PACRA Assigns Entity Ratings to Sapphire Retail Limited

Sapphire is a leading and reputable brand in the bigger textile space. Over the year, the group has expanded both horizontally and vertically. The group has built a formidable presence in the retail world as well, as under Sapphire Retail. The Company operates a complete range of clothing brands targeting various segments (unstitched, stitched, accessories, etc) of the retail market. Sapphire Retail has a retail network with over 32 stores in Pakistan. Apart from the physical stores Sapphire Retail online store is also generating huge traffic and is the second most visited website in Pakistan. The Company enjoys a strong presence in Tier I cities whereas expansion in Tier-II cities is also underway. The Company employs experienced professionals, aided by comprehensive reporting, who look after operations of the Company with complete autonomy. Its established business profile emanating from strong presence in the broader value-chain; enabling the company to manage volatility in the textile industry. In FY21, revenues depicted an increase along with strengthened operating profit. The decline in finance cost is also supplementing the profitability. The Company has wholly-owned subsidiary Designtex (SMC-Private) Limited. The Company took the SBP facility of deferment of the principal amount of the long-term loan. The Company has a strong financial profile characterized by strong coverages, moderately leveraged capital structure and improving working capital management.
Textile exports of the country recorded a double-digit increase of ~23% for FY21 to stand at USD 15.4bln as compared to USD 12.5bln in FY20. The same trend continued and exports recorded 27% growth to stand at USD 4.4bln in the first-quarter ending September 2021. The growth is attributable to an increase in demand for textile products internationally, led by good recovery around the globe post-pandemic. Going forward, the textile sector’s outlook is expected to stay stable in the medium term where the demand for textile products is expected to increase.
The ratings are dependent on sustaining the business profile of the Company by maintaining profitability and margins achieved from core textile operations. At the same time, sustainability of income and prudent management of the surplus funds are important.

About the Entity
Sapphire Retail Limited – a public, unlisted entity – commenced operations in 2014 and engaged in carrying out the manufacturing of textile products by processing the textile goods in outside manufacturing facilities and operating retail outlets to sell the same in Pakistan and abroad through E-store. Sapphire Retail is wholly owned by Sapphire Textile Limited. Sapphire Group is one of the largest vertically integrated textile setups in Pakistan which includes Sapphire Fibers Limited, Reliance Cotton Spinning Mills Limited, Sapphire Finishing Mills Limited & many others.
Overall control vests with a five-member Board of Directors, dominated by the sponsoring family: five family members, including the CEO. The CEO, Mr. Nabeel Abdullah, belonging to the sponsoring family, possesses expertise in textile and has a future-oriented region for the Company. He is assisted by a professional and experienced management team.