PACRA Maintains Entity Ratings of Ali Embroidery Mills (Private) Limited

Lahore, November 29, 2019 (PPI-OT): Ali Embroidery Mills (Private) Limited, part of the Sefam Group, specializes in Schiffli and Multi-Heads embroidery. The Company derives the bulk of its revenue from embroidery services for its sister concern, Sefam (Private) Limited’s associated brands “Bareeze” and “Kayseria”. The ratings reflect the Company’s adequate business profile characterized by growing revenues on the back of stable demand for embroidered fabric as well as recent venture into retail through its brand “The Embroidery Company”. Margins remain strong, though displaying stagnation over recent years. This is expected to improve with further expansion into retail.

The Company’s bottom line has remained steady over the years, though remains relatively small with limited cushion against any adverse situation. Conservative financial structure with minimal dependence on short-term borrowing bodes well for the financial risk profile. This is supported by prudent working capital management and strong coverages. Ratings further reflect association with the well-established Sefam Group as well as sponsors willingness to provide support when required, as demonstrated in the past. Meanwhile, the Company’s overall governance structure and financial transparency need improvement.

The ratings are dependent on anticipated growth in topline resulting from recent penetration into retail. Additionally, sustainability of working capital management and coverages is critical. Improvement in corporate governance framework will be important.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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