Super Tannery Limited has received a rating reaffirmation from CARE Ratings Limited, with the credit rating agency maintaining its BBB- stable outlook on the company's banking facilities worth ₹108.80 crore. The rating reflects the leather manufacturer's resilient operational performance and experienced management team despite challenging market conditions.

Rating Details and Facility Breakdown

CARE Ratings reaffirmed ratings across multiple facility categories for Super Tannery Limited:

The rating agency highlighted the company's ability to sustain operational performance despite sluggish demand in global markets, particularly noting the announcement made on November 12, 2025, regarding a potential business demerger as a key monitoring factor.

Financial Performance and Growth Trajectory

Super Tannery demonstrated robust financial performance in FY25, with significant improvements across key metrics:

The company's revenue growth was driven by its strategic shift towards higher value-added leather footwear and components, which accounted for more than 50% of FY25 revenue. However, H1FY26 showed softer demand conditions in key European markets, with operating income declining to ₹129.66 crore compared to ₹136.02 crore in H1FY25.

Improved Capital Structure and Coverage Metrics

Super Tannery's financial position strengthened considerably during FY25, with notable improvements in debt management and coverage ratios:

The improvement in capital structure was supported by healthy profit accretion, reduced working capital borrowings, and scheduled term loan repayments. The company's enhanced debt-servicing ability was evident from the improved coverage indicators and reduced total debt levels.

Operational Efficiency and Working Capital Management

Super Tannery achieved significant improvements in working capital efficiency, addressing one of its historical challenges:

The sharp improvement in operating cycle management translated into the highest net cash flow from operations in five years at ₹44.26 crore in FY25, demonstrating enhanced operational discipline and inventory management.

Key Strengths and Risk Factors

CARE Ratings identified several strengths supporting the rating, including experienced promoters with four decades of industry experience, long operational track record since 1953, and export presence across 40+ countries. The company exports approximately 81% of its total income, though this creates concentration risk with top ten customers contributing 81% of total sales.

Key challenges include intense competition from organized and unorganized players in the leather industry, elongated operating cycles despite recent improvements, and foreign exchange fluctuation risks. The company partially hedges 45-50% of its export exposure through forward contracts, with an additional 10% naturally hedged, though the absence of a formal hedging policy remains a concern.

Outlook and Liquidity Assessment

CARE Ratings maintained a stable outlook, expecting Super Tannery to sustain its operating and financial performance with adequate liquidity over the medium term. The company's liquidity position is supported by expected gross cash accruals of ₹14-15 crore against scheduled repayment obligations of ₹0.49 crore in FY26, with free cash and bank balance of ₹3.27 crore as of September 30, 2025.

Super Tannery Limited , a prominent player in the leather industry, has announced a significant corporate restructuring initiative. The company's Board of Directors has given in-principle approval for a proposal to demerge certain identified business divisions, subject to further approvals from various regulatory bodies and shareholders.

Key Highlights of the Announcement

• Demerger Proposal: The Board has approved an in-principle proposal for the demerger of certain identified undertakings or business divisions.
• Pending Approvals: The demerger is subject to further approval from the Board of Directors, BSE Limited, SEBI, NCLT, other competent authorities, and shareholders.
• Professional Appointments: The Board has proposed the appointment of various professional advisors to facilitate the demerger process:
  • Legal advisors and counsels
  • Tax consultants
  • Merchant bankers
  • Other required consultants
• Valuation Process: A Registered Valuer will be appointed to determine share entitlement ratios and related requirements.

Financial Context

To provide context for this corporate action, let's look at Super Tannery's recent financial position:

The company has shown growth in its asset base and equity over the past year, which could potentially support its restructuring plans.

Implications of the Demerger

While the specific details of the demerger are yet to be disclosed, such corporate actions typically aim to:

1. Streamline operations
2. Unlock shareholder value
3. Focus on core competencies
4. Potentially improve operational efficiency

Investors and stakeholders should note that the proposal is still in its early stages and subject to various approvals. The appointment of professional advisors and a registered valuer indicates the company's commitment to a thorough and compliant process.

As the demerger process unfolds, shareholders and potential investors should keep an eye out for further announcements regarding the specifics of the business divisions to be demerged and the potential impact on the company's structure and valuation.

Super Tannery Limited's shares are listed on the BSE. Investors are advised to monitor official communications from the company and regulatory bodies for updates on this significant corporate development.