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The Pakistan Credit Rating Agency Limited
Press Release

Date
30-Jul-21

Analyst
Maryam Ijaz
maryam.ijaz@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 Upgrades Entity Rating of Sarena Textile Industries (Private) Limited

Rating Type Entity
Current
(30-Jul-21)
Previous
(30-Jul-20)
Action Upgrade Maintain
Long Term A A-
Short Term A2 A2
Outlook Stable Positive
Rating Watch - -

Sarena Textile Industries (Private) Limited specializes in weaving, dyeing, printing, finishing and stitching. The Company offers various finished products and has created a niche where it processes and produces specialized cloth for fire resistant and other uniforms. The company is also licensee for PROBAN® in Pakistan. The Company employs experienced professionals, aided by comprehensive reporting, who look after operations of the Company with complete autonomy. The Company has established its presence in the overseas market and also considered a strong player in local market as the revenue is balanced almost equally between the local and export market. Captive clientele in shape of group companies, provide an advantage in local sale. The Company’s performance showed resistance, compared in the relative universe, attributable to brand diversity and each brand targeting separate segment of the market. In FY21, revenues depicted increase along with strengthened operating profit. The decline in finance cost is also supplementing the profitability. The Company has a strong financial profile characterized by strong coverages and improving working capital management. Almost all of the borrowings of the Company are on SBP concessional rates, safeguarding it from volatility of interest rate. The COVID-19 outbreak created uncertainty which impacted the entire textile chain however, the demand is gradually improving as lockdown in domestic and global markets eases. Going forward, the company intends to focus on value-added capex while enhancing the garments capacity. The Company is moving towards technical textile which comprises of manufacturing of work-wear fabric for export. The rating upgrade reflects stability in ownership, stable performance of the company despite Covid-19 pandemic and diversification of business risk with respect to exports which are spread over variety of geographical area.
The ratings are dependent on the management’s ability to sustain its operations and margins amidst tough prevailing conditions in Pakistan and internationally. Maintaining prudent working capital management practices and strong coverages is important. Adverse movement in margins and/or coverages will impact the ratings.

About the Entity
Sarena Textile Industries (Private) Limited, incorporated in 2001, is 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. The Company has 185 Looms inclusive of 100 Toyota Air Jet looms and 85 Sulzer Air Jet looms. 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.