Rating Rationale

Brickwork Ratings has assigned the long-term rating of BWR BBB- and short-term rating of BWR A3, with a stable outlook for the bank loan facilities amouting to Rs 74.81  Crores of Shree Ram Wooden Industries Private Limited.The ratings reflect the extensive experience of the promoters in the wooden products and furniture manufacturing business, established relationships with key clients, and a stable financial risk profile. These credit strengths are partially offset by the company's moderate scale of operations, high working capital intensity, and exposure to raw material price volatility within a highly fragmented industry. Brickwork Ratings believes Shree Ram Wooden Industries Private Limited will maintain its business risk profile over the medium term. The 'Stable' outlook indicates a low likelihood of a rating change, supported by steady demand for wooden/furniture products and the promoters' long-standing operational track record.

• As per the covenants stipulated in the sanction letter of the banks 
• Achievement of financial closure for the bank loan 
• Successful implementation of the project and start of commercial operations on due date.

• Locational Advantage in Ahmedabad Industrial Cluster :

  Nestled in the vibrant locale of Bavla, just outside Ahmedabad, Gujarat, the company is uniquely positioned to leverage a range of strategic advantages. Its proximity to vital industrial infrastructure not only streamlines operations but also ensures rapid access to indispensable resources. This geographical advantage significantly enhances logistical efficiency, enabling the company to respond swiftly to market demands and changes. Moreover, the region boasts a rich availability of skilled labor pools, which serve as a cornerstone of the company’s commitment to excellence. The access to a talented workforce is instrumental in fostering an environment of productivity and innovation. Employees bring diverse skills and creative perspectives, contributing to the company’s ability to implement cutting-edge solutions and maintain high operational standards.

• Established Track Record of Operations :

  With nearly a decade of established business operations since their incorporation, the management team has developed a wealth of operational experience that spans multiple business cycles. This extensive background has not only honed their strategic capabilities but has also fostered the establishment of stable and lasting relationships with regional buyers and wood product distributors. Their commitment to nurturing these connections is a testament to our understanding of market dynamics and the importance of collaboration in achieving mutual success. By leveraging their experience, we are well-positioned to navigate challenges and seize opportunities within the industry, ensuring sustained growth and value for all stakeholders involved.

• Intense Competition & Low Entry Barriers :

  The wooden furniture and processed wood manufacturing sector is characterized by a high degree of fragmentation. This fragmentation arises from low capital and technological entry barriers, making it accessible for new players to enter the market. Additionally, there is minimal differentiation among end products, which further intensifies competition.  As a result, both organized and unorganized regional competitors actively vie for market share. This competitive landscape significantly restricts pricing power for manufacturers, limiting their ability to increase prices in response to rising costs or demand. Consequently, profit margins are often capped, making it challenging for businesses within this sector to achieve sustainable growth and profitability.

• Susceptibility to Raw Material Price Volatility & Cyclical Demand :

  Fluctuations in the prices of wood and timber are influenced by various factors, including supply chain dynamics and seasonal demand variations. Additionally, the industry's heavy reliance on sectors such as construction, real estate, and retail interior design makes it particularly vulnerable to economic cycles. This dependency can lead to significant exposure to shifts in operating margins, as any increase or decrease in input costs can directly impact profitability.  Moreover, changing consumer preferences and market trends, alongside regulatory changes in building materials, contribute to the volatility of these prices. As a result, businesses within this sector must navigate not only the immediate challenges of price swings but also the broader implications of fluctuating end-market demand

Moving forward, the progress and successful execution of the new project will be an important indicator for the company to monitor.

Positive :

- Sustained growth in operational scale while maintaining an operating margin above 13.50%. - Continued strengthening of the capital structure, supported by healthy increases in net worth, with Total Debt to Tangible Net Worth (TNW) maintained below 2.75x.

- Comfortable liquidity and debt coverage, indicated by a current ratio above 1.5x and a Debt Service Coverage Ratio (DSCR) above 2.0x.
Negative :

- Any slowdown in execution that leads to revenue growth falling below 15% or an operating margin declining below 10%.

- A decline in liquidity due to delayed collections, resulting in a current ratio falling below 1.25x.

Shree Ram Wooden Industries Private Limited(SRWIPL)  was established on 28th Jan,2016.The company's liquidity indicators remains adequate.The current Ratio is at 1.34x in FY'26(Prov.) which is project to rise to 1.58x in FY27.Net Cash Accruals are sufficient at Rs 6.74 Crores in FY'26(Prov.) which is projected to rise to Rs 9.85 Crores in FY27 against the debt repayment obligation of Rs 2.22 Crores in FY26(Prov.) and Rs 3.01 Crores in FY27. Debt Servicing metrics are comfortable ,with an Interest Service Coverage Ratio(ISCR) at 3.48x in FY'26(Prov.) and projected to rise to 5.41x in FY27.

The company demonstrates an adequate ESG profile based on its environmental, social, and governance practices.

Environmental: Environmental risks are driven by high water usage, waste generation, and reliance on energy-intensive processes, making disclosures on water consumption  waste-management practices, renewable energy share, and emissions levels particularly important.

Social: Social factors hinge on adherence to labour laws, accident prevention frameworks, and human-capital development, with metrics such as workforce mix, safety performance, and training initiatives offering insights into operational resilience.

Governance: Governance assessment focuses on board independence, committee effectiveness, and robustness of compliance systems, supported by readily available disclosures on board structure, audit mechanisms, and risk-management practices.

Shree Ram Wooden Industries Private Limited (SRWIPL) is an Ahmedabad-based Company, initially established as a partnership firm in 2008 and later converted into Private Limited Company since 2016. The company is promoted by Mr Vishwas Sonigara, Mr Jasmin Patel and Mr Ritesh Gajjar. The company manufactures modular furniture for retail, project, and hospitality segments. Its products include modular kitchens, wardrobes, home furniture, decorative doors, speciality furniture, office furniture and hospitality furniture etc. SRW had set up a state-of-the-art manufacturing plant in Bavla in 2016 by installing German and Italian made production line. The company has grown consistently over the years with maintaining focus on profitability rather than getting into the mad rush of only top line. Due to this philosophy of promoters, SRW has been performing consistently and sustainably over the years and has earned a good name and fame. With continuous increase in operations, SRWIPL now plans to install a second plant to cater to the growth in orders. The details of the company are as under :
Registered Office Cum Plant Address:
Survey No. 252/1, Near H P Petrol Pump, Village Rupal, Taluka Bavla, Ahmedabad-382220.
Experience Centre Address:
VITTAAZIO, 1st Floor, The Ridge, S G Highway, Near ISCON Flyover, Ahmedabad. 

The Complexity Indicator refers to the ease with which the returns associated with the rated instrument could be estimated. It does not indicate the risk related to the timely payments on the instrument, which is rather indicated by the instrument's credit rating. It also does not indicate the complexity associated with analysing an entity's financial, business, industry risks or complexity related to the structural,transactional or legal aspects. Details on the complexity levels of the instruments are available on BWR's website Complexity Levels.

Not Applicable

BWR Board of Directors have no influence over rating decisions, nor do they sit on the rating committee or review, discuss or evaluate any credit rating during the Board meetings.

Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI]. BWR is the 5th agency to get a credit rating registration in India in 2009 and its corporate office in Bengaluru. It has a country-wide presence with representatives in 150+ locations. Canara bank is an institutional investor in Brickwork.

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