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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 169.00 | ACUITE A- | Negative | Reaffirmed | Stable to Negative | - |
| Bank Loan Ratings | 50.00 | - | ACUITE A2+ | Reaffirmed |
| Total Outstanding | 219.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuite has reaffirmed the long-term rating of ‘ACUITE A-' (read as ACUITE A minus) and short term rating of 'ACUITE A2+' (read as ACUITE A two plus) on the Rs.219.00 crore bank facilities of Superhouse Limited. The outlook is revised from ‘Stable’ to 'Negative'.
Rationale for Rating The revision in outlook reflects the weakening of the business risk profile of the group as reflected by decline in revenue which stood at Rs.665.85 Cr. in FY2024 as against Rs.768.13 Cr. in FY2023. The group has registered a revenue of Rs.488.95 Cr. in 9MFY25 as against Rs.500.13 Cr. in 9MFY24. The EBITDA margin of the group decreased and stood at 5.67 per cent in FY2024 and 7.68 per cent in FY2023. The margin stood at 4.78 per cent in 9MFY25 as against 5.66 per cent in 9MFY24. The decrease is on an account of lower cost absorption of fixed costs. The PAT margin stood at 1.76 per cent in FY2024 and 3.64 per cent in FY2023 due to high depreciation and finance costs. Further, the PAT margin stood at 1.78 per cent in 9MFY25 as against 1.73 per cent in 9MFY24. The revenue and profitability of the group is majorly impacted due to slow down in export demand owing to recessionary pressure in the key geographies like US, UK and Europe. The rating further remains constrained by intensive working capital operations of the group marked by Gross Current Assets (GCA) of 256 days as on 31st March 2024 as compared to 232 days as on 31st March 2023 and intense competition in the industry. However, the rating draws comfort from extensive experience of promoters spanning over four decades in leather industry, long track record of operations, group’s strong distribution network and reputed as well as diversified customer base across various industries. The rating also factors the healthy financial risk profile of group marked healthy networth which stood at Rs.461.45 Cr., gearing below unity and comfortable debt protection metrics reflected by interest coverage ratio (ICR) and debt service coverage ratio (DSCR) of 3.16 times and 1.42 times respectively as on March 31, 2024. In addition, the liquidity position of the group is adequate marked by steady net cash accruals against its long-term debt obligations and sufficient cash and bank balance. Acuite notes that going forward, ability of the group to sustain its revenue and profitability margins while scaling up of operations along with managing its working capital operations will remain key rating sensitivity. |
| About the Company |
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Uttar Pradesh based, Superhouse Limited is recognized as one of the leading manufacturers and exporters of finished leather. The company also deals in leather footwear and accessories, textile garments, other leather products, etc. The company was originally incorporated in 1980 as a private limited company in the name of Aminsons Leather Finishers Private Limited and was later converted to a public limited company and subsequently its name was changed to Aminsons Limited in 1989. Post the merger of other group companies its name was changed to Superhouse Leather Limited and then to Superhouse Limited in 2006. The Directors of the company are Mrs. Shahina Mukhtar, Mr. Mohammad Shadab, Mr. Vinay Sanan, Mr. Mukhtarul Amin, Mr. Zafarul Amin, Mr. Yusuf Amin, Mr. Ajai Kumar Sengar, Mr. Rajendra Krishna Shukla, Mr. Chaudhary Usman Ahmad and Mr. Krishna Kumar Ram Tiwari.
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| About the Group |
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Superhouse Group is a multi-unit and multi-product conglomerate in the field of footwear, leather and textile garments manufacturing and exports. Superhouse group is engaged in manufacturing and supplying of leather, leather goods and textile garments across the world. The group’s manufacturing unit, i.e. SL is ably backed by marketing offices and distribution channels routed through various offshore companies. Most of such companies are its wholly owned subsidiaries, i.e. Superhouse (U.K.) Limited, Superhouse (USA) International Inc., Superhouse Middle East FZC, Briggs Industrial Footwear Limited, Linea De Seguridad SLU, LA Compagine Francaise D Protectio SARL, Creemos International Limited and Rojus Enterprises Limited. All these companies collectively, hereinafter referred to as Superhouse Group.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuité has considered the consolidated view of business and financial risk profiles of Superhouse Limited along with its wholly owned subsidiaries/ subsidiaries (refer annexure 2) owing to presence in similar line of business, common promoters and operating as well as financial linkages between the entities to arrive at this rating.
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| Key Rating Drivers |
| Strengths |
| Experienced promoters & established market position in export market for leather goods
The operations of Superhouse group are led by Mr. Mukhtarul Amin along with his family, who possess more than four decades of experience in the leather industry. The top management is ably supported by well experienced technical team. The extensive experience of the promoters has helped the company in establishing healthy relationship with its customers and suppliers. Acuité believes that Superhouse Group will continue to benefit owing to the extensive experience of the promoters and established brand name in the leather industry. Diversified product portfolio coupled with reputed clientele Superhouse group has a diversified product portfolio which includes finished leather, shoe uppers, finished footwear, textile garments, horse riding equipment and other leather products. The group also manufactures safety and fashion footwear. The group has an established market position in the export leather industry. The group is catering to reputed clientele such as Uvex Heckel S.A.S, Pt Alasmas Berkat Utama, High Tech Shoes Pvt Ltd among others. In addition to this, the group is approved by vendors for global brands such as WalMart, GAP, DKNY, IWA and many more. Healthy financial risk profile The group’s financial risk profile is marked by healthy networth, gearing below unity and comfortable debt protection metrics. The tangible net worth of the group increased to Rs.461.45 Cr. as on March 31, 2024 from Rs.445.28 Cr. as on March 31, 2023 due to accretion of profits into reserves and incremental non-controlling interest. The total debt of the group stood at Rs.203.65 Cr. as on March 31, 2024 as against Rs.191.57 Cr. as on March 31, 2023. The capital structure of the group is marked by gearing which stood at 0.44 times as on March 31, 2024 as against 0.43 times as on March 31, 2023. The debt protection metrics are marked by interest coverage ratio (ICR) and debt service coverage ratio (DSCR) of 3.16 times and 1.42 times respectively as on March 31, 2024 as against 4.74 times and 1.68 times respectively as on March 31, 2023. Debt-EBITDA stood at 4.16 times in as on March 31, 2024 as against 2.85 times in as on March 31, 2023. Further, the net cash accruals to total debt (NCA/TD) stood at 0.15 times in FY2024 as against 0.23 times in FY2023 and Total Outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 0.77 times as on March 31, 2024 as against 0.85 times as on March 31, 2023. Going forward, the financial risk profile of the group is expected to remain in similar range with no further debt funded capex plans in near to medium term. |
| Weaknesses |
| Decline in Revenue and Profitability
The revenue of the group decreased and stood at Rs.665.85 Cr. in FY2024 as against Rs.768.13 Cr. in FY2023. Further, the group has registered a revenue of Rs.488.95 Cr. in 9MFY25 as against Rs.500.13 Cr. in 9MFY24. This decrease is on an account of recessionary trends in major export markets like US, UK and Europe. Several other factors have also contributed to this downturn like the lingering effects of the Covid-19 pandemic, coupled with geopolitical tensions and fluctuating energy prices that led to reduced consumer spending. The majority revenue base for the group is export-oriented therefore any drop in overseas demand directly impacts the overall revenue of the group. Retailers and wholesalers have been conservative with their orders, leading to a noticeable decline in export volumes for the group during the year. Additionally, supply chain disruptions and increased logistic costs have added to the complexity, making it challenging to maintain competitive pricing while ensuring timely deliveries. Moreover, the EBITDA margin of the group decreased and stood at 4.78 per cent in 9MFY25 as against 5.66 per cent in 9MFY24. The margin stood at 5.67 per cent in FY2024 and 7.68 per cent in FY2023 on an account of lower cost absorption of fixed costs. The PAT margin stood at 1.76 per cent in FY2024 and 3.64 per cent in FY2023 due to high depreciation and finance costs. Further, the PAT margin stood at 1.78 per cent in 9MFY25 as against 1.73 per cent in 9MFY24. Acuite believes that going forward, the ability of the group to sustain its revenue and profitability margins while scaling up of operations will remain key rating sensitivity factor. Intensive working capital operations The working capital operations of the group are intensive marked by Gross Current Assets (GCA) of 256 days as on 31st March 2024 as compared to 232 days as on 31st March 2023. The high GCA days are on an account of high inventory and receivable days. The inventory day stood at 141 days as on 31st March 2024 as compared to 134 days as on 31st March 2023 and the debtor days of the group stood at 93 days as on 31st March 2024 as against 90 days as on 31st March 2023. Against this, the group has creditors, which stood at 83 days as on March 31, 2024 as against 93 days as on March 31, 2023. The overall working capital requirement stood utilised at an average of 95.50% for fund based limits and at an average of 53.78% for non-fund based limits over last five months ended February, 2025. Acuité expects that the working capital operations of the group will remain in similar range in near to medium term. Competition from organized and unorganized players & Foreign Currency fluctuation risk The group is engaged in leather industry which is a highly competitive and fragmented industry marked by the presence of a large number of small-to-medium sized players which exposes Superhouse group to pricing pressure. Since majority of the group’s revenue is generated from export sales, this exposes the group to foreign currency fluctuation risk. However to mitigate this the group hedges its export orders and the financial team in the group monitors the currency rates. |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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The group has adequate liquidity marked by net cash accruals of Rs.29.86 Cr. as on March 31, 2024 as against Rs.16.45 Cr. of debt obligations over the same period. Going forward, the group is expected to generate net cash accruals under the range of Rs.32.00 Cr. to Rs.34.50 Cr. against debt obligations of upto Rs.9.30 Cr. over the same period. The overall working capital requirement stood utilised at an average of 95.50% for fund based limits and at an average of 53.78% for non-fund based limits over last five months ended February, 2025. The current ratio of the group stood comfortable at 1.47 times as on March 31, 2024. The cash and bank balance stood at Rs.18.07 Cr. as on March 31, 2024. Acuité believes that the liquidity of the group is expected to remain adequate over the medium term on account of comfortable cash accruals against long debt repayments over the medium term.
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| Outlook: Negative |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Actual) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 665.85 | 768.13 |
| PAT | Rs. Cr. | 11.73 | 27.92 |
| PAT Margin | (%) | 1.76 | 3.64 |
| Total Debt/Tangible Net Worth | Times | 0.44 | 0.43 |
| PBDIT/Interest | Times | 3.16 | 4.74 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Interaction with Audit Committee anytime in the last 12 months (applicable for rated-listed / proposed to be listed debt securities being reviewed by Acuite) |
| Not applicable |
| Any Other Information |
| None |
| Applicable Criteria |
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• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm |
| Note on complexity levels of the rated instrument |
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||||||||||||||||
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