Cedaar Textile Ltd.

Brickwork Rating has assigns the long-term ratings for bank loan facilities of Cedaar Textile Ltd at BWR BB/Stable and the ratings of short-term bank loan facilities at BWR A4 for Rs.129.90 Crs .

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	89.85	Long Term	BWR BB /Stable Assignment
	30.00	Short Term	BWR A4 Assignment
	(15.00)
	(20.00)
	(5.00)
Non Fund Based	10.05	Short Term	BWR A4 Assignment
	(10.00)
	(10.00)
Grand Total	129.90	(Rupees One Hundred Twenty Nine Crores and Ninety lakhs Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure RATING ACTION / OUTLOOK

Brickwork Rating has assigns the long-term ratings for bank loan facilities of Cedaar Textile Ltd at BWR BB/Stable and the ratings of short-term bank loan facilities at BWR A4 for Rs.129.90 Crs .

The assignment of the ratings takes into account the comfortable financial performance of the company in FY24, experienced directors and management team of the company, satisfactory banker's feedback, transitioning from outsourced fabric to in-house production and driving progress with 100% organic and recycled yarns. However, ratings are constrained by risks from regional instability and geopolitical tensions, intense competition, raw material price fluctuations, stretched liquidity and exposure to foreign exchange risk due to lack of hedging strategy.

The outlook has been retained Stable as BWR believes that the business risk profile of the Company will be maintained over the medium term. The Stable outlook indicates a low likelihood of a rating change over the medium term.

For assigning the rating, BWR has relied upon the last 3 years of audited financials till FY24, projected financials for FY25 & FY26, and publicly available information and clarification provided by management.

KEY RATING DRIVERS

Credit Strengths:

Widely experienced directors and management team of the company :
The leadership team at Cedaar Textile Ltd. is comprised of experienced professionals with diverse backgrounds and expertise. Rajesh Mittal, the Director, holds a B.Sc. in Computer Science and a PGDM in Marketing, bringing a wealth of knowledge in both technology and business strategy. Virender Goyal, another Director, has a B.Sc. in Textile Chemistry and a Master of Management Sciences, contributing his extensive technical and managerial expertise. Monnappa Nachappa Bachangada and Saraswathi Monappa Bachangada, both Directors, hold graduate degrees offering valuable experience in leadership and operations. J.P. Singh, the Vice President, holds a Diploma in Textile Technology and plays a key role in driving the company’s strategic initiatives in textile innovation and technology. Together, this leadership team combines a strong technical foundation, industry knowledge, and strategic vision, ensuring Cedaar Textile’s continued growth and success.
Comfortable financial performance in FY24 :
Company booked an operating income of Rs. 189.68 crs in FY24 (PY: Rs. 160.60 crs). The company has achieved 9 month Sales of Rs 109.47 Crs. The bottom line of the company stands at Rs.12.10 Crs in FY24 considering 6.38% Net PAT margins.The tangible net worth of the company has improved from Rs. 8.54 Crs. in FY22 (Audited) to Rs. 12.66 Crs. in FY23 (Audited). It is further increased to Rs 24.80 Cr in FY24(audited) In FY24 (audited), the current ratio stands at 1.22 times.
Driving Progress with 100% Organic and Recycled Yarns :
The company specializes in a broad spectrum of yarns, including RW Yarns, Melange Yarns, Solid Top Dyed Yarns, and Grey Yarns, crafted from materials like cotton, polyester, and acrylic. Sustainability is at the core of Cedaar Textile’s mission, with products offered in 100% organic and recycled fibers, such as polyester and cotton, contributing to environmental conservation and the responsible use of natural resources. Cedaar Textile also prioritizes continuous innovation, customer focus, R&D, technological advancements, digitalization, ERP integration, and ongoing improvement. The company is also committed to transitioning towards green energy, reinforcing its dedication to sustainable manufacturing.

Credit Risks:

Strechted Liquidity :
The company has cash and bank balances of Rs. 6.68 Crs as on March 31, 2024 (Aud.). The current ratio of the company stood comfortable at 1.25 times in FY23 and 1.22 times in FY24 .The company has average utilisation of around 96.00% for past 12 months with ending Dec 2024 for the cash credit limit of Rs.20.00 Crs for both HDFC bank and Canara bank. The net cash accrual stood at Rs. 15.77 Crs against the CPLTD of Rs. 11.50 Crs as on March 31, 2024 (Aud.). ISCR and DSCR are at comfortable level at 2.38x and 1.19x in FY24 respectively. Although the company faces risks from ongoing tensions in the Bangladesh region due to political instability, social unrest, or geopolitical conflicts that disrupt the normal course of business operations, this risk is mitigated by focusing more in domestic market in FY25. Further, the stretched liquidity is also on account of high CC utilisations and higher conversion cycle.
Risks from Regional Instability and Geopolitical Tensions :
The company faces risks from ongoing tensions in the Bangladesh region due to political instability, social unrest, or geopolitical conflicts that disrupt the normal course of business operations. This risk is mitigated by focusing more in domestic market in FY25.
Intense Competition :
The textile industry is highly fragmented and there is significant competition among players; as a result, their bargaining power is moderate and thus, resulting in thin profit margins.
Raw Material Price Fluctuations :
The volatility in the prices of key raw materials like cotton, polyester, and acrylic can impact production costs and profitability.
Company Exposed to Foreign Exchange Risk Due to Lack of Hedging Strategy :
The company is exposed to foreign exchange (FX) risk due to an unhedged position, leaving it vulnerable to currency fluctuations. However, it has not adopted any risk management strategies, such as hedging, to protect itself from the potential effects of these fluctuations.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Going forward, the ability of the company to improve its scale of operations, profitability margins, overall credit risk profile and efficiently manage its working capital requirement would be the key rating sensitivity.

Positive: Rating may be upgraded in case of substantial improvement in revenues by around 12% along with improvement in the operating profitability and debt protection metrics may lead to a positive rating action.

Negative: Rating may be downgraded in case there is a deterioration in the financial risk profile, delay in debt servicing, substantial decline in topline and deterioration in the liquidity ratios of the company.and liquidity position of the company along with decline in revenue of the company to Rs.140.00 Crs and if TNW slips to Rs.22.00 Crs.

LIQUIDITY INDICATORS - Stretched

The company has cash and bank balances of Rs. 6.68 Crs as on March 31, 2024 (Aud.). The current ratio of the company stood comfortable at 1.25 times in FY23 and 1.22 times in FY24 .The company has average utilisation of around 96.00% for past 12 months with ending Dec 2024 for the cash credit limit of Rs.20.00 Crs for both HDFC bank and Canara bank. The net cash accrual stood at Rs. 15.77 Crs against the CPLTD of Rs. 11.50 Crs as on March 31, 2024 (Aud.). ISCR and DSCR are at comfortable level at 2.38x and 1.19x in FY24 respectively. Although the company faces risks from ongoing tensions in the Bangladesh region due to political instability, social unrest, or geopolitical conflicts that disrupt the normal course of business operations, this risk is mitigated by focusing more in domestic market in FY25. Further, the stretched liquidity is also on account of high CC utilisations and higher conversion cycle.

ABOUT THE ENTITY

Macro Economic Indicator	Sector	Industry	Basic Industry
Consumer Discretionary	Textiles	Textiles & Apparels	Other Textile Products

Cedaar Textile Ltd., formerly Cedaar Textile Pvt Ltd, was incorporated on September 28, 2020. The company specializes in a broad spectrum of yarns, including RW Yarns, Melange Yarns, Solid Top Dyed Yarns, and Grey Yarns, crafted from materials like cotton, polyester, and acrylic. Sustainability is at the core of Cedaar Textile’s mission, with products offered in 100% organic and recycled fibers, such as polyester and cotton, contributing to environmental conservation and the responsible use of natural resources. Cedaar Textile also prioritizes continuous innovation, customer focus, R&D, technological advancements, digitalization, ERP integration, and ongoing improvement. The company is also committed to transitioning towards green energy, reinforcing its dedication to sustainable manufacturing.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21 - 22 (Audited - Annual)	FY 22 - 23 (Audited - Annual)	FY 23 - 24 (Audited - Annual)
Operating Revenue	Rs.Crs.	219.59	160.60	189.68
EBITDA	Rs.Crs.	18.61	19.34	29.89
PAT	Rs.Crs.	6.93	4.60	12.10
Tangible Net Worth	Rs.Crs.	8.54	12.66	24.80
Total Debt / Tangible Net Worth	Times	14.17	10.83	5.89
Current Ratio	Times	1.24	1.25	1.22

KEY COVENANTS OF THE FACILITY RATED

There are standard sanction terms and conditions, and the USL is subordinated to the bank.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2025)			2024		2023		2022
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	89.85	BWR BB/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Fund Based	ST	30.00	BWR A4 (Assignment)	NA	NA	NA	NA	NA	NA
FB SubLimit	ST	(15.00)	BWR A4 (Assignment)	NA	NA	NA	NA	NA	NA
		(20.00)	BWR A4 (Assignment)	NA	NA	NA	NA	NA	NA
		(5.00)	BWR A4 (Assignment)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	10.05	BWR A4 (Assignment)	NA	NA	NA	NA	NA	NA
NFB SubLimit	ST	(10.00)	BWR A4 (Assignment)	NA	NA	NA	NA	NA	NA
		(10.00)	BWR A4 (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		129.90	(Rupees One Hundred Twenty Nine Crores and Ninety lakhs Only)

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Prajwal Biraj Rating Analyst prajwal.b@brickworkratings.com	Ravi Rashmi Dhar Associate Director - Ratings ravi.d@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Cedaar Textile Ltd.

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)	Complexity of the Instrument
1	Canara Bank	Cash Credit - Sanctioned	20.00	_	20.00	Simple##
	Sub-Limit (FDB/FBE/BRD) - Sanctioned		(15.00)
	Sub-Limit (PC/PCFC) - Sanctioned		(10.00)
2	HDFC Bank	Cash Credit - Sanctioned	20.00	_	20.00	Simple##
	Sub-Limit (Letter of Credit) - Sanctioned		(10.00)
	Sub-Limit (Pre Shipment)		(20.00)
3	HDFC Bank	Foreign Bill Discounting - Sanctioned	_	10.00	10.00	Simple##
4	HDFC Bank	Bank Guarantee - Sanctioned	_	0.05	0.05	Simple##
5	HDFC Bank	Letter of Credit - Sanctioned	_	5.00	5.00	Simple##
6	HDFC Bank	Pre Shipment - Sanctioned	_	6.00	6.00	Simple##
	Sub-Limit (Foreign Bill Discounting) - Sanctioned		(5.00)
7	HDFC Bank	Post Shipment - Sanctioned	_	4.00	4.00	Simple##
8	HDFC Bank	Post Shipment - Sanctioned	_	10.00	10.00	Simple##
9	HDFC Bank	GECL - Sanctioned	18.00	_	18.00	Simple##
10	HDFC Bank	Pre Settlement Risk - Sanctioned	_	5.00	5.00	Simple##
11	HDFC Bank	Term Loan - Out-standing	24.91	_	24.91	Simple##
12	SIDBI	Term Loan - Out-standing	6.94	_	6.94	Simple##
Total			89.85	40.05	129.90
TOTAL (Rupees One Hundred Twenty Nine Crores and Ninety lakhs Only)

## BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.

ANNEXURE-II

INSTRUMENT DETAILS

Instrument	Issue Date	Amount (Rs.Crs)	Coupon Rate (%)	Maturity Date	ISIN Particulars	Complexity of the Instrument
Nil	Nil	Nil	Nil	Nil	Nil	Nil

ANNEXURE-III

List of entities consolidated

Name of Entity	% Ownership	Extent of consolidation	Rationale for consolidation
Nil	Nil	Nil	Nil

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