of apparel catering to multiple customer segments across age groups and genders. The Company operates an extensive retail footprint, comprising ~70 outlets under Kayseria and 23~ outlets under Leisure Club. In addition, SPL has recently launched a new brand, Shahnameh, focused on Eastern menswear, with ~1 outlet currently operational.


Ownership
Ownership Structure

The ownership is distributed among nine shareholders, all holding Ordinary shares. Mr. Hamid Zaman remains the largest individual shareholder with 53.18%, while Mr. Tariq Zaman and Ms. Ambreen Zaman each hold 8.41%. The remaining shares are distributed equally among five shareholders — Ms. Sarah Zaman, Mr. Mustafa Ahmad Zaman, Mr. Omar Badi Zaman, Mr. Bilal Ahmad Zaman, and Mr. Waleed Ahmad Zaman — each holding 5.0%. Zaman Foundation, a non-profit organization (NPO) incorporated under the Companies Act, 2017 and registered with the SECP, also holds 5.0%.


Stability

Ownership stability is considered adequate, supported by concentration with the primary sponsor. The anticipated formulation of a family constitution is expected to further strengthen governance continuity. The second generation is fully involved and serves as the primary decision-maker for the business, which is a strong positive indicator for long-term sustainability.


Business Acumen

The sponsoring group possesses extensive experience in textile manufacturing and branded retail. The sponsors are recognized as pioneers in introducing organized fashion retail in Pakistan. The group has also diversified into ancillary sectors, including energy and corporate farming, through small-scale ventures.


Financial Strength

The Company derives financial strength from its association with Sarena Textile Industries (Pvt.) Limited. Continued sponsor support, evidenced through subordinated loans (~PKR897mln), reflects commitment to sustain operations and support liquidity.


Governance
Board Structure

The Board comprises five members: two representatives from the sponsoring family, Mr. Hamid Zaman and Mr. Tariq Zaman, and three independent directors. This composition reflects a balanced governance structure, with independent representation forming the majority of the Board, thereby strengthening oversight and corporate governance practices.


Members’ Profile

Mr. Hamid Zaman, Managing Director, holds an MBA from Utah State University and brings nearly five decades of industry experience.


Board Effectiveness

The Board demonstrates effective governance through active involvement in both operational oversight and strategic direction. With a majority of independent directors, the Board is well-positioned to ensure objective decision-making, accountability, and alignment with the organization's long-term objectives.


Financial Transparency

External auditors, M/s Arshad Raheem & Co. Chartered Accountants (QCR-rated by ICAP), have issued an unqualified opinion for FY25, reflecting adequate financial reporting standards.


Management
Organizational Structure

Sefam (Pvt.) Ltd has undergone a management restructuring, including the appointment of a dedicated CEO for retail operations. Reporting lines are clearly defined, with the CEO reporting to the Group CEO, while financial oversight is maintained through the Group CFO.


Management Team

The management team comprises experienced professionals. Mr. Mustafa Ahmad Zaman serves as Group CEO, while Mr. Yameen Malik, CEO of SPL, brings over three decades of retail experience. Financial oversight is led by Mr. Shahzad Sarfraz Khan (Group CFO) and Mr. Kanwal Shahzad (Company CFO).


Effectiveness

Although formal management committees are not in place, the Company utilizes detailed performance dashboards to monitor brand-level performance and operational efficiency.


MIS

Sefam (Pvt.) Ltd employs a hybrid MIS framework, including SAP ECC 6 ERP, facilitating operational tracking and decision support.


Control Environment

An independent internal audit function reports to the audit committee, supported by internally developed systems for production monitoring, customer feedback, and workforce efficiency.


Business Risk
Industry Dynamics

Textile exports of the country reached USD ~681.0mln in FY25 (cotton yarn only), down from USD ~956.0mln in FY24, reflecting a ~28.8% YoY decline in value. In volume terms, yarn exports declined to ~256,000 MT in FY25 from ~353,000 MT in FY24 (~27.5% YoY decrease). China remained the largest export destination, accounting for ~61.9% of total yarn exports in FY25. During FY25, yarn exports contributed ~2.1% to the country’s total exports (FY24: ~3.1%). In FY25, the transition from the final tax regime to the normal tax regime continued to impact export-oriented units, with corporate profits subject to 29% tax along with a super tax of up to 10%, thereby affecting the profitability matrix of the textile value chain.


Relative Position

Sefam (Pvt.) Ltd operates with ~94 outlets nationwide. The Company maintains an adequate market presence within the organized retail segment, primarily driven by Kayseria.


Revenues

During FY25, the Company’s topline stood at ~PKR6.2bln (FY24: ~PKR5.4bln), reflecting recovery following the demerger. During 6MFY26, revenue reached ~PKR3.4bln, depicting a growth of ~12.0% compared to the corresponding period, indicating gradual stabilization in operations. However, revenue concentration remains skewed towards Kayseria (~75%), with Leisure Club contributing the remaining share, exposing the Company to brand concentration risk.


Margins

Profitability indicators have shown notable improvement during 6MFY26. Gross margin improved to ~47.0% compared to ~37.9% in FY25, supported by better pricing strategies and cost control measures. Operating margin turned positive at ~4.9%, compared to ~-7.5% in FY25, reflecting rationalization of operating expenses and improved operational efficiency. Net margin also improved to ~0.7% (FY25: ~0.5%). Additionally, finance cost intensity declined to ~3.9% of sales (FY25: ~5.0%), supporting bottom-line recovery. The overall improvement reflects the impact of restructuring initiatives and cost optimization measures.


Sustainability

SPL is transitioning towards a three-brand structure with Shahnameh being developed as an independent brand. Strategic focus remains on outlet optimization, brand repositioning, and product diversification. Closure of underperforming outlets and investment in design innovation are expected to support long-term sustainability.


Financial Risk
Working capital

The Company’s working capital management has shown improvement during 6MFY26, with net working capital days reducing to ~45 days compared to ~64 days in FY25, reflecting enhanced liquidity management. However, inventory days increased slightly to ~178 days (FY25: ~166 days), indicating higher stock levels. This was partially offset by an increase in trade payable days to ~133 days (FY25: ~102 days), which provided liquidity support. Short-term trade leverage remained controlled at ~13.9% (FY25: ~11.6%; FY24: ~44.9%), reflecting reduced reliance on supplier financing, while the current ratio remained stable at ~1.4x, indicating adequate short-term liquidity.


Coverages

Coverage metrics have strengthened materially in line with improved profitability and cash flow generation. EBITDA to finance cost improved to ~2.9x in 6MFY26 (FY25: ~1.2x), while FCFO to finance cost increased to ~2.4x (FY25: ~1.0x). The Company generated positive free cash flows from operations of ~PKR325mln, supporting its debt servicing capacity. Sustaining these improvements will remain contingent upon continued profitability and effective working capital management.


Capitalization

The capital structure remains stressed, albeit showing gradual signs of improvement. Total borrowings stood at ~PKR1.27bln in 6MFY26 (FY25: ~PKR1.28bln), indicating relative stability in overall debt levels. However, short-term borrowings increased to ~PKR855mln (FY25: ~PKR812mln), primarily due to seasonal working capital requirements. The Company continues to operate with a negative equity base of ~PKR-66mln (FY25: ~PKR-90mln; FY24: ~PKR-118mln), although the improving trend reflects gradual recovery through retained earnings. Consequently, leverage remains elevated, with total borrowings to capitalization at ~103.1%.
 
 

Apr-26

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Sefam (Pvt.) Limited


Financial Summary

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(PKR mln)


 Dec-25
6M		 Jun-25
12M		 Jun-24
12M
A. BALANCE SHEET
1. Non-Current Assets 2,273 2,557 2,368
2. Investments 0 0 0
3. Related Party Exposure 27 24 41
4. Current Assets 4,435 4,105 2,774
a. Inventories 3,437 3,273 2,326
b. Trade Receivables 0 0 0
5. Total Assets 6,735 6,686 5,183
6. Current Liabilities 3,064 2,941 2,486
a. Trade Payables 2,563 2,442 985
7. Borrowings 1,265 1,282 327
8. Related Party Exposure 897 897 897
9. Non-Current Liabilities 1,574 1,656 1,590
10. Net Assets (66) (90) (118)
11. Shareholders' Equity (66) (90) (118)
B. INCOME STATEMENT
1. Sales 3,446 6,157 5,399
a. Cost of Good Sold (1,827) (3,825) (3,175)
2. Gross Profit 1,619 2,332 2,224
a. Operating Expenses (1,450) (2,795) (2,709)
3. Operating Profit 169 (463) (485)
a. Non Operating Income or (Expense) 34 882 391
4. Profit or (Loss) before Interest and Tax 203 418 (94)
a. Total Finance Cost (135) (314) (496)
b. Taxation (43) (77) (57)
6. Net Income Or (Loss) 25 28 (647)
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 325 317 (168)
b. Net Cash from Operating Activities before Working Capital Changes 187 (235) (601)
c. Changes in Working Capital (186) (353) 1,466
1. Net Cash provided by Operating Activities 1 (587) 865
2. Net Cash (Used in) or Available From Investing Activities (33) 579 632
3. Net Cash (Used in) or Available From Financing Activities (99) (139) (1,406)
4. Net Cash generated or (Used) during the period (130) (147) 91
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) 12.0% 14.0% -77.4%
b. Gross Profit Margin 47.0% 37.9% 41.2%
c. Net Profit Margin 0.7% 0.5% -12.0%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) 4.0% -0.6% 24.0%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] -31.5% -13.3% -315.2%
2. Working Capital Management
a. Gross Working Capital (Average Days) N/A N/A 313
b. Net Working Capital (Average Days) 45 64 253
c. Current Ratio (Current Assets / Current Liabilities) 1.4 1.4 1.1
3. Coverages
a. EBITDA / Finance Cost 2.9 1.2 0.1
b. FCFO / Finance Cost+CMLTB+Excess STB 1.0 0.4 -0.3
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 3.4 189.1 -1.4
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 103.1% 104.3% 110.7%
b. Interest or Markup Payable (Days) 48.5 45.7 204.4
c. Entity Average Borrowing Rate 12.3% 18.2% 28.9%

Apr-26

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Sefam (Pvt.) Limited


Rating Scale

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Apr-26

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Sefam (Pvt.) Limited


regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
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