| Spenta International Limited | ||||
| Rating upgraded to 'Crisil BB / Stable' | ||||
| Rating Action | ||||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has upgraded its rating on the long-term bank loan facilities of Spenta International Limited (SIL) to 'Crisil BB/Stable' from 'Crisil BB-/Stable'.
The rating action reflects the higher-than-expected improvement in the business risk profile of the company. Revenues grew from Rs 35.5 crore in fiscal 2024 to Rs 48 crore in fiscal 2025, driven by healthy volumetric growth of approximately 30-35%, with revenue growth expected to continue over the medium term, supported by repeat orders from established clientele and continued customer additions. The operating margin stood at 8.1% in fiscal 2025 and should continue to range at similar levels going forward, resulting in steady net cash accruals of around Rs 2-2.5 crores over the medium term. The financial risk profile and liquidity continue to remain comfortable with moderate utilization of working capital lines and no major debt repayment obligations over the medium term.
The rating continues to reflect extensive industry experience of the promoters in the sock manufacturing industry and established customer relationships and healthy financial risk profile. These strengths are partially offset by moderate scale of operations in a highly fragmented industry and working capital intensive operations. |
Analytical Approach Crisil Ratings has evaluated the standalone business and financial risk profile of SIL. |
Key Rating Drivers - Strengths Extensive industry experience of the promoters and established customer relationships: SIL has healthy market acceptance due to its affordable pricing, wide variety of socks and presence across India and Middle East. The promoters have experience of around four decades in designing, manufacturing and exporting cotton socks business. This has given them an understanding of the dynamics of the market and enabled them to establish relationships with suppliers and customers. Revenues improved from 35 crores in fiscal 2024 to 48 crores in fiscal 2025, supported by bounce back of demand in export markets, and continued orders from the domestic market. Revenues should continue to improve over the medium term, driven by steady order flow from existing customers, and incremental orders from new customer additions. Extensive industry experience of the promoters and established customer relationships should continue to support the business risk profile over the medium term.
Healthy financial risk profile: The financial risk profile has been healthy, supported by networth of ~Rs 29 crore as on March 31, 2025, and has been increasing over the fiscals with accretion to reserves (over Rs 28 crores as on March 31,2024). The capital structure has been healthy due to moderate reliance on external funds, yielding gearing and total outside liabilities to adjusted networth (TOLANW) ratios of ~0.77 times and of ~1.0 times as on March 31, 2025, due to moderate reliance on external debt for working capital and capex requirements. The capital structure is expected to improve steadily over the medium term with steady accretion to reserves and in the absence of any major debt funded capex plans. Debt protection metrics have also been adequate due to low leverage and robust profitability, with the interest coverage and net cash accrual to total debt (NCATD) ratios of ~2.2 times (2.1 times for fiscal 2024) and ~0.1 times, respectively, for fiscal 2025. The debt protection metrics are expected to improve steadily over the medium term with stable profitability expected over the medium term. |
Key Rating Drivers - Weaknesses Moderate scale of operations in a highly fragmented industry: Overall the scale of operations remains moderate, as the revenues have remained rangebound between Rs 35-55 crores over the last three years through fiscal 2025. Furthermore, the industry is highly fragmented and competitive, with many unorganized players in the market. Such high fragmentation limits the pricing flexibility and bargaining power of the players. Also, the threat from large integrated players in the form of capacity additions limits the growth. Hence, steady improvement in revenues, while sustaining operating margins, remains a key monitorable over the medium term.
Working capital intensive operations: The operations of the company are working capital intensive as highlighted by the GCA of ~235 days as on March 31, 2025. This is mainly driven by moderate debtors of 90 to 110 days due to moderate credit period offered by SIL. Furthermore, the inventory is maintained at high levels of 110 to 170 days to cater to client and business requirements and is majorly order backed. The overall working capital cycle is expected to remain large over the medium term, hence management of the same remains monitorable. |
Liquidity Stretched Bank limit utilisation is moderate and averaged around 71% over the past twelve months through September 2025. Cash accruals are expected to be around Rs 2.0 -2.5 crores over fiscals 2026 and 2027 which is comfortable against modest annual repayment obligations of Rs 0.5 crores. The current ratio is healthy at 1.7 times on March 31, 2025. Low gearing and moderate net worth support its financial flexibility and provides the financial cushion available in case of any adverse conditions or downturn in the business. |
Outlook Stable Crisil Ratings believe SIL will continue to benefit from the extensive experience of its promoter, and established relationships with clients. |
Rating sensitivity factors Upward factors
Downward factors
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About the Company SIL was incorporated in July 1986. The company specializes in designing, manufacturing and exporting cotton socks for men, women and children of all age groups. Its manufacturing facility is located at Palghar (West), Maharashtra with a total installed capacity of 15 lakh pairs of socks per month. The day to day operations of the company are managed by Mr. Danny Hansotia |
Key Financial Indicators
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||
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Criteria Details
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