RATING RATIONALE

17Nov2025

Shreedhar Spinners Pvt. Ltd.

Brickwork Ratings assigns the long-term and short-term ratings for the Bank Loan Facilities of Rs. 45.05 Crs. of Shreedhar Spinners Pvt. Ltd.

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	42.05	Long Term	BWR BBB - /Stable Assignment
Fund Based	(3.00)	Short Term	BWR A3 Assignment
Non Fund Based	3.00	Short Term	BWR A3 Assignment
Grand Total	45.05	(Rupees Forty Five Crores and Five 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

BWR has assigned the long-term rating of BWR BBB-/Stable and assigned the short-term rating of BWR A3 for the bank loan facilities of Shreedhar Spinners Pvt. Ltd..

The rating draws strength from the extensive experience of the promoters in the textile industry, consistent improvement in the scale of operations by commissioning of Unit-II has nearly doubled production capacity, a healthy financial risk profile, and an adequate liquidity profile. Financial flexibility is strong, supported by inter-company assistance and timely fund support by the promoters during expansion. However, the ratings remain constrained by the susceptibility of profitability to volatile cotton prices and the entity’s presence in a highly fragmented and competitive textile industry.

The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. BWR believes Shreedhar Spinners Pvt. Ltd.’s business and financial risk profile will be maintained over the medium term. The outlook may be revised to Positive if a sustained increase in the scale of operations and higher than envisaged profitability result in an improved financial risk profile and better debt protection metrics. The outlook may be revised to Negative if lower than expected revenue or profitability, a delay in completion or stabilization of the Unit-II project leading to cost overruns or weaker-than-expected capacity utilization, or a deterioration in DSCR

KEY RATING DRIVERS

Credit Strengths:

Established Track Record & Experienced Promoters :
The company has a well-established track record in the textile industry, backed by the strong reputation of the Shreedhar Group. It is promoted by Mr. Dharmendra Goyal and Mr. Vishal Agarwal, both of whom are Chartered Accountants with over two decades of rich experience in textile trading, manufacturing, and exports. Their combined expertise in finance, operations, and market development has helped the company maintain financial discipline and achieve sustainable growth. Over the years, they have built strong relationships with suppliers, customers, and financial institutions, enhancing business credibility. Under their leadership, the company has expanded its product portfolio and market reach, focusing on both domestic and international segments. Their sound understanding of business cycles and strategic vision continues to strengthen the group’s long-term growth prospects.
Consistent improvement in the scale of operations :
The company has demonstrated a steady improvement in operating income from FY23 through FY26, reflecting its strong market presence and growing customer demand. The commissioning of Unit-II has nearly doubled production capacity, positioning the company for higher revenue growth in the coming years FY27. The company’s sales have shown consistent growth, increasing from Rs.126.14 crore in FY24 to Rs.134.27 crore in FY25, and are expected to rise further with the enhanced capacity. This strong growth trajectory is supported by the commencement of commercial operations in Unit-II, which will contribute additional volumes and strengthen overall business performance.
Healthy Financial Flexibility :
The company has demonstrated healthy financial flexibility with an improving net worth, rising from Rs.17.60 crore in FY24 to Rs.21.58 crore in FY25, supported by profit retention and the availability of unsecured loans from promoters and related parties.
Debt protection indicators such as ISCR (2.25x) and DSCR (1.02x) remain adequate, reflecting the company’s comfortable debt servicing capability, which is expected to further strengthen as earnings from the new unit materialize in FY26–FY27.

Credit Risks:

Susceptibility of profitability to volatile cotton prices :
SSPL's profitability is highly susceptible to volatility in cotton prices, driven by the inherent cyclicality of the textile industry and fluctuating raw material costs. The company remains vulnerable to changes in government policies, such as Minimum Support Price (MSP), import-export duties, and market regulations, which can impact procurement costs and overall margins. Any adverse policy changes or price fluctuations could strain profitability, affecting cost competitiveness and working capital management.
Presence in a highly fragmented and competitive textile industry :
The Indian yarn manufacturing industry is highly fragmented, with numerous small-scale units leading to intense competition. SSPL faces challenges in maintaining pricing flexibility and profitability compared to larger integrated textile companies that benefit from economies of scale and stronger market positioning.

Due to this fragmented market structure, SSPL has limited ability to pass on fluctuations in raw material prices to end customers, often experiencing a time lag before price adjustments can be implemented. This exposes the company to margin pressures, especially during periods of rising cotton prices. Additionally, the intense competition from both domestic and international players constrains its bargaining power, making it essential for the company to focus on operational efficiencies, cost optimization, and strategic customer relationships to sustain profitability and growth in a highly competitive environment.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has considered the standalone performance of the company. BWR has applied its rating methodology as detailed in the Rating Criteria (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 Triggers:

A significant improvement in the scale of operations (revenues above Rs.350 crs), operating margins of over 15% and net margin of over 5% on a sustained basis.
DSCR consistently above 1.5x would reflect improved debt servicing capability, while a reduction in Total Debt/TNW below 1.0x would indicate lower leverage dependency.

Negative Triggers:

Delay in completion or stabilization of the Unit-II project, leading to cost overrun could impact the company’s cash flows and overall credit profile or weaker-than-expected capacity utilization.
A Rating downgrade may be triggered by an inability to achieve the projected revenue and profit growth, with operating margins dropping below 8% or net margins falling below 2%. A decline in DSCR below 1.0x for an extended period would signal stress in debt repayment capacity.

LIQUIDITY INDICATORS - Adequate

The company’s liquidity profile remains adequate, supported by moderate internal accruals. The net cash accrual for FY25 is Rs.7.36 Crs against CPLTD of Rs.4.60 Crs. The company is expected to generate cash accruals of Rs.11.36 crore in FY26, comfortably covering its CPLTD of Rs.6.55 crore, indicating strong debt servicing capability. The current ratio remains moderate at 1.12 times. The company also maintains a Debt Service Reserve Account (DSRA) equivalent to three months of term loan instalments and interest obligations, providing an additional liquidity cushion for timely debt servicing. Further comfort is derived from the availability of unsecured loans from promoters treated as quasi equity. However, the average working capital utilization of around 93% indicates high dependence on bank limits, though it remains within the sanctioned levels and reflects active fund management.

ABOUT THE ENTITY

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

Incorporated in December 2020, Shreedhar Spinners Private Limited (SSPL) is a subsidiary of Shreedhar Cotsyn Private Limited, which holds a 96.67% stake in the company. Headquartered in Mumbai, with its manufacturing facility located at Amravati (Maharashtra), SSPL is engaged in the manufacturing of cotton yarn.

The company operates a spinning plant with an installed capacity of approximately 5,580 metric tonnes per annum (MTPA). SSPL plays a key role in the group’s backward integration strategy, ensuring consistent quality, efficient production, and reliable supply of cotton yarn for both domestic and international markets.

The company is promoted by Mr. Dharmendra Goyal and Mr. Vishal Agarwal, who together bring over two decades of experience in the textile industry.

The company is setting up a new spinning unit within its existing 30-acre premises with a total project cost of ₹58.18 crore, funded through a mix of term loan, unsecured loans, and internal accruals. The commercial operations is expected to begin by January 2026. The new unit will significantly enhance production capacity and contribute to revenue growth from FY26 onwards. Both units at the same location will enable cost efficiency and better operational control

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 23 - 24 (Audited)	FY 24 - 25 (Audited)	FY 25 - 26 (Unaudited - Midterm-H1)
Operating Revenue	Rs.Crs.	126.14	134.27	66.01
EBITDA	Rs.Crs.	13.57	13.16	8.00
PAT	Rs.Crs.	4.18	3.98	3.80
Tangible Net Worth	Rs.Crs.	17.60	45.51	Not Available
Total Debt / Tangible Net Worth	Times	3.66	0.97	Not Available
Current Ratio	Times	1.09	1.12	Not Available

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include standard covenants normally stipulated for such facilities.
Unsecured loans are subordinated to the Bank's exposure and not to be paid during the currency of the bank term loan
The DSRA (interest and principal) for 3 months for the term loan facility has to be maintained with the bank as fixed deposits.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

ANY OTHER INFORMATION

Nil

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	42.05	BWR BBB-/Stable (Assignment)	NA	NA	NA	NA	NA	NA
FB SubLimit	ST	(3.00)	BWR A3 (Assignment)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	3.00	BWR A3 (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		45.05	(Rupees Forty Five Crores and Five lakhs Only)

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Chinmaya R Rating Analyst chinmaya.r@brickworkratings.com	Nitika Srivastava Associate Director Ratings nitika.s@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com	Customer Support \| CustSupport@brickwrokratings.com

Shreedhar Spinners Pvt. 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	State Bank Of India (SBI)	Term Loan - Out-standing	30.05	_	30.05	Simple##
	Sub-Limit (EPC/PCFC) - Sanctioned		(3.00)
2	State Bank Of India (SBI)	Cash Credit - Sanctioned	12.00	_	12.00	Simple##
3	State Bank Of India (SBI)	Bank Guarantee - Sanctioned	_	1.75	1.75	Simple##
4	State Bank Of India (SBI)	Credit Exposure Limit (CEL) - Sanctioned	_	1.25	1.25	Simple##
Total			42.05	3.00	45.05
TOTAL (Rupees Forty Five Crores and Five 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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