PACRA Maintains the Entity Ratings of Sarena Textile Industries (Pvt.) Limited

The rating reflects the prominent profile of Sarena Textile Industries (Pvt.) Limited (“the Company” or “STIL”) in the textile industry of Pakistan. The core operating activity of the Company is manufacturing and exporting fabrics and apparel. STIL is a semi-vertically integrated textile company, featuring in-house facilities for dyeing/processing, weaving, and garment production. STIL has carved out a market for itself by processing and manufacturing specialized materials for uniform and fire protection. The Company holds the exclusive PROBAN® license in Pakistan, enabling it to produce and commercialize flame-retardant textile products in accordance with globally recognized safety and quality benchmarks. To enhance its global positioning, STIL has developed distinct brand entities, including Sarena® PROBAN® in KSA and Blaze Block in the USA, providing specialized PROBAN®-treated flame-retardant apparel for critical sectors such as oil, gas, and petrochemicals. The Company’s core product portfolio is led by dyed and printed fabric, with workwear garments forming the secondary yet strategically significant segment. Notably, workwear garments represent the highest-margin offering and hold a leading position in the Company’s value contribution framework. STIL has undertaken a strategic shift in its business approach, focusing on sustainable profitability over mere top-line growth. As part of this repositioning, the Company has rationalized its client portfolio and restructured product pricing in USD terms to protect and enhance margins. This strategic shift is also reflected in the Company’s financial performance during 9MFY25, where the topline recorded a modest growth of 3.2%, reaching PKR 26.85bln (9MFY24: PKR 26.01bln). Despite limited revenue growth, margins improved significantly, resulting in a PAT of PKR 1.23bln, compared to PKR 35mln in 9MFY24 and a net loss of PKR 802mln in FY24. The Company has undertaken renewable energy initiatives aimed at creating a cushion in its cost structure by optimizing energy expenses. The Company is currently generating 2MW of electricity through its operational solar power system. As part of its ongoing commitment to sustainable energy development, it has embarked on a project to enhance its solar capacity to 4MW. The installation of the additional 2MW is underway and is expected to be completed within the next six months. STIL’s clientele comprises well-established entities across diverse export destinations, with a primary concentration in the European market. Furthermore, the Company is actively pursuing entry into additional high-potential markets, which is expected to enhance business volumes, support income diversification, and strengthen overall business sustainability. The financial risk profile of the Company is considered adequate, with a stretched working capital cycle depicting industry norms. The working capital requirement of the Company is primarily met through short-term borrowings. The Company has maintained a leveraged capital structure while demonstrating improved cash conversion efficiency over the past three quarters.
The ratings are dependent on the Company’s ability to sustain its operations and gradually improve business volumes. Prudent working capital management and generating sufficient cash flows/profitability from core operations while maintaining comfortable coverages remain critical. The adherence to the debt matrix at an optimal level is a prerequisite for assigned ratings.

About the Entity
STIL operates as part of the Sefam group and originates from the Ali Group of Industries. The shareholding structure of STIL has been restructured, with Mr. Hamid Zaman transferring 30.0% of his stake to family members and the Zaman Foundation. Following the transition, Mr. Hamid Zaman retains majority ownership at 53.34%, while Ms. Sarah Zaman, Mr. Mustafa Ahmad Zaman, Waleed Ahmed Zaman, Omar Badi Zaman, Bilal Ahmed Zaman, and the Zaman Foundation each hold a 5.0% stake. The remaining 16.66% is equally held by Mr. Tariq Zaman and Ms. Ambreen Zaman. Mr. Mustafa Ahmad Zaman holds the Group CEO position, while Mr. Asif Masood serves as the CEO of the Company.