Press Release August 22, 2025 SARA SUOLE PRIVATE LIMITED Rating Assigned

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	87.84	ACUITE BBB | Stable | Assigned	-
Bank Loan Ratings	72.16	-	ACUITE A3+ | Assigned
Total Outstanding	160.00	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

­Acuité has assigned the long-term rating of ‘ACUITE BBB’ (read as ACUITE triple B) and short term rating of ‘ACUITE A3+’ (read as ACUITE A three plus) on the Rs.160.00 Cr. bank facilities of Sara Suole Private Limited (SSPL). The outlook is 'Stable'. Rationale for rating assigned The rating assigned factors in the established track record of SSPL in the shoe manufacturing business along with the improving operating performance. The rating also factors in the moderate financial risk profile marked with a moderate gearing levels. However, the rating continues to remain constrained on account of intensive working capital operations of the company driven by high inventory holding period. The company also remains prone to customer concentration risk as more than 60% of the revenue comes from one single brand. Further, the rating also factors in the presence of the company in highly competitive industry with presence of many established as well as unorganized players in the market.

About the Company

Incorporated in April 2001, SSPL is into the manufacturing of footwear soles and shoes. The company currently has two manufacturing facilities one in Bangalore (sole) and other in Ambur, Tamil Nadu (shoe) with an installed capacity of 36 lakh sole pairs & 18 lakh shoe pair annually. The company majorly manufacturer/supplies shoes to well-known international brands like Clark, Gant and Florsheim etc. Besides this it also sells shoes in the market under it own the brand name “Ruosh”. The current directors of the company are Mr. Kayum Razak Dhanani and Mr. Paveet Amin Girishbhai.

Unsupported Rating

­Not Applicable

Analytical Approach

Acuité has considered the standalone business and financial risk profile of SSPL to arrive at the rating

Key Rating Drivers

Strengths

Established track record of operations SSPL has an established track record of over two decades in the shoes manufacturing industry, specializing in the premium footwear with a dominant presence in the export market (~70% of sales in FY25). Further the company also sells soles and shoes in the domestic markets. The company is presently led by Mr. Kayum Dhanani, who has been actively involved in its day-to-day operations since its inception, which has also led to the SSPL’s association with the well-known international brands like Clark, Gant and Florsheim over the years.     Improving operating performance The company reported an operating income of Rs.266.25 crore in FY25 (Prov.) as against Rs.229.86 crore in FY24. The increase in the operating income in FY25 is on back increase in the volumes driven by demand growth along with a better price realization. Further, the company also witnessed an increase in the operating margins to 15.07 percent in FY25 (Prov.) as against 10.51 percent in FY24 on back of decrease in employee cost due to partial outsourcing of labour work. Furthermore, the company has recorded profits of Rs.10.26 crore in FY25 (Prov.) as against losses in the previous year. Moderate financial risk profile The financial risk profile of the company remained moderate, marked by a moderate net worth, gearing and debt protection metrics. The net worth of the company stood at Rs.96.37 crore as on March 31, 2025 (Prov.) as against Rs.85.94 crore as on March 31, 2024 and Rs.29.41 crore in FY23. While the net-worth in FY25 has increased due to accretion of profits to reserves, the increment in FY24 was on account of conversion of unsecured loans to equity and fresh equity infusion. The company's gearing ratio stood at 1.33 times as of March 31, 2025 (Prov.) as against 1.57 times as of March 31, 2024. The TOL/TNW stood at 1.65 times as on March 31, 2025 (Prov.) as against 1.93 times as on March 31, 2024. The debt protection metrics remained comfortable with debt service coverage ratio (DSCR) and interest coverage ratio standing at 1.24 times and 1.75 times respectively as on 31st March 2025 (Prov.). Acuite expects the financial risk profile of the company to improve further on back of increasing accruals and absence of any large debt funded capex plans for the company.

Weaknesses

Intensive working capital operations The company's working capital operations remain intensive, as indicated by gross current assets (GCA) days of 285 days in FY2025(Prov.), down from 314 days in FY2024. The GCA days were primarily marked higher on account of maintenance of high inventory days (207 days in FY25, 222 days in FY24) considering the nature of business. Further, the debtor’s days of the company remain in the range of 90-100 days. However, the creditor days for the company is elongated due to presence of some aged supplier dues, improved to 189 days in FY25(Prov.) as against 239 days in FY24 owing to clearance of these dues. Therefore, the average bank limit utilization for the company also stands high at 94% for the last 5 months ended May 2025. Acuite believes that working capital operations of the company may continue to remain intensive considering the nature of operations. Customer concentration along with presence in competitive industry   The company’s revenue is largely derived from one brand —Clark’s, accounting for 62% of FY25 revenue which acts as a major customer concentration risk for the company. Further the industry in which the company operates is highly competitive with many established international as well domestic players. Furthermore, it also faces risk from many unorganized players in the domestic markets. Therefore, to mitigates this to some extent company needs to continuously strive for providing better quality & diversified products to existing as well as new customers.

Rating Sensitivities

Significant improvement in operating income along with stable margins Timely enhancing the working capital limits leading to improvement in the liquidity Reduction in customer concentration risk Continued maintenance of the current financial risk profile

Liquidity Position

Stretched

The liquidity position of the company is currently marked stretched on account of high utilization of its working capital limits to 94% for last 5 months ended May 2025. The current ratio of the company also stood low at 0.97 times as on March 31, 2025 (Prov.). The company had low cash and bank balance of Rs.0.28 crore as on March 31, 2025 (Prov.). However, the company in the current year is further looking for enhancement in working capital limits or infusion of funds in near term to ease the liquidity. Moreover, the company generated sufficient net cash accruals (NCA) of Rs.15.10 crore in FY25 (Prov.) to repay the debt obligations of Rs. 8.36 crore. Further the company is estimated to generated sufficient net cash accruals in FY26 to pay off the remaining debt obligations in the current year as per the schedule.

Outlook - Stable

­

Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 25 (Provisional)	FY 24 (Actual)
Operating Income	Rs. Cr.	266.25	229.86
PAT	Rs. Cr.	10.26	(3.75)
PAT Margin	(%)	3.85	(1.63)
Total Debt/Tangible Net Worth	Times	1.33	1.57
PBDIT/Interest	Times	1.75	1.08

Status of non-cooperation with previous CRA (if applicable)

­None

Any other information

­None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm

Note on complexity levels of the rated instrument

­In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History :

­Not Applicable

Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating RBL Bank Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 10.45 Simple ACUITE BBB | Stable | Assigned Kotak Mahindra Bank Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 18.54 Simple ACUITE BBB | Stable | Assigned HDFC Bank Ltd Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 16.85 Simple ACUITE BBB | Stable | Assigned State Bank of India Not avl. / Not appl. PC/PCFC Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 42.84 Simple ACUITE A3+ | Assigned Bank of Baroda Not avl. / Not appl. PC/PCFC Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 18.59 Simple ACUITE A3+ | Assigned Axis Bank Not avl. / Not appl. PC/PCFC Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 10.73 Simple ACUITE A3+ | Assigned Not Applicable Not avl. / Not appl. Proposed Long Term Bank Facility Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 36.27 Simple ACUITE BBB | Stable | Assigned HDFC Bank Ltd Not avl. / Not appl. Working Capital Demand Loan (WCDL) 27 Jun 2022 Not avl. / Not appl. 31 Dec 2025 0.59 Simple ACUITE BBB | Stable | Assigned State Bank of India Not avl. / Not appl. Working Capital Term Loan 16 May 2022 Not avl. / Not appl. 31 Dec 2025 2.54 Simple ACUITE BBB | Stable | Assigned Axis Bank Not avl. / Not appl. Working Capital Term Loan 20 Jun 2022 Not avl. / Not appl. 31 Dec 2025 0.96 Simple ACUITE BBB | Stable | Assigned RBL Bank Not avl. / Not appl. Working Capital Term Loan 23 Jun 2022 Not avl. / Not appl. 31 Dec 2025 0.34 Simple ACUITE BBB | Stable | Assigned Bank of Baroda Not avl. / Not appl. Working Capital Term Loan 21 Jun 2022 Not avl. / Not appl. 31 Dec 2025 0.70 Simple ACUITE BBB | Stable | Assigned Kotak Mahindra Bank Not avl. / Not appl. Working Capital Term Loan 05 Jul 2022 Not avl. / Not appl. 31 Dec 2025 0.60 Simple ACUITE BBB | Stable | Assigned

Contacts

Mohit Jain Chief Analytical Officer - Rating Operations Parth Patel Lead Analyst - Rating Operations	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai. Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating. Note: None of the Directors on the Board of Acuité Ratings & Research Limited are members of any rating committee and therefore do not participate in discussions regarding the rating of any entity.