| Swaraj Suiting Limited | ||||
| Rating upgraded to 'Crisil BBB+ / Stable' | ||||
| Rating Action | ||||
| ||||
| 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 facilities of Swaraj Suiting Ltd (SSL) to ‘Crisil BBB+/Stable’ from ‘Crisil BBB/Stable’.
The upgrade reflects sustained improvement in the credit risk profile, supported by signficant improvement in operating performance and expected financial risk improvement driven by fund raising for capital expenditure. . Revenue increased from Rs 325 crore in fiscal 2024 to Rs 418 crore in fiscal 2025 and is expected to rise 20-25% in the current fiscal, supported by commissioning of the cotton fabric division and ramp-up in the existing denim fabrics. The operating margin improved from 13.8% in fiscal 2024 to 17.7% in fiscal 2025, supported by better economies of scale with the ramp- up in operations and the management’s focus on high realisation product. In the first nine months of fiscal 2026, the company reported operating income of Rs 377 crore with operating margin of ~22%. SSL also raised funds of Rs 261.5 crore through warrants and preference shares to fund the planned capital expenditure (capex) of the spinning and garmenting divisions and also to support the growing working capital requirement. Out of given funds, SSL received Rs 116 crore as on February 9, 2026, and expected to receive the due amount by July 2027. All required equity portion will be raised through warrants and it will not be replaced with debt anytime. With the fund raising, the financial risk profile is expected to improve. Any high debt than planned debt for the capex will remain monitorable.
The rating reflects the extensive experience of SSL promoters in the textile industry, integrated operations and moderate financial risk profile of the company. These strengths are partially offset by susceptibility to volatility in raw material (cotton) prices and to project risk of recent capex plan, and working capital-intensive operations. |
Analytical approach Crisil Ratings has evaluated the standalone business and financial risk profiles of SSL. |
Key rating drivers - Strengths Extensive experience of the promoters and integrated operations: Benefits from the promoters’ experience of over three decades, their in-depth understanding of market dynamics and established relationships with suppliers and customers should continue to support the business.
SSL has strategically planned the vertical integration of its operations to the next level of supply chain, aiming to low production costs and increase the efficiency. It enhanced its weaving capacity with 72 new looms having capacity to produce 1.23 crore metres of fabric per annum; and its denim processing capacity with one line of indigo dyeing range has capacity to produce 72 lakh metres of fabric per annum at unit 1 in Neemuch, Madhya Pradesh. SSL also has spinning capacity with 22,656 spindles having an installed capacity of 7,344 tonne per annum in Neemuch (unit 2) and for a non-denim processing unit having capacity to produce 2.40 crore metres of fabric per annum.
Growth in the revenue and healthy operating margin: The revenue increased from Rs 325 crore in fiscal 2024 to Rs 418 crore in fiscal 2025 and is expected to rise 20-25% in the current fiscal supported by commissioning of the cotton fabric division and ramp-up in the existing denim fabrics. The operating margin improved from 13.8% in fiscal 2024 to 17.7% in fiscal 2025, supported by better economies of scale with the ramp-up in operations and the management’s focus on high realisation product. In the first nine months of fiscal 2026, the company reported operating income of Rs 377 crore with operating margin of ~22%.
Improvement in the financial risk profile supported by fund raising from warrants and preference shares: SSL issues warrants and preference shares of Rs 261.5 crore to investors, which will be infused in the company by July 2027. Out of Rs 261.5 crore, Rs 116 crore is received by the SSL. Out of total funds raised, ~Rs 120 will be utilised for the capex and balance for the working capital and general purpose. With the fund raising, the capital structure is projected to improve with gearing and total outside liabilities to tangible networth ratio at less than 1 times and less than 1.4 times, respectively (1.77 times and 2.75 times, respectively, as on March 31, 2025). |
Key rating drivers - Weaknesses Risk related to upcoming capex: SSL is undertaking large of Rs 418 crore for backward integration of the spinning unit and garmenting division, which will be funded through debt of Rs 298 crore and equity/internal accrual of Rs 120 crore. The new plant is expected to commence operations by July 2027.Timely commencement, execution without any cost overruns, higher debt than envisaged for capex and steady ramp-up of operations would remain key rating sensitivity factors.
Working capital-intensive operations: Gross current assets (GCAs) were at 190-230 days for the three years ended March 31, 2025 (230 days as on March 31, 2025) due to high receivables and inventory level. Inventory increased to 148 days as on March 31, 2025, due to high level for the spinning division, which became operational in March 2025 and the cotton fabric division that become operational in July 2025. However, with ramp-up in operations, inventory days are expected to decrease. |
Liquidity Adequate Bank limit utilisation was moderate around 79% on average for the 12 months ended November 30, 2024. Annual cash accrual is expected above Rs 75 crore against yearly term debt obligation of Rs 19 crore over the medium term and will cushion liquidity. The current ratio was moderate at 1.21 times as on March 31, 2025. |
Outlook Stable SSL will continue to benefit from the extensive experience of its promoters and established relationships with clients. |
Rating sensitivity factors Upward factors
Downward factors
|
About the company SSL was incorporated in 2003 as a private limited company and reconstituted as a public limited company in March 2022. It is promoted by Mohammed Sabir Khan, Samar Khan and Nasir Khan. The company manufactures cotton and synthetic fabric at its two facilities in Bhilwara (Rajasthan) and Neemuch with a combined installed capacity of 3.90 crore metres of cotton and synthetic fabric. SSL is listed on the National Stock Exchange. |
Key financial indicator
|
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
|
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Criteria Details
|