PACRA Upgrades Entity Rating of Sarena Textile Industries (Private) Limited

Lahore, August 02, 2021 (PPI-OT): 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.

For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com

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