logo
The Pakistan Credit Rating Agency Limited
Press Release

Date
30-Jul-18

Analyst
Muhammad Hassan
muhammad.hassan@pacra.com
+92-42-35869504
www.pacra.com

Applicable Criteria

Related Research

Disclaimer
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 Assigns Initial Entity Ratings to Sarena Industries & Embroidery Mills (Pvt.) Limited

Rating Type Entity
Current
(30-Jul-18)
Action Initial
Long Term A-
Short Term A2
Outlook Stable
Rating Watch -

Sarena Industries and Embroidery Mills (Private) Limited specializes in weaving, dyeing, printing, finishing and stitching. The company offers a variety of special finishes and is the only licensee for PROBAN® in Pakistan. The company employs experienced professionals, aided by comprehensive reporting who look after operations with autonomy. The company has a balanced sales mix and the greater part of the sales revenue comes from processing sales. Recent devaluation of the rupee enabled the company to capitalize on positive dynamics and was able to grow its revenue and margins in line with industry trends. The company has a strong financial profile categorized by a moderately leveraged capital structure and a relatively stretched working capital due to high net working capital days. A significant increase in Cashflows resulted in strong coverages for the company.

The ratings are dependent on the management’s ability to improve governance framework. Additionally, working capital management and ensuing borrowings should be monitored closely. Adverse movement in margins and/or coverages will negatively impact the ratings.

About the Entity
Sarena Industries and Embroidery Mills (Private) limited incorporated in 1998, is a part of the Sefam and Ali Group of Industries, most famous for its fashion brand Bareezé. The company has its plant located at Sheikhupura road which is equipped with ~100 looms and has processing facilities with the capability to process ~6mln mtrs. of fabric per month. 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 Sefam & Sarena Group of Industries. 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.

Majority of the ownership (84%) lies with Mr. Hamid Zaman and Ms. Seema Aziz, both of whom are educated from prestigious universities and have a diverse background in the textile industry. Operations of the company are looked after by the Chief Executive Officer, Mr. Asif Masood.

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.