| Sudha Somany Ceramics Private Limited | ||||||
| Ratings reaffirmed at 'Crisil BBB+/Stable/Crisil A2' | ||||||
| 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 reaffirmed its ‘Crisil BBB+/Stable/Crisil A2’ ratings on the bank facilities of Sudha Somany Ceramics Private Limited (SSCPL).
The ratings factor in strong financial support from the parent, Somany Ceramics Ltd (SCL; rated ‘Crisil AA-/Stable/Crisil A1+’). SSCPL is a critical joint venture (JV) for SCL in South India.
Revenue has grown by 16% to Rs 219 crore in fiscal 2024, from Rs 189 crore in fiscal 2023, driven by ramp up of operations, post capacity enhancement. For fiscal 2025, the company has achieved revenue of around Rs 168 crore during the first nine months of fiscal 2025 and is expected to clock revenue of Rs 230-240 crore for the full fiscal. Operating margin rose to 14.2% in fiscal 2024, from 9.7% in fiscal 2023, driven by increasing scale of operations, in turn led by improvement in capacity utilisation and fixed cost absorption, and moderation in gas prices. Operating margin of around 18.7% was recorded for the first nine months of fiscal 2025 (14.2% in fiscal 2024) and is expected to remain around 17% in the near-to-medium term.
The ratings reflect the strategic location of the plant, healthy profitability, efficient working capital management and strong support from both the JV partners, SCL and ER Ceramics Pvt Ltd (40%; a subsidiary of Sudha Agro Oil and Chemical Industries Pvt Ltd). These strengths are partially offset by the improving yet moderate interest coverage ratio and exposure to intense competition and cyclicality in the real estate segment. |
Analytical approach Crisil Ratings has factored in the support that SSCPL receives from its parent, SCL, by applying the parent notch-up criteria, as SSCPL is critical to SCL’s operations in South India.
Out of the unsecured loan of Rs 28.4 crore (as on March 31, 2024) extended by JV partners, 75% has been treated as equity and 25% as debt. |
Key rating drivers & detailed description Strengths:
Weaknesses:
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Liquidity: Adequate Bank limit utilisation averaged 90% over the 12 months through December 2024. Expected net cash accrual of Rs 19-27 crore per fiscal will be tightly matched against yearly debt obligation of Rs 19-24 crore. Cash and bank balance was around Rs 6.32 crore as on March 31, 2024. Current ratio was lower than one time as on the same date, because of higher repayment, and may remain at a similar level over the medium term. |
Outlook: Stable SSCPL will continue to benefit from support received from both the JV partners, and SCL’s healthy relationships with dealers and distributors in the region. |
Rating sensitivity factors Upward factors
Downward factors
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About the company SSCPL was incorporated as a JV between SCL (60%) and ER Ceramics Pvt Ltd (40%) in 2015. Commercial operations began in March 2019.
The manufacturing facility, located in the Chittoor district of AP, has an installed capacity of 7.5 million square per metre (MSM).
About the group SCL was incorporated in 1968, as Somany Pilkington’s Ltd (SPL), by Mr HL Somany, in collaboration with the UK-based Pilkington’s Tiles Plc (PTP). In 1971, the Somany family purchased the stake of PTP in SPL, and renamed the company.
SCL is listed on the Bombay Stock Exchange and the National Stock Exchange. Mr Shreekant Somany is the chairperson and managing director, and Mr Abhishek Somany is the managing director. |
Key financial indicators*
*Crisil adjusted financials |
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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