| Experienced management supporting sustained improvement in operating performance:
Santhi Processing Unit Private Limited (SPUPL) benefits from the extensive experience of its promoter, Mr. S.?Duraisamy, who has over four decades of experience in the textile industry, which has enabled the company to establish strong operational capabilities and longstanding relationships with suppliers and customers. Backed by this experienced management, SPUPL has demonstrated a steady improvement in its operating performance, with revenues estimated to have increased to ~Rs.495 ?Cr. in FY2026 from Rs.454.11?Cr. in FY2025, driven by capacity expansion and stable realizations. Operating profitability has also improved steadily over the years and also expected to strengthen further, with margins estimated at 7.5–8.5 percent, supported by lower raw material costs and increased usage of captive solar and wind power. The company operates as an integrated textile player with sizeable spinning and weaving capacities and in-house power facilities, which lends stability to operations. Acuité believes that the promoter’s execution capability, coupled with ongoing capacity augmentation and cost efficiencies, will continue to support SPUPL’s scale and profitability over the medium term.
Healthy financial risk profile:
SPUPL’s financial risk profile is healthy, marked by moderate networth, healthy capital structure and debt protection metrics. Company’s net worth stood improved at Rs.88.84 Cr. as on March 31, 2025 compared to Rs.74.73 Cr. as on March 31, 2024, on account of accretion for profits to reserves despite buy back of shares worth Rs.2.53 Cr. in FY2025. The gearing level remained below unity at 0.73 times as on March 31, 2025 compared to 0.87 times as on March 31, 2024. The debt protection metrics stood at healthy with interest coverage of 4.80 times and debt service coverage ratio (DSCR) of 1.97 times as on March 31, 2025 as against 3.63 times and 1.79 times, respectively for FY2024. Besides Debt to EBITDA marginally improved to1.63 times as on March 31, 2025 from 2.52 times of previous year. During FY2026, the long-term debt position is estimated to increase by Rs.17-17.5 Cr. majorly towards capital expenditure, while sanctioned working capital limits were enhanced to Rs. 60 Cr. from Rs.35 Cr, majorly to fund the increasing working capital requirements. Acuité believes that despite the debt funded capex company’s financial risk profile will remain above average on account of its health networth and expected improvement in profitability.
Efficient working capital operations
SPUPL’s working capital operations are efficiently managed as reflected by its gross current asset (GCA) of 81 days, supported by lower inventory days of 13 in FY2025. The company benefits from established relationships with customers, resulting in a debtor days of 37 days in FY2025 against 44 days in FY2024. Similarly, the company makes payment to its suppliers up on realizing its debtors, resulting in a creditor days of 43 days in FY2025 against 36 days in FY2024. This has led to moderate to high dependency on its fund based working capital limits, which were utilized at an average of ~88 percent over the past 12 months ending March, 2026. Acuite believes, the company’s ability in maintaining the efficient working capital operations will be a key rating sensitive.
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| Customer concentration risk:
SPUPL remains exposed to customer concentration risk, with its top ten customers accounting for around 79 percent of total revenues in FY2026 (Rs.353.95 Cr. out of Rs.445.86 Cr), largely driven by sales through merchant exporters, which contributed around 65 percent of the overall revenues. Further, the company has a single-customer exposure, with its top customer accounting for about 25 percent of total revenues in FY2026. While SPUPL has long-standing relationships with its customers of over 15 years, a concentrated customer profile exposes the company to risks related to order concentration, pricing pressure and demand fluctuations in end markets. Acuité believes that customer concentration remains a key credit risk and will remain a rating sensitivity going forward.
Intense competition in the industry
SPUPL operates in a highly fragmented and competitive segment of textile value chain. This segment is marked by the presence of a large number of small to mid-sized players, especially in textile hubs like Tamil Nadu, Gujarat and Maharashtra. Many players operate as job-workers for large garment or fabric manufacturers, bidding on processing contracts where price and turnaround time are the primary differentiators. As a result, price competition is stiff, which may also limit the pricing power of individual players. This emphasises the need for maintaining customer relations and strengthening the integrated operations, to sustain the profitability. SPUPL is currently incurring capex around Rs.63.00 Cr. for solar power and a processing unit. The solar capex is expected to meet around 75-80 percent of the electricity usage and the processing unit is expected to strengthen the backward integration and reduce the dependency on job work of the yarn to fabric.
Risk of dependency on outsourced manufacturing operations:
The company continues to rely significantly on third-party processors for its key processors for its key operations. Such reliance exposes the company to operational risks, including limited control over quality and consistency and constrains its ability to capture higher margins. However, the associated risks are partially mitigated by the company’s established relationships with experienced outsourcing partners. The company is also planning to undertake capex to integrate its business operations which is likely to mitigate the dependency risk on outsourcing manufacturing and also improve the company's business risk profile and profitability.
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