Sonaselection India Limited

1. Overview

Sonaselection India Limited is an integrated fabric manufacturing and processing company based in Bhilwara, Rajasthan — a region recognised as the "Textile City" or "Manchester City of Rajasthan" for its dense cluster of over 400 spinning, weaving and dyeing units. Incorporated in February 2022, the Company commenced operations by acquiring an established textile processing unit on a slump-sale basis for ₹16.21 Crore, initially operating as a job-work processor before transitioning to an integrated manufacturing model with a dedicated cotton processing plant commissioned in July 2024.

The Company specialises in 100% cotton fabric, cotton lycra (stretch) fabric, cotton blends and polyester blends, alongside third-party job-work processing. Its Manufacturing Facility spans approximately 49,540 sq. mtr. with an installed processing capacity of 82.44 million meters per annum, supported by warehousing capacity of roughly 5.00 million meters. In Fiscal 2026, the Company recorded capacity utilisation of 82.71%, up from 78.24% in Fiscal 2025 and 89.50% in Fiscal 2024 (the earlier high utilisation reflecting the smaller job-work-only base prior to the manufacturing expansion).

Revenue from operations has scaled from ₹120.98 Crore in Fiscal 2024 to ₹516.95 Crore in Fiscal 2026, a CAGR of 106.71%, driven by the shift from job-work (88.72% of revenue in FY24) to owned manufacturing (81.50% of revenue in FY26). The Company's customer base has grown from 191 customers in FY24 to 909 customers in FY26, though customer concentration has fallen sharply as the base has broadened — top-10 customers contributed 29.44% of revenue in FY26, down from 48.15% in FY24.

Geographically, the Company remains heavily domestic and Rajasthan-concentrated: 37.31% of FY26 revenue originated from Rajasthan (down from 95.31% in FY24), with Delhi (28.03%), Maharashtra (16.24%) and Karnataka (9.37%) emerging as growing markets. Export revenue commenced only in Fiscal 2026, at a nominal ₹0.85 Crore from Nepal, marking an early and largely untested step toward geographic diversification. The Company recently entered the readymade garments (RMG) segment through a wholly owned subsidiary, Sionnah Enterprises Private Limited, incorporated in July 2025.

2. Business Model and Revenue Streams

Revenue by Business Vertical

The Company operates three distinct revenue verticals — in-house Manufacturing, third-party Job Work, and the newly launched RMG (readymade garments) segment:

The vertical mix has inverted over three fiscals — job-work, once nearly the entire business, is now a minority contributor as the Company's own manufacturing capacity absorbs a growing share of throughput. This shift is structurally significant: manufacturing carries the Company's own margin, whereas job-work is fee-based processing for third parties who retain fabric ownership.

Operating Model

Procurement follows two paths — direct sourcing of greige fabric from third-party suppliers, or procurement of yarn that is converted into greige fabric via outsourced job-work arrangements. All downstream operations (bleaching, dyeing, finishing) are performed in-house at the Manufacturing Facility, with an in-house grading protocol at the Finished Warehouse checking shade consistency, hand-feel and physical integrity before dispatch.

Client Concentration and Retention

Customer concentration has structurally declined even as absolute revenue has grown:

132 customers have maintained an ongoing relationship for at least three reporting periods, though the revenue contribution from this cohort has fallen from 91.73% (FY24) to 20.14% (FY26) — a mechanical consequence of the much larger, newer customer base diluting the legacy cohort's share, not a decline in the legacy relationships themselves.

3. Products and Service Portfolio

Key Product Lines

The Company's product portfolio spans four core fabric categories, each serving distinct end-use segments:

1. 100% Cotton Fabric — valued for breathability, softness and durability; suited to fashion apparel and casualwear.
2. Cotton Lycra (Stretch) Fabric — combines cotton comfort with elastane-based stretch and recovery; used across casual and formal garment segments.
3. Cotton Blends — integrates cotton with polyester and viscose for improved wrinkle resistance and reduced shrinkage.
4. Polyester Blends — engineered for durability and wrinkle resistance while retaining softness and breathability.

Product-wise Manufacturing Revenue Mix

Cotton Blends have become the dominant product line, jumping from 22.90% to 74.73% of manufacturing revenue in a single fiscal year — the single largest compositional shift in the portfolio and a key driver of the overall revenue scale-up.

Capacity and Utilisation

Installed capacity has remained constant at 82.44 million meters per annum across all three fiscals, meaning recent revenue growth has been driven primarily by improved utilisation and product mix shift rather than fresh capacity addition — a dynamic that will change once the IPO-funded capex (new plant and machinery) comes online.

Diversification in Progress

The Company has entered the readymade garments (RMG) segment via its subsidiary, targeting menswear across age groups, and in May 2026 signed a memorandum of understanding to manufacture military-specification technical textiles — an early-stage diversification with no material revenue contribution yet disclosed.

4. Key Business Strengths

• Strategically Located Manufacturing Facility: Operations are anchored in Bhilwara's established textile ecosystem, giving access to a 400-plus unit fibre-to-fabric supplier base, skilled manpower and ancillary support services within a single location, reducing material handling and production lead times.
• Integrated Manufacturing–Job Work Model: The Company combines in-house manufacturing with job-work processing, enabling flexible capacity utilisation and stronger quality control without over-committing to a single revenue model.
• Broadening and Higher-Retention Customer Base: Customer count has grown nearly 5x from FY24 to FY26 (191 to 909), with declining reliance on top customers (top-10 concentration down from 48.15% to 29.44%), reducing single-client risk.
• Experienced Promoter-Led Leadership: Promoters bring a combined 75-plus years of textile industry experience — Subhash Chandra Nuwal (30+ years) and Harshil Nuwal (14+ years) — supported by senior management averaging multiple decades in operations, finance and plant management.
• Sustainability-Linked Infrastructure: A 1.20 MW rooftop solar installation, a zero-liquid-discharge effluent treatment plant, and multiple international certifications (OEKO-TEX, GOTS, GRS, RCS) position the Company for compliance-sensitive export and brand customers.

5. Future Growth Strategy

• Forward Integration via RMG Subsidiary: Expansion into readymade garments through Sionnah Enterprises Private Limited aims to move the Company up the textile value chain from fabric processing into finished apparel, targeting the largely unorganised, MSME-dominated RMG segment.
• Deepening Renewable Energy Investment: A newly commissioned 0.94 MW rooftop solar plant (bringing total installed solar capacity to 1.20 MW) is expected to materially reduce grid electricity dependence and operating costs.
• Continued Cost Optimisation: Monthly reviews of cost structures and a planned capex-funded acquisition of in-house yarn-readiness machinery (part of the IPO Net Proceeds utilisation) aim to reduce outsourcing costs and improve turnaround time.
• Deleveraging for Financial Flexibility: A planned ₹80.00 Crore repayment of borrowings from Net Proceeds is intended to lower the debt-equity ratio further and reduce interest costs, building on the improvement already seen from 3.72x (FY24) to 2.48x (FY26).
• Entry into Technical Textiles: A May 2026 MoU to manufacture military-specification technical textiles marks the Company's first step into a higher-value, specification-driven segment distinct from its current fashion and apparel fabric focus.