Saanika Industries Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 80.00 Crs. of Saanika Industries Pvt. Ltd.

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	78.00	Long Term	BWR BBB - /Stable Assignment
	(55.24)
	(55.24)
	(3.00)
Non Fund Based	2.00	Short Term	BWR A3 Assignment
Grand Total	80.00	(Rupees Eighty Crores 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 has assigned the long-term rating and short-term rating of BWR BBB- (Stable) and BWR A3 for the bank loan facilities of Rs. 80.00 Crore of Saanika Industries Private Limited.

For assigning the ratings, BWR has relied upon the last three year combined financials till FY26 and Projected financials for FY27 and FY28 as well as publicly available information and clarification provided by the management.

Brickwork Ratings (BWR) has assigned the ratings of SIPL considering factors such as the extensive industry experience of the promoters, the group's robust operational scale in Surat's prominent textile hub and its government-recognized status as a Two-Star Export House. The ratings also strongly reflect the group's successful strategic shift toward vertical integration into high-margin finished fabrics, driving a sharp recovery in operating margins and net profitability. Furthermore, the ratings are supported by a stable capital structure and optimized adjusted leverage following the treatment of promoter unsecured loans as quasi-equity, alongside adequate debt coverage indicators.

The ratings are, however, constrained by the group's inherent exposure to raw material price volatility and intense competitive pressures within a highly fragmented textile sector.

The rating outlook has been assigned as "Stable" as BWR believes that Saanika Industries Private Limited 's business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case the revenue and profitability margins show sustained improvement. The rating outlook may be revised to 'Negative' if the financial risk profile goes down.

KEY RATING DRIVERS

Credit Strengths:

• Extensive experience of the promoter and established market presence :

  The promoter’s nearly two-decade-long presence in the polyester yarn industry—with operations spanning polyester draw texturised yarn, air textured yarn and knitted fabrics—has helped the Saanika group establish a robust market position. This deep domain expertise is backed by a diversified customer base across domestic and export markets alongside an extensive supplier network.

• Locational Advantage :

  The group's manufacturing facilities are strategically positioned in Surat, Gujarat, the core geographic hub of India's synthetic textile landscape. This location facilitates streamlined logistical access to raw material networks, skilled labor pools, and major domestic trade channels.

• Resilient Growth Trajectory & Improving Core Profitability :

  From a consolidated perspective, the group has successfully scaled its operations over the medium term, expanding Total Operating Income (TOI) from Rs. 664.05 Crores in FY24 to Rs. 698.11 Crores in FY25. Despite a brief macroeconomic consolidation in FY26 to Rs. 674.57 Crores. In response to industry-wide margin pressures on conventional texturised yarn, management successfully pivoted production capacity toward high-margin finished fabrics. This expanded consolidated OPBDIT to an audited high of Rs. 37.58 Crores in FY26, raising consolidated EBITDA margins from 4.4% to 6.2%.

• Stable Capital Structure and Improving Consolidated Gearing Profile :

  Saanika Industries Pvt. Ltd. (SIPL) maintains a stable capital structure with conservative standalone leverage, serving as a vital financial cushion where its Total Debt to TNW ratio hovered at 0.67 times in FY24 and improved to 0.60 times in FY26. Evaluated on a combined basis, the group’s gearing (Total Debt/TNW) has shown steady structural improvement, dropping from 1.54 times in FY24 to 1.24 times in FY26. The consolidated TOL/TNW ratio followed a similar downward trajectory, contracting from 1.82 times in FY24 to 1.61 times in FY26, indicating a healthy reduction in total external liabilities against equity.

   

Credit Risks:

• Highly Competitive & Fragmented Sector :

  The texturised yarn and knitting segments feature low entry barriers, giving rise to fierce competition from a vast network of both organized and unorganized domestic players. This extreme market fragmentation fragments aggregate market share and fundamentally restricts the standalone pricing power of producers, leaving them reliant on operational agility and raw scale to defend margins.

• High Supplier Concentration & Raw Material Volatility Risk :

  The group maintains a highly concentrated procurement profile, with the top 5 vendors driving roughly 87% of aggregate raw material purchases. Notably, Reliance Industries Limited serves as the anchor supplier, providing 64% of Partially Oriented Yarn (POY) to SIPL and 70% to SPPL. While counterparty default risk is low, any logistical or commercial disruption at the supplier level poses a direct threat to production continuity.The primary raw materials are petrochemical derivatives, exposing the group's input costs directly to global crude oil price fluctuations and realization cycles.

• Inherent Industry Cyclicality & Seasonal Demand Skenwess :

  Standalone revenue profiles demonstrate susceptibility to broader industry shifts; for instance, SIPL's absolute standalone top-line contracted by Rs. 34.56 Crores over two years due to falling texturised yarn realizations. Revenue streams exhibit noticeable systemic seasonality, with nearly 30% of annual sales volume consistently heavily concentrated in the final quarter (Q4) of the fiscal year. This sharp rise requires stringent working capital coordination and active inventory management to prevent cash flow strains during off-peak quarters.

ANALYTICAL APPROACH - Consolidated

Brickwork Ratings (BWR) has adopted a combined analytical approach for evaluating the credit risk profiles of Saanika Industries Private Limited (SIPL). BWR has combined financials of Saanika Industries Private Limited (SIPL) and Saanika Products Private Limited (SPPL), which is referred as the Saanika Group. This approach is aligned with BWR's criteria for consolidation, given that both entities operate as a highly synchronized, functionally integrated textile ecosystem. The group exhibits absolute commonality of management, shared promoter capital and deep operational and financial inter-company reliance. Consequently, evaluating these entities as a single economic unit is essential to capture the group's true operational scale, consolidated leverage and genuine debt-servicing capacity, which would otherwise be fragmented and obscured under standalone accounting structures.

 

RATING SENSITIVITIES

Positive:

• Sustained expansion in scale of operations, with Total Operating Income (TOI) crossing Rs. 750–800 crore
• Stabilization of the core operating profitability, with the OPBDIT margin expanding and sustaining above 6.50%
• Rationalization of the working capital conversion cycle down below 120 days

Negative:

• A sharp drop or stagnation in top-line growth below Rs. 650 crore, or contraction in the OPBDIT margin below 4.50%
• Any aggressive, un-envisaged debt-funded capex or incremental long-term borrowings that disrupts the deleveraging path, causing Total Debt / TNW to increase or stay above 1.50x
• Increased reliance on short-term bank borrowings driven by a stretched working capital cycle where the operating loop extends beyond 150 days
• Significant funds being moved out of the core entity via loans/advances to group companies or directors exceeding current trends, which would diminish the available liquidity buffer

LIQUIDITY INDICATORS - Adequate

On a standalone basis, SIPL exhibits a healthy and stable liquidity profile, characterized by a strong current asset cushion that comfortably supports its ongoing operational requirements. The company demonstrates a robust technical capacity to clear its immediate obligations promptly, backed by active working capital management and well-established banking relationships. Short-term borrowings stand at Rs. 60.55 crore, with fund-based bank limit utilization running at 78%. This high utilization reflects an intensive and efficient deployment of capital directly into core operations, ensuring that banking lines are fully sweat to maximize operational scale. The standalone Current Ratio is robust at 1.85x, sitting comfortably above the standard 1.33x banking benchmark. While the Quick Ratio stands at 0.73x, this composition is typical for the industry; it reflects a deliberate and strategic allocation of working capital into productive, revenue-generating current assets, specifically Inventory (Rs. 64.37 crore) and Trade Credit (Rs. 55.89 crore). Free cash and bank balances are maintained at an optimized level of Rs. 3.02 crore. Rather than leaving cash idle, SIPL keeps its resources fully deployed in the business cycle, relying on predictable, continuous collection cycles from its established debtor base to smoothly meet daily cash commitments.

At the group level, the liquidity framework remains adequate and cohesive. Both operating arms—SIPL and SPPL—demonstrate synchronized financial management, effectively utilizing their respective credit lines to drive scale and maintain market momentum.Total short-term group debt stands at Rs. 129.79 crore. Operating both entities at 65% working capital utilization indicates that the group is fully leveraging its available credit facilities to support a high volume of simultaneous project execution, backed by strong banking comfort. The group’s consolidated Current Ratio is healthy at 1.66x, while the consolidated Quick Ratio stands at a defensive 0.63x. This reflects a group-wide focus on maintaining active operational assets, with Rs. 152.31 crore tied up in moving inventory and Rs. 114.43 crore in trade debtors, both of which serve as a reliable pipeline for upcoming cash generation. Total short-term group debt stands at Rs. 129.79 crore. Operating both entities at 65% working capital utilization indicates that the group is fully leveraging its available credit facilities to support a high volume of simultaneous project execution, backed by strong banking comfort. The group’s consolidated Current Ratio is healthy at 1.66x, while the consolidated Quick Ratio stands at a defensive 0.63x. This reflects a group-wide focus on maintaining active operational assets, with Rs. 152.31 crore tied up in moving inventory and Rs. 114.43 crore in trade debtors, both of which serve as a reliable pipeline for upcoming cash generation. The group manages a total consolidated cash pool of Rs. 4.80 crore. While modest against total current liabilities of Rs. 189.88 crore, this streamlined cash position is offset by the steady, rolling monetization of the group's substantial current asset base, ensuring adequate coverage for systemic operational commitments.  

ABOUT THE ENTITY

Saanika Industries Private Limited (SIPL), headquartered in Surat, Gujarat and promoted by Mr. Sumit Agarwal, is a vertically integrated textile manufacturer. The company operates in close conjunction with its group concern, Saanika Polytex Private Limited (SPPL), leveraging strong operational, managerial, and financial integration across a unified textile ecosystem.

SIPL spearheads the upstream yarn manufacturing division with an annual installed capacity of 3,24,60,000 Kgs, backed by premium global benchmarks including Global Recycled Standard (GRS) and Oeko-Tex certifications. Complementing this, SPPL manages downstream manufacturing and value-added diversification. The combined operations utilize a highly synchronized infrastructure to optimize economies of scale, catering effectively to both domestic and international markets as a government-recognized "Two Star Export House."

ESG Profile

NA

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 23 - 24 (Audited - Annual)	FY 24 - 25 (Audited - Annual)	FY 25 - 26 (Audited - Annual)
Operating Revenue	Rs.Crs.	380.46	351.19	345.90
EBITDA	Rs.Crs.	12.28	7.21	9.31
PAT	Rs.Crs.	6.08	1.64	4.93
Tangible Net Worth	Rs.Crs.	130.98	130.83	135.77
Total Debt / Tangible Net Worth	Times	0.67	0.69	0.60
Current Ratio	Times	1.83	1.87	1.85

KEY FINANCIAL INDICATORS (Consolidated)

Key Parameters	Units	FY 23 - 24 (Audited)	FY 24 - 25 (Audited)	FY 25 - 26 (Audited)
Operating Revenue	Rs.Crs.	664.05	698.11	674.57
EBITDA	Rs.Crs.	30.11	29.15	37.58
PAT	Rs.Crs.	9.39	6.96	14.94
Tangible Net Worth	Rs.Crs.	164.35	169.53	227.37
Total Debt / Tangible Net Worth	Times	1.54	1.35	0.81
Current Ratio	Times	1.55	1.64	1.66

KEY COVENANTS OF THE FACILITY RATED

As per the normal terms and conditions stipulated in the sanction letters.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

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	78.00	BWR BBB-/Stable (Assignment)	NA	NA	NA	NA	NA	NA
FB SubLimit	LT	(55.24)	BWR BBB-/Stable (Assignment)	NA	NA	NA	NA	NA	NA
		(55.24)	BWR BBB-/Stable (Assignment)	NA	NA	NA	NA	NA	NA
		(3.00)	BWR BBB-/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	2.00	BWR A3 (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		80.00	(Rupees Eighty Crores Only)

Hyperlink/Reference to applicable Criteria

• General Criteria
• Approach to Financial Ratios
• Ratings based on Group Support
• Consolidation of Companies
• Short Term Debt
• Manufacturing Company

Analytical Contacts
Tripathi Deep GopalKumar Ratings Analyst deep.tripathi@brickworkratings.com	Mukesh Kumar Verma mukesh.verma@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	Bank of Baroda	Term Loan - Out-standing	3.21	_	3.21	Simple##
2	Bank of Baroda	Term Loan - Out-standing	4.55	_	4.55	Simple##
3	Bank of Baroda	Term Loan - Out-standing	1.35	_	1.35	Simple##
4	Bank of Baroda	Term Loan - Out-standing	6.30	_	6.30	Simple##
5	Bank of Baroda	Term Loan - Proposed	2.59	_	2.59	Simple##
6	Bank of Baroda	Cash Credit - Sanctioned	55.24	_	55.24	Simple##
	Sub-Limit (FBP/FBD/FCBP/FCBD) - Sanctioned	(55.24)
	Sub-Limit (FCNR) - Sanctioned	(3.00)
	Sub-Limit (PC/PCFC) - Sanctioned	(55.24)
7	Bank of Baroda	Bank Guarantee - Sanctioned	_	2.00	2.00	Simple##
8	Bank of Baroda	Stand by Limit - Sanctioned	4.76	_	4.76	Simple##
Total			78.00	2.00	80.00
TOTAL (Rupees Eighty Crores 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.