Redeco Fibers Pvt. Ltd.

Brickwork Ratings assigns the long-term of BWR BBB-/Stable and short-term ratings of A3 for the Bank Loan Facilities of Rs. 81.66 Crores. of Redeco Fibers Pvt. Ltd.

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	76.66	Long Term	BWR BBB - /Stable Assignment
Non Fund Based	5.00	Short Term	BWR A3 Assignment
	(0.40)
Grand Total	81.66	(Rupees Eighty One Crores and Sixty Six 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 Ratings (BWR) assigns the ratings BWR BBB-/Stable for the long-term and BWR A3 for the short-term bank loan facilities of Redeco Fibers Pvt. Ltd. amounting to Rs.81.66 crores. The ratings factor in the company’s management expertise, strong client base and company’s improved and healthy financial risk profile with improvement in EBITDA margin of 8.16% in FY26 Provisionals, comfortable capital structure with improved Y-o-Y  Adjusted TNW of Rs.83.09 Crores as at FY26 Provisionals along with adequate liquidity with sufficient cash accruals to cover the upcoming debt obligations and satisfactory debt protection metrics supported by satisfactory bankers feedback—each of which contributes to the overall credit strength. However, the ratings are constrained by several factors, including risks associated with working capital–intensive nature of operations and susceptibility to raw material price volatility as well as the highly competitive nature and cyclicality of the industry and exposure to evolving ESG compliance. The stable outlook indicates a moderate likelihood of a rating change over the medium term due to promoters' extensive industry experience and expertise, the company's strong relationship with its clientele and its stable financial risk profile. BWR expects the company to enhance its scale of operations, improve profitability margins and strengthen its liquidity position and show stabilization of operations for long-term by mitigating risks involved in the business while maintaining adequate capital structure, all of which could lead to a positive outlook. However, any significant underperformance in revenue, deterioration in profitability or gearing indicators or a deterioration in the capital structure or debt protection metrics due to fresh debt-financed capital expenditure, liquidity challenges due to extended working capital cycle could result in a revision to a negative outlook.  

KEY RATING DRIVERS

Credit Strengths:

• Extensive Industry Experience of the Promoters & Established Track Record :

  The Redeco Fibers Private Limited (RFPL) company benefits significantly from the deep-rooted industry expertise and active involvement of its core promoter-directors, who possess an established operational track record in the highly competitive textile domain. The strategic vision and day-to-day operations are steered by Mr. Rameshbhai Jivrajbhai Ranipa (aged 54 years), who brings more than three decades of extensive industrial experience, alongside Mr. Hareshbhai Kanjibhai Ranipa (aged 45 years), who contributes over two decades of specialized expertise in the yarn business. Both key promoters hold graduation degrees, anchoring the management framework with a strong blend of formal academic qualifications and technical acumen. This multi-decadal operational experience gives the management a profound understanding of raw cotton procurement cycles, domestic demand dynamics, and spinning mill asset optimization. This extensive background provides significant comfort to lenders, mitigates operational execution risks, and enhances the company’s ability to navigate cyclical industry downturns effectively and their networking governance, which includes common directorships in other related entities, aiding strong decision-making and the business's going concern ability.

   

• Strengthened Capital Structure and Comfortable Debt Coverage Metrics :

  Strengthened Capital Structure and Comfortable Debt Coverage Metrics: The continuous retention of operating profits has steadily augmented the company's equity base, fostering a resilient capital structure. Adjusted Tangible Net Worth (TNW) increased progressively from Rs.73.30 crores in FY25 and Rs.83.09 crores in FY26 provisionals. This accretion of capital significantly deleveraged the balance sheet, with the adjusted Debt-to-Equity ratio improving from a peak of 1.22 times in FY25 to a conservative 0.84 times in FY26 Provisionals. Liquidity and short-term debt-servicing capabilities have moved in tandem; the current ratio stood at comfortable 1.17 times in FY26 provisionals, indicating adequate and stable current asset padding against short-term obligations. Backed by expanding cash accruals, key solvency metrics exhibit a high degree of cushion for lenders: the Interest Service Coverage Ratio (ISCR) strengthened from 2.74  times in FY25 to 3.14 times in FY26 (provisional), while the Debt Service Coverage Ratio (DSCR) scaled up from 1.16  times in FY25  to a healthy 1.24  times over the same period, mitigating credit risk.  

   

Credit Risks:

• Product Concentration and Geographic Risk and High Exposure to Key Domestic Hubs :

  The company benefits from high operational utilization across its production lines; its business model remains exposed to product and geographic concentration risks. During FY26 Provisional, revenue streams were heavily weighted toward a single core segment, with Cotton Yarn sales accounting for 90% of total sales and Cotton Waste contributing 10% of total sales. This high reliance on cotton spinning leaves the company's financial performance acutely vulnerable to localized supply-demand mismatches and sudden price corrections in the yarn market.
  This product concentration is further amplified by geographic risk, as the company operates with a purely pan-India domestic footprint, lacking international export diversification. Sales are heavily tied to specific industrial textile states, namely Gujarat,Rajasthan,Madhya Pradesh, West Bengal, Maharashtra and Karnataka. This multi-state concentration means that any regional economic shocks, amendments to state-specific power subsidies, localized labor challenges, or consumption slowdowns within these primary weaving and garmenting clusters could immediately damp demand and compress operating

• Susceptibility of Profitability to Raw Material Price Volatility and High Working Capital Intensity :

  The profitability of Redeco Fibers Private Limited  (RFPL) remains highly sensitive to systemic volatility in raw cotton prices, which constitutes the primary cost component at approximately 80% of the company's total manufacturing expense. Raw cotton prices fluctuate significantly due to seasonal harvesting factors, vagaries of the monsoon, domestic production yields, global demand-supply imbalances, and regulatory interventions such as the Government of India's Minimum Support Price (MSP) adjustments. Given the highly competitive and commoditized nature of the spinning industry, HSMPL has limited pricing flexibility and low bargaining power, restricting its ability to pass on sudden hikes in input costs to downstream customers and exposing the company to severe inventory valuation loss risks.

  This margin vulnerability is further magnified by the inherent working capital intensity of the company's operations. Because raw cotton availability is highly seasonal, the mill must engage in bulk procurement during the peak harvest period to lock in raw material inventory for year-round production requirements. This cyclical procurement strategy ties up significant liquidity in inventory over extended durations. While RFPL partially mitigates these working capital pressures by leveraging established relationships with suppliers to secure extended credit periods of around 2 months, the combination of elevated seasonal working capital requirements and raw material price volatility continues to be a primary credit concern.

• Presence in a Fragmented, Cyclical, and Competitive Industry Alongside evolving ESG Compliance Pressures :

  Redeco Fibers Private Limited (RFPL) operates within an inherently cyclical and highly fragmented textile manufacturing landscape. The industry is characterized by the presence of a vast number of both organized and unorganized players, resulting in aggressive pricing competition. Because cotton yarn is commoditized with low product differentiation, RFPL 's standalone pricing flexibility is constrained. Furthermore, the textile sector is tightly linked to global and domestic macroeconomic business cycles; fluctuations in international demand-supply dynamics directly impact local yarn valuations and finished goods pricing, making the company's operating profit margins highly sensitive to global economic shifts.
  Compounding these marketplace risks are the increasing operational headwinds associated with stringent environmental regulations and evolving Sustainability/ESG (Environmental, Social, and Governance) mandates. The textile industry is subject to rigorous pollution control norms, particularly regarding wastewater discharge, chemical effluent treatment, and industrial waste management. Non-compliance with these evolving benchmarks poses material credit risks, including legal penalties, unexpected operational disruptions, and severe reputational damage. Adhering to rising or evolving ESG expectations from lenders and regulatory authorities will require the company to commit ongoing capital expenditure toward eco-friendly technologies, sustainable raw material sourcing, and zero-liquid-discharge systems. These mandatory investments could escalate near-term operational costs and strain cash flows, while any delay in adaptation would adversely impair the mill's long-term market competitiveness and credit profile.

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). BWR has principally relied upon the Standalone audited financials up to FY25 and FY26 provisional and clarification/information provided by the company.

RATING SENSITIVITIES

The company’s ability to increase its scale of operations, improve profitability and margins, efficiently manage its working capital requirements with adequate liquidity, debt protection metrics and strengthen overall credit profile would be the key rating sensitivities.

Positive Rating Factors:

• The rating may be upgraded if the revenue performance improved with Y-o-Y revenue growth, supported by enhanced profitability, with EBITDA margins exceeding 10%.
• A healthier debt profile, including Adjusted Total Debt/ Adjusted TNW below 1.00x, TOL/TNW below 1.50x, and maintaining debt protection metrics DSCR above 1.40 times, ISCR above 2.5 times and liquidity with an improved current ratio above current level which strengthens working capital efficiency.

Negative Rating Factors:

• The ratings may be downgraded if revenue declines by more than 10% YoY due to weaker demand, or if profitability weakens, with EBITDA margins dropping under 5%.
• A rising debt burden, accompanied by a decline in key ratios such as Total Debt to Tangible Net Worth (TOD/TNW) above 2 times , Current Ratio (CR), Interest Coverage Ratio (ISCR), and Debt Service Coverage Ratio (DSCR) falling below 1 times current levels, may signal a deterioration in the financial position and reduced debt servicing capacity.

 

LIQUIDITY INDICATORS - Adequate

The Company (Redeco Fibers Pvt. Ltd) liquidity position is adequate with a cash and cash equivalents  of Rs.8.05  crores in FY25 and Rs.5.89  Crores in FY26 provisionals, EBITDA of Rs.27.16  crores in FY25 and Rs.27 crores in FY26 provisionals, and gross cash accruals of Rs.16.23 crores in FY 25 and Rs.18.37 crores in FY26 Provisionals , which is adequate to cover interest and finance charges of Rs. 9.90 crores in FY25 and Rs.8.57 crores in FY26 provisionals and the current portion of long-term debt of Rs.13.20 crores in FY25 and Rs.13.80 crores in FY26 provisionals respectively. The average utilization of working capital facilities stands at around 90%, reflecting efficient use of the sanctioned limits. Further liquidity is supported by adequate net worth with a gearing of times 0.84 times in FY26 provisionals, a current ratio of 1.15 times in FY25 and 1.17 times in FY26 provisionals and projected cash accruals of Rs.21 crores and current ratio of 1.37 times respectively show an adequate current and liquid assets. Based on these factors, the liquidity is assessed as "Adequate”.

ABOUT THE ENTITY

Redeco Fiber Private Limited is a private limited company incorporated in 2020 under the Corporate Identification Number (CIN) U17299GJ2020PTC118191. The company operates as a specialized manufacturer of carded cotton yarns, serving the domestic textile ecosystem from its integrated setup in Gujarat. Both its registered corporate office and primary manufacturing plant are co-located at Neknam, Taluka: Tankara, District: Morbi, Gujarat (PIN: 363650). Strategic business direction, daily operations, and long-term expansion initiatives are actively steered by its core promoter-directors, Mr. Rameshbhai Ranipa and Mr. Hareshbhai Ranipa, who bring extensive domain experience and management continuity to the business.

 

ESG Profile

Environmental, Social, and Governance (ESG) Profile: Redeco Fibers Pvt. Ltd.

The company's ESG profile demonstrates an Adequate profile across Environmental, Social, and Governance dimensions, aligned with the operational characteristics of the manufacturing sector.

Environmental (E):

Redeco Fibers Pvt. Ltd. demonstrates an exceptional commitment to environmental sustainability and sustainable manufacturing, heavily validated by its Global Organic Textile Standard (GOTS) certification (License Number: GOTS-14717). The company’s core operational footprint encompasses eco-certified processes including Spinning (PR0027) as well as the Warehousing and Distribution of non-final products (PR0031) at its primary manufacturing facility situated at Sr. No. 209/P1, 209/P2, 210, 211/P3 & 255/P1, Neknam-Paddhari Road, Neknam, Taluka: Tankara, District: Morbi - 363650.

The factory operates strictly within regulatory parameters under Factory License No. 51542 (Date of Anniversary: 02-Feb-2023), approved by the Joint Director of Industrial Safety and Health, Rajkot Region (vide No. 1759, dated 05-May-2023), in compliance with the Factories Act, 1948. The license authorizes a maximum installed power capacity of 5,000 B.H.P. on any given day.

Its sustainable product portfolio is structurally organized into clean material streams, maximizing the use of 100% Organic Cotton (RM0104) and 100% In-Conversion Organic Cotton (RM0103) across its primary output categories:

Greige Yarns (PC0030): Encompassing Carded yarns (PD0067), Normally combed yarns (PD0102), and Super combed yarns (PD0068).

Undyed Fibers (PC0034): Encompassing sustainable manufacturing sub-products like Comber noil (PD0082) and Lint cotton (PD0074).

Beyond maintaining a strict organic product lifecycle,it demonstrates a strong commitment to environmental sustainability by maintaining a low-footprint manufacturing process that limits its resource consumption strictly to electricity, water for employee usage, and general operational utilities. The facility demands an annual power capacity of 3600 KVA for its operations. To mitigate its carbon footprint and transition toward clean energy, the company successfully secured solar term loans in FY25 to install an on-site Solar Plant. Consequently, 40% of the plant's total annual electricity consumption is now powered by renewable solar energy, while the remaining 60% is sourced from the state utility, Gujarat State Electricity Corporation Limited (GSECL).

Social (S):

The company maintains an inclusive, safe, and legally compliant human resource framework that emphasizes equitable workplace conditions under the Factories Act, 1948. While the company's factory license formally permits a maximum of 250 workers to be employed on any day, Redeco Fibers Pvt. Ltd. currently supports an active workforce of 235 personnel, structurally mapped to secure operational excellence and clear internal progression.This team features 123 permanent corporate and manufacturing staff, supported by 65 skilled workers, 35 semi-skilled workers, and 12 unskilled laborers. Championing progressive gender diversity within the heavy industrial and textile sector, the company enforces a workforce demographic of 30% female employees and 70% male employees, providing equal professional advancement and secure workspace environments.

Governance (G):

Redeco Fibers Pvt. Ltd. upholds excellent corporate responsibility, adequate internal tracking, compliance infrastructure and governance standards . By aligning its production capacity with approved industrial safety limits (Joint Director ISH, Rajkot approval) and international tracking protocols (GOTS), the company maintains top-tier compliance.

Complete regulatory and financial accountability is enforced through external statutory audits executed by specialized independent entities, specifically J.G. UNADAKAT & CO. (Chartered Accountants).  All statutory audits and financial disclosure are verified by a Unique Document Identification Number (UDIN), guaranteeing excellent corporate governance, strong internal controls, and absolute legal alignment to protect multi-stakeholder interests.

 

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 23 - 24 (Audited)	FY 24 - 25 (Audited)	FY 25 - 26 (Provisional)
Operating Revenue	Rs.Crs.	289.13	358.83	329.37
EBITDA	Rs.Crs.	18.03	27.16	26.88
PAT	Rs.Crs.	0.25	7.82	9.79
Tangible Net Worth	Rs.Crs.	42.65	50.46	60.26
Total Debt / Tangible Net Worth	Times	2.46	2.23	1.15
Current Ratio	Times	0.83	1.15	1.17

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include the standard covenants typically prescribed for such facilities. The entity needs to achieve or maintain the key ratios such as ISCR, DSCR as per CMA. (Any Deviation in these ratios more than 10% will attract penal interest.)

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

ANY OTHER INFORMATION

Not Applicable.

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

Facilities	Current Rating  (2026)			2025		2024		2023
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	76.66	BWR BBB-/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	5.00	BWR A3 (Assignment)	NA	NA	NA	NA	NA	NA
NFB SubLimit	ST	(0.40)	BWR A3 (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		81.66	(Rupees Eighty One Crores and Sixty Six lakhs Only)

Hyperlink/Reference to applicable Criteria

• General Criteria
• Approach to Financial Ratios
• Short Term Debt
• Manufacturing Company

Analytical Contacts
Likith M S Rating Analyst likith.ms@brickworkratings.com	Suryanarayan N Associate Director - Ratings suryanarayan.n@brickworkratings.com
Media Contact | media@brickworkratings.com	Client Support | clientsupport@brickworkratings.com

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	State Bank Of India (SBI)	Term Loan - Out-standing	56.66	_	56.66	Simple##
2	State Bank Of India (SBI)	Cash Credit - Sanctioned	20.00	_	20.00	Simple##
	Sub-Limit (CEL Limit for Derivative Contracts) - Sanctioned		(0.40)
3	State Bank Of India (SBI)	Bank Guarantee - Sanctioned	_	5.00	5.00	Simple##
Total			76.66	5.00	81.66
TOTAL (Rupees Eighty One Crores and Sixty Six 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.