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The Pakistan Credit Rating Agency Limited
Press Release

Date
07-May-21

Analyst
Muhammad Noor Ul Haq
noorulhaq@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
(07-May-21)
Previous
(21-May-20)
Action Maintain Maintain
Long Term A- A-
Short Term A2 A2
Outlook Positive Stable
Rating Watch - YES

The ratings reflect Sefam (Pvt.) Limited’s reputable image as one of the leading players in the clothing/home textile retail industry with several established brands. The Company operates a complete range of clothing brands targeting various segments of the retail market. The major portion of the Company's raw material is sourced from group companies, which allows efficient supply chain management while ensuring quality. Ratings positively take in to account the track record and presence of experienced & professional management team which possesses considerable experience in the retail business. With Bullish Sector dynamics, the Company has managed to sustain growth in revenues and margins in the retail market. Moreover, the Company has resorted to online sales, which constitute a small part of its overall revenues. Considering the gradual recovery in operations backed by the lifting of the lockdown, profitability is expected to increase in FY21. Liquidity profile of the Company is considered strong with manageable working capital cycle and sufficient cash flows to meet outstanding obligations. The capital structure remains low leveraged with strong coverages and efficient management of working capital.
The positive outlook signifies the sustained revenue and profitability along with the other improved financial parameters. Moreover, the comfort can also be drawn from the business risk profile backed by the healthy market position of the Company's various brands as well as benefits from the strong financial position of the sponsors.
The ratings are dependent on sustaining business performance amidst prevailing tough conditions. Maintaining strong financial profile amidst lower revenues is critical. The Company’s ability to improve the governance framework by hiring better financial auditors will remain important.

About the Entity
Sefam (Private) Limited, incorporated in 1989, is part of the Sarena and Ali Group of Industries, most famous for its fashion brand Bareezé. The Company operates a total of 10 brands which cater to different segments of the market. Additionally, the Company sells high-end foreign brands (Ralph Lauren & Giorgio Armani) through its wholly-owned subsidiary, S-Luxe (Private) Limited. Moreover, the Company also operates 6 ‘The Entertainer’ franchises across the country.

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 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 Managing Director of the Company 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.