| Experienced management
The promoter of the Samarth group (SG) has a business experience of more than a decade in the plastic packaging business. The group has a strong customer base which includes leading cement companies and oil marketing company such as Ultratech Cement Ltd, Ambuja Cements Limited among others. Apart from supplying Woven sacks/PP bags to cement and OMC sectors, the group caters to government agencies on tender basis. The group has been associated with their key customers almost since inception. Acuité believes that the extensive experience of the promoter would continue to help in the business risk profile of the group going forward.
Steady scale of operations and profitability margins
The group’s revenue remained at similar levels, standing at Rs. 377.70 crore in FY25 as against Rs. 363.97 crore in FY24 and Rs. 376.31 crore in FY23, supported by steady demand for its products. Further, the group reported revenue of approximately Rs. 348.25 crore till December 2025 and is expected to close FY26 at around Rs. 440 crore. The Group’s EBITDA margin remained stable at 12.62 percent in FY25 compared with 12.01 percent in FY24, driven by steady realisations. Going forward, the EBITDA margin is expected to moderate marginally due to lower price realisations; however, it is likely to remain around 12 percent. The PAT margin improved to 1.63 percent in FY25 from 1.23 percent in FY24. Acuité believes that the ability of the group to improve consistently its scale of operations while maintaining the profitability margins will remain a key rating sensitivity factor.
Moderate financial risk profile
The group’s financial risk profile remains moderate, characterised by a moderate net worth base, below average gearing, and average debt protection metrics. The tangible net worth declined to Rs. 128.20 crore as on March 31, 2025, from Rs. 143.10 crore as on March 31, 2024. This reduction was primarily due to the withdrawal of subordinated unsecured loans by the promoters, which were earlier treated as quasi equity. The group’s gearing increased to 2.00 times as on March 31, 2025, compared with 1.79 times as on March 31, 2024. Total debt stood at Rs. 257.02 crore as on March 31, 2025, comprising long term borrowings of Rs. 83.61 crore and short term borrowings of Rs. 173.40 crore. This is broadly in line with the total debt of Rs. 256.14 crore as on March 31, 2024. The long term borrowings primarily pertain to the capacity expansion undertaken at SREJPL. The group’s debt protection indicators remain adequate. The interest coverage ratio (ICR) stood at 2.05 times in FY25, compared with 2.35 times in FY24, while the Debt service coverage ratio (DSCR) improved marginally to 1.45 times in FY25 from 1.35 times in FY24. Acuité believes that the financial risk profile of the group will moderate over the medium term due to steady accruals and no debt funded capex.
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| Working Capital intensive operations
The operations of SG remain working capital intensive, as reflected in its Gross Current Assets (GCA) of 300 days as on March 31, 2025, compared with 309 days as on March 31, 2024. Inventory days increased to 238 days as on March 31, 2025, from 191 days as on March 31, 2024. The elevated inventory levels are attributable to the group stocking a wide range of PP bags used by various cement manufacturers, each with different branding and specifications, to ensure adequate rolling stock and smooth execution of orders. Debtor days improved significantly to 49 days as on March 31, 2025, from 97 days as on March 31, 2024. Creditors days also moderated to 76 days as on March 31, 2025, from 93 days in the previous year. The working capital requirements are primarily funded through bank lines. The group’s average fund based utilisation stood at approximately 84 percent, while the non fund based utilisation averaged around 49 percent for the six months ended November 2025. Acuité believes, the operations of the company would continue to remain intensive due to high inventories.
Susceptibility of margins to raw material price fluctuation
As SG is engaged in the manufacturing of PP bags, the major raw materials required to manufacture such products are polypropylene granules, which is a derivative of crude oil, and the prices of crude oil are directly affected by various macroeconomic factors. Similarly, the prices of such raw materials are also volatile in nature, and such fluctuations in the major raw material prices may impact the operating profit margin of the company. However, such risks are mitigated to some extent due to raw material escalation clause included in the contracts by the group.
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