Product Quantum (Rs. Cr) (SEBI) Quantum (Rs. Cr) (Other FSR) Long Term Rating Short Term Rating Regulated By
Bank Loan Ratings 0.00 75.00 ACUITE BBB | Stable | Upgraded - RBI
Bank Loan Ratings 0.00 2.00 - ACUITE A3+ | Upgraded RBI
Total Outstanding 0.00 77.00 - - -
Total Withdrawn 0.00 0.00 - - -
Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
 
Rating Rationale

Acuité has upgraded its long-term rating to ‘ACUITE BBB’ (read as ACUITE triple B) from ‘ACUITE BBB-’ (read as ACUITE triple B minus) and short-term rating to 'ACUITE A3+' (read as ACUITE A three plus) from 'ACUITE A3' (read as ACUITE A three) on Rs. 77.00 Cr. bank facilities of Shrerajlaxmi Denim Limited (SDL, erstwhile Shrirajlaxmi Denim Limited). The outlook is 'Stable'.

Rationale for rating
The rating upgrade takes into account improving operating performance of the company driven by increasing volumes along with reduction in the power cost owing to captive power plant over the past two years. Further, the rating considers the established track record of operations along with long-standing experience of the management in the textile industry. Further, the rating draws comfort from the moderate financial risk profile marked by below unit gearing (debt/equity) and improving debt protection metrics. However, the rating is constrained on account of moderately intensive working capital operations coupled with susceptibility of raw material prices and intense competition impacting the operating performance of the company.


About the Company

Incorporated in 2012, Shrerajlaxmi Denim Limited (SDL), formerly known as Shrirajlaxmi Denim Limited, is engaged in the manufacturing of denim fabrics. The company operates its dyeing and weaving manufacturing facility at Gujarat Eco Textile Park in Palsana, Surat, Gujarat, with an installed capacity of 4.32 crore meters per annum. Also, the company operates a captive wind power plant with an installed capacity of 2.10 MW, located in Jamnagar, Gujarat. The directors of the company are Mr. Laxmikant Sodhani, Mr. Bharat Sikchi, Mr. Shrikant Shah, Mr. Ritesh Banger, Mr. Nand Kishor Bahety and Mr. Durgesh Banger.

 
Unsupported Rating
­Not Applicable
 
Analytical Approach

­Acuité has considered the standalone business and financial risk profiles of Shrerajlaxmi Denim Limited (SDL) to arrive at the rating.

 
Key Rating Drivers

Strengths

Established track record of operations along with experienced management
SDL has an established track record of operations dating back to more than a decade. Over the years, the company has established a strong position in the denim fabric manufacturing industry leading to healthy relationship established with their stakeholders. The experience of the management is reflected in the growing operations of the company. The denim fabric manufactured by the company is sold to various traders and readymade garment manufacturers at domestic and international markets like Bangladesh, Egypt, Sri Lanka amongst others.


Improving operating performance
The operating revenue of the company stood improved at Rs. 227.26 Cr. in FY26 (Prov.) as compared to Rs. 191.46 Cr. in FY25 and Rs. 167.44 Cr. in FY24, marking CAGR of 16.50 percent y-o-y over the past three years. The improvement in the revenue is attributable to increase in sales volumes owing to improving industry demands of denim fabrics while realisations continue to decline. However, the operating margin of the company also stood improved at 9.32 percent in FY26 (Prov.) as against 7.36 percent in FY25, on account of improving operating efficiencies and benefits derived from the captive power plant. Further, the company generated ~93.66 percent of its revenue in FY26 through domestic sales while ~6.34 percent of its revenue was derived from exports. Moreover, the company is currently setting up 4.34 MW of captive solar power plant at Vyara, Gujarat. Going forward, the operating performance of the company is anticipated to improve on account of expected improvement in sales realisations along with improvement in operating margin owing to commencement of solar power plant.


Moderate financial risk profile
The financial risk profile of the company is moderated marked by moderate net worth of Rs. 89.76 Cr. as on March 31, 2026 (Prov.) (Rs. 81.08 Cr. as on March 31, 2025), improved on account of accretion of profits to reserves. The net worth also includes unsecured loans from promoters and relatives treated as quasi equity amounting to Rs. 22.85 Cr. as on March 31, 2026, as per the undertaking received to maintain this amount in the business till the tenure of bank facilities. Moreover, the total debt of the company stood increased at Rs. 44.91 Cr. as on March 31, 2026 (Prov.) (Rs. 37.02 Cr. as on March 31, 2025) on account of increase in the working capital borrowings. However, the gearing (debt/equity) ratio stood healthy at 0.50 times in FY26 (Prov.) (0.46 times in FY25). Further, the debt protection metrics stood comfortable marked by interest coverage ratio of 5.92 times in FY26 (Prov.) and debt service coverage ratio of 1.52 times in FY26 (Prov.).

Going forward, the company is expected to avail long-term debt for installing solar power plant (amounting to Rs. 10.50 Cr. in FY27), however, owing to steady cash accruals, the financial risk profile of the company is expected to remain moderate.


Weaknesses

Moderately intensive working capital operations
The working capital operations of the company are moderately intensive marked by gross current assets (GCA) of 155 days in FY26 (Prov.) (139 days in FY25), driven majorly by debtor and inventory levels. The company maintains inventory of almost two months with inventory levels at 59 days in FY26 (Prov.) (56 days in FY25). Further, the creditor days stood at 32 days in FY26 (Prov.) (31 days in FY25), and the debtor days stood at 64 days in FY26 (Prov.) and FY25. Going forward, the working capital operations of the company are expected to remain in the similar levels considering the nature of the business.

Susceptibility to fluctuations in raw material prices and highly competitive industry
SDL’s profitability margins are susceptible to fluctuations in the prices of raw material i.e., cotton yarn. Cotton being a seasonal crop, the production of the same is highly dependent upon the monsoon and the climatic conditions. Furthermore, any abrupt change in cotton prices due to supply demand scenario or government regulations of changes in minimum support price can lead to distortion of prices and affect the profitability of the company across the cotton value chain. Further, the company is operating in a fragmented textile industry and is exposed to intense competition from several players operating in the industry, which continues to remain key rating monitorable.

Rating Sensitivities

Potential triggers (individual or collective) for an upward rating action:
  • ­­Improvement in scale of operations leading to revenues rising above Rs. 300-350 Cr. at stable operating margins
  • Improvement in the working capital cycle
Potential triggers (individual or collective) for a downward rating action:
  • ­Decline in operating performance with revenues falling below Rs. 150 Cr. or decline in operating margins
  • Increase in debt levels thereby impacting the financial risk profile
  • Elongation in the working capital cycle
Liquidity Position
Adequate

The company’s liquidity position is adequate marked by sufficient net cash accruals of Rs. 14.98 Cr. in FY26 (Prov.) as against long term debt repayment of Rs. 8.60 Cr. over the same period. Going forward, the company is expected to generate net cash accruals in the range of Rs. 16-18 Cr. for the period FY27-28 to repay its maturing debt obligation in the range of Rs. 3.0-4.0 Cr. for the same period. The average bank limit utilisation of fund-based limits stood moderate at ~83.49 percent and for non-fund-based limits, it stood at 88.32 percent for the past twelve months ended March 2026. Moreover, the company received GST subsidy amounting to Rs. 3.34 Cr. in FY26 (Rs. 2.42 Cr. in FY25), which provided additional cushion to the liquidity. Further, the current ratio of the company stood healthy at 1.83 times as on March 31, 2026 (Prov.) and the cash and bank balances of the company stood at Rs. 1.69 Cr. as on March 31, 2026 (Prov.).

 
Outlook: Stable
­
 
Other Factors affecting Rating
­None
 

Particulars Unit FY 26 (Provisional) FY 25 (Actual)
Operating Income Rs. Cr. 227.26 191.46
PAT Rs. Cr. 8.67 2.15
PAT Margin (%) 3.82 1.12
Total Debt/Tangible Net Worth Times 0.50 0.46
PBDIT/Interest Times 5.92 2.90
Status of non-cooperation with previous CRA (if applicable)
­Not Applicable
 
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

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook
18 Mar 2025 Bank Guarantee (BLR) Short Term 2.00 ACUITE A3 (Reaffirmed)
Term Loan Long Term 0.60 ACUITE BBB- | Stable (Reaffirmed)
Working Capital Term Loan Long Term 4.43 ACUITE BBB- | Stable (Reaffirmed)
Proposed Long Term Bank Facility Long Term 0.65 ACUITE BBB- | Stable (Reaffirmed)
Term Loan Long Term 12.00 ACUITE BBB- | Stable (Assigned)
Cash Credit Long Term 40.00 ACUITE BBB- | Stable (Reaffirmed)
Term Loan Long Term 5.24 ACUITE BBB- | Stable (Reaffirmed)
Term Loan Long Term 12.08 ACUITE BBB- | Stable (Reaffirmed)
28 Feb 2024 Bank Guarantee (BLR) Short Term 2.00 ACUITE A3 (Assigned)
Cash Credit Long Term 30.00 ACUITE BBB- | Stable (Assigned)
Term Loan Long Term 10.84 ACUITE BBB- | Stable (Assigned)
Working Capital Term Loan Long Term 7.81 ACUITE BBB- | Stable (Assigned)
Term Loan Long Term 12.86 ACUITE BBB- | Stable (Assigned)
Proposed Long Term Bank Facility Long Term 1.49 ACUITE BBB- | Stable (Assigned)
­

Lender’s Name ISIN Facilities Listing Status Regulated By Date Of Issuance Coupon Rate Maturity Date Quantum
(Rs. Cr.)
Complexity Level Rating
Bank Of Baroda Not avl. / Not appl. Bank Guarantee (BLR) Unlisted RBI Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 2.00 Simple ACUITE A3+ | Upgraded ( from ACUITE A3 )
Bank Of Baroda Not avl. / Not appl. Cash Credit Unlisted RBI Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 40.00 Simple ACUITE BBB | Stable | Upgraded ( from ACUITE BBB- )
Not Applicable Not avl. / Not appl. Proposed Long Term Bank Facility Unlisted RBI Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 14.22 Simple ACUITE BBB | Stable | Upgraded ( from ACUITE BBB- )
Bank Of Baroda Not avl. / Not appl. Term Loan Unlisted RBI Not avl. / Not appl. Not avl. / Not appl. 31 Dec 2034 10.50 Simple ACUITE BBB | Stable | Upgraded ( from ACUITE BBB- )
Bank Of Baroda Not avl. / Not appl. Term Loan Unlisted RBI Not avl. / Not appl. Not avl. / Not appl. 30 Jun 2026 0.73 Simple ACUITE BBB | Stable | Upgraded ( from ACUITE BBB- )
Bank Of Baroda Not avl. / Not appl. Term Loan Unlisted RBI Not avl. / Not appl. Not avl. / Not appl. 31 Oct 2030 9.28 Simple ACUITE BBB | Stable | Upgraded ( from ACUITE BBB- )
Bank Of Baroda Not avl. / Not appl. Working Capital Term Loan Unlisted RBI Not avl. / Not appl. Not avl. / Not appl. 31 May 2026 0.27 Simple ACUITE BBB | Stable | Upgraded ( from ACUITE BBB- )
Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.

Contacts

List of instruments and names of regulators of the instruments

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