PACRA Maintains Entity Ratings of H. Sadar Ali Akhtar Ali (Private) Limited

H. Sadar Ali and Akhtar Ali (Pvt.) Limited ("HSA" or "the Company") is engaged in the manufacturing and export of finished leather and value-added leather products, including leather jackets and gloves. Following its diversification into apparel, the Company now also manufactures denim fashion garments, extending its reach to an international client base across China, Spain, Vietnam, Cambodia, France, Singapore, the United Kingdom, and broader Europe. The ratings reflect HSA's established business profile, supported by its meaningful market presence in the export of leather products. The Company draws on expertise across a range of leather types, including burnished, waxed, pull-up, oily, and nubuck leather, enabling it to address diverse end-use applications and serve a varied global clientele. With a legacy spanning over eight decades, HSA has built a recognized standing in both the leather goods and apparel export segments. The leather industry is segmented by value, with leather gloves (~37%), apparel and clothing (~28%), and tanned leather (~16%) representing the primary export categories. During 8MFY26, leather apparel, accessories, and footwear continued to register growth in both volume and value terms on a year-on-year basis. However, overall export performance continued to face headwinds from global economic slowdowns, geopolitical escalations, supply chain disruptions, and a gradual shift in consumer preference toward synthetic alternatives. Sustaining competitiveness will depend on continued innovation, cost efficiency, and product diversification, particularly into footwear and other value-added product lines. During 1HFY26, the Company's topline increased by ~6% on an annualized basis, driven by modest improvements in price realization and sales volumes across its core product categories. Margins remained relatively stable throughout the period, supported by marginal reductions in operational and energy costs, reflecting the Company's efforts to manage its cost base effectively. The Company's governance framework carries scope for further development, particularly through the establishment of a structured board and specialized committees with a strengthened independent oversight function. The Company has, however, established an internal audit function, reflecting a commitment towards improvement in governance standards and compliance practices. The financial risk profile is considered adequate, supported by comfortable coverage ratios, healthy cash flows, and a stable working capital cycle. Liquidity is maintained at a satisfactory level. The capital structure is moderately leveraged, with borrowings primarily comprising short-term credit facilities extended under the SBP's concessionary rates to meet working capital requirements.
The ratings are dependent on HSA's ability to maintain its position in its specific business niches and sustain growth in the face of challenging industry dynamics. Essential factors include bolstering share capital, achieving consistent revenue growth, enhancing margins, and maintaining prudent financial performance in accordance with projections.

About the Entity
H. Sadar Ali Akhar Ali (Pvt.) Limited was incorporated in Pakistan on 11 August 1985 under the Companies Ordinance, 1984 (now Companies Act, 2017). The Company’s shareholding has transitioned to the third generation, ensuring continuity in ownership while capitalizing on deep industry expertise and long-term strategic vision. Mr. Mian Naeem Akhtar serves as CEO, with his brother, Mr. Mian Saleem Akhtar, as Director. The next generation — Mr. Ahsan Ali, Mr. Mohsin Ali, and Mr. Hassan Ali — are actively involved in operations, bringing strong qualifications and industry experience to the leadership team.