Sonaselection keeps 96% sourcing and sole plant in Rajasthan

Sonaselection has concentrated both procurement and manufacturing in Rajasthan: the state supplied 96.01% of purchases, or Rs 344.805 crore, in Fiscal 2026, while its sole manufacturing facility and registered office are in Bhilwara. Sales have become less Rajasthan-dependent, but a state-level disruption could still affect inputs and production simultaneously.

How concentrated is Sonaselection's Rajasthan sourcing and plant network?

Sonaselection's operational concentration is high because Rajasthan accounted for more than 96% of purchases in each of Fiscal 2024, Fiscal 2025 and Fiscal 2026, and Bhilwara hosts its only manufacturing facility. Procurement means the goods and materials that the company buys for its operations. Rajasthan procurement was Rs 344.805 crore in Fiscal 2026, Rs 258.797 crore in Fiscal 2025 and Rs 50.583 crore in Fiscal 2024.

The concentration did not reduce materially as purchasing expanded. Rajasthan represented 96.26% of total purchases of Rs 52.548 crore in Fiscal 2024, increased to 98.36% of Rs 263.127 crore in Fiscal 2025, and stood at 96.01% of Rs 359.138 crore in Fiscal 2026. Therefore, purchases outside Rajasthan were only 3.99% in Fiscal 2026, despite a sharp increase in the overall purchase base.

The disclosed Fiscal 2026 alternatives were limited in scale. Gujarat supplied Rs 4.298 crore, or 1.20% of purchases, while Karnataka supplied Rs 2.067 crore, or 0.58%, and Uttar Pradesh supplied Rs 1.952 crore, or 0.54%. Italy accounted for Rs 7,000, based on Rs 0.07 million, and the prospectus records no material import dependence.

Why does the single Bhilwara facility increase Sonaselection's Rajasthan concentration risk?

Sonaselection's Bhilwara site is the company's single manufacturing facility, so it had no alternate or backup manufacturing location as of the Red Herring Prospectus date. The facility carries out end-to-end processing for 100% cotton fabric, cotton lycra stretch fabric, cotton blends and polyester blends. It also includes an in-house quality-control laboratory and warehousing capacity of about 5 million metres.

A disruption in Rajasthan could consequently affect two linked functions: supplies obtained in the state and the production site that processes fabric. The company identifies changes in state regulations, labour unrest, infrastructure bottlenecks, floods, droughts, earthquakes, industrial accidents, political or social unrest and public-health emergencies as potential regional events. This is a concentration mechanism rather than a reported disruption: Sonaselection states that it experienced no material operational disruption at the facility in the last three fiscal years.

The production dependency extends beyond ordinary downtime. Equipment or automation-system failure, fire hazards, power interruptions, severe weather and planned upgrades could slow or halt the sole site. Sonaselection reported repairs and maintenance expense of Rs 1.70 crore in Fiscal 2026, Rs 64.90 lakh in Fiscal 2025 and Rs 1.616 crore in Fiscal 2024, representing 0.36%, 0.22% and 0.59% of total expenses, respectively. Those figures show recorded maintenance spending, not an estimate of the cost of a major shutdown.

Has Sonaselection diversified its sales beyond Rajasthan?

Sonaselection has diversified its sales geographically within India, as Rajasthan's share of revenue from operations fell from 95.31% in Fiscal 2024 to 37.31% in Fiscal 2026. Rajasthan revenue nonetheless rose in absolute terms from Rs 115.306 crore in Fiscal 2024 to Rs 159.457 crore in Fiscal 2025 and Rs 192.880 crore in Fiscal 2026. The lower percentage reflects faster growth in sales to other states rather than a decline in Rajasthan sales.

Total revenue from operations increased from Rs 120.979 crore in Fiscal 2024 to Rs 315.952 crore in Fiscal 2025 and Rs 516.949 crore in Fiscal 2026. Delhi contributed Rs 144.909 crore, or 28.03%, in Fiscal 2026, Maharashtra contributed Rs 83.952 crore, or 16.24%, and Karnataka contributed Rs 48.424 crore, or 9.37%. These three states together represented 53.64% of Fiscal 2026 revenue, exceeding Rajasthan's 37.31% share.

Sales diversification does not remove the supply-and-production concentration because customers outside Rajasthan are still served from the Bhilwara facility. Sonaselection started exports in Fiscal 2026, generating Rs 85 lakh from Nepal, or 0.16% of revenue from operations. Domestic business remained 99.84% of Fiscal 2026 revenue, compared with 100% in both Fiscal 2024 and Fiscal 2025.

What would have to happen for the risk to affect operations?

Sonaselection's risk would become operational if a Rajasthan event interrupts procurement, prevents Bhilwara from running, or disrupts both at the same time for a material period. The prospectus says a significant facility disruption may delay production, create inventory pile-up and impair timely fulfilment of customer orders. It identifies possible consequences including cancellations, penalties, customer attrition and reputational harm, but does not quantify any expected financial loss.

The risk would persist unless procurement becomes meaningfully less concentrated or Sonaselection establishes production redundancy outside the sole Bhilwara site. Fiscal 2026 data show that non-Rajasthan procurement was Rs 14.333 crore out of Rs 359.138 crore, while Rajasthan remained Rs 344.805 crore. The company has disclosed no alternate facility or stated plan in the supplied material to build one.

The company may also undertake planned shutdowns for equipment upgrades. Although no material shutdown occurred in the three years through Fiscal 2026, a planned or unanticipated closure can affect production schedules and customer deliveries. A recovery from such an event would depend on repair timing, available inventory, the ability to obtain inputs, power and labour, and whether customers accept delayed delivery.

Conclusion

Sonaselection's Fiscal 2026 sales profile was more geographically varied than its Fiscal 2024 profile, with Rajasthan's revenue share declining by 58 percentage points to 37.31%. Yet its operating footprint remained concentrated because Rajasthan provided 96.01% of purchases and Bhilwara contained the only manufacturing facility. Revenue diversification therefore does not by itself create supply-chain or production redundancy.

The next disclosed point to watch is whether Sonaselection changes its procurement mix or establishes an alternate manufacturing facility, neither of which is described in the supplied prospectus pages. The company has begun exports, recording Rs 85 lakh of Nepal sales in Fiscal 2026, but that development addresses geographic sales reach rather than the stated Rajasthan sourcing and plant dependency.