MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis of our financial condition and results of
operations for the financial year ended
on 2026, 2025 and 2024 is based on, and should be read in conjunction with, our Restated
Financial Statements,
including the schedules, notes and significant accounting policies thereto, included in
the chapter titled "Restated
Financial Statements" beginning on page 192 of this Red Herring
Prospectus. Our Restated Financial Statements
have been derivedfrom our audited financial statements and restated in accordance with the
SEBIICDR Regulations
and the ICAI Guidance Note.
You should read the following discussion of our financial condition and results of
operations together with our restated
financial statements included in this Red Herring Prospectus. You should also read the
section titled "Risk Factors"
beginning on page 22 of this Red Herring Prospectus, which discusses a number
offactors, risks and contingencies
that could affect our financial condition and results of operations. Our fiscal year ends
on March 31 of each year, so
all references to a particular fiscal year are to the twelve-month period ended March 31
of that year.
In this section, unless the context otherwise requires, any reference to
"we", "us" or "our" refers to Shreedhar
Spinners Limited, our Company. Unless otherwise indicated, financial information included
herein are based on our
"Restated Financial Statements" for the Fiscal ended on 2026, 2025 and
2024 included in this Red Herring
Prospectus beginning on page 192 of this Red Herring Prospectus.
Note: Statement in the Management Discussion and Analysis Report describing our
objectives, outlook, estimates,
expectations or prediction may be "Forward Looking Statements" within the
meaning of applicable securities laws
and regulations. Actual results could differ materially from those expressed or implied.
Important factors that could
make a difference to our operations include, among others, economic conditions affecting
demand/supply and price
conditions in domestic and overseas market in which we operate, changes in Government
Regulations, Tax Laws and
other Statutes and incidental factors.
BUSINESS OVERVIEW
Our Company is primarily engaged into manufacturing of compact spun cotton yarn of
various counts ranging from
Ne 10s to Ne 40s at our manufacturing facility located at manufacturing units located at
Plot No. T-15, additional
Amravati industrial area textile park, Tuljapur, Amravati - 444901, Maharashtra, India for
a period of 95 years spread
across 1,20,000 sq. mt. and has a production capacity of 10,000MT per annum of cotton
yarn, with 28608spindles as
on March 31, 2026. Our Manufacturing Facility operates 24 hours per day to maximize output
and ensure
uninterrupted operations and usually operates for approximately 360 days a year. We
believe that our manufacturing
facility is equipped with modern state-of-the-art spinning technology and processing
techniques which enable to
ensure production of quality yarn. Our raw material: raw cotton bales are utilized for
production of cotton yarns. These
yarns are suitable for both knitting and weaving applications and catering to a wide
spectrum of end-use segments and
products including but not limited to Apparel, Denim, Terry towels, Shirting, Bed linen,
Sweaters, Socks, Furnishing
Fabrics and Industrial fabrics. We operate exclusively in the business-to-business (B2B)
segment, supplying our
products to buyers such as textile manufacturers, yarn exporters, traders and fabric
processors (collectively
"Customers").
For more details, please refer chapter titled " Our Business"
beginning on page 136 of this Red Herring Prospectus.
SIGNIFICANT DEVELOPMENTS AFTER FISCAL 2026
In the opinion of the Board of Directors of our Company, since the date of the year in
this Red Herring Prospectus,
there have not arisen any circumstance that materially or adversely affect or are likely
to affect the profitability of our
Company or the value of its assets or its ability to pay its material liabilities within
the next twelve months.
FACTORS AFFECTING OUR RESULTS OF OPERATIONS
Our business, financial condition and results of operations have been, and are expected
to be, influenced by numerous
factors. A summary of the most important factors that have had, and that we expect will
continue to have, a significant
impact on our business, results of operations and financial condition follows below:
Our business is subject to various risks and uncertainties, including those discussed
in the section titled "Risk Factors"
on page 22 beginning of this Red Herring Prospectus.
Raw Material Cost
We source raw materials, such as, cotton bales , and other additives from our suppliers
with whom we have established
long-standing relationships in order to ensure the consistent supply of products to our
customers. We do not enter into
formal arrangements or contracts with certain of our suppliers and instead issue purchase
orders to source our materials
on an as-needed basis to such suppliers. Our factory is located within major cotton
growing area of Maharashtra and
hence, we procure cotton bales from local vendors, Cotton Corporation of India and traders
for our spinning unit,
which helps reduce transportation costs, shorten lead times, and support timely
production. ; during the last three
Fiscals, we procured cotton bales from more than 10 Suppliers and top 10 suppliers
contribute 82.06%, 91.05 % and
71.51% of the total purchase during the Fiscals 2026, 2025 and 2024, respectively.
Our cost of goods sold is impacted by the amount of raw materials procured and the
price at which we procure such
raw materials and may fluctuate from time to time. During the Fiscal 2026, Fiscal 2025 and
Fiscal 2024 are raw
material consumed to revenue from operations were 77.99%, 78.59% and 80.81%, respectively.
The availability and
price of our raw materials may be subject to a number of factors beyond our control,
including macro and micro
economic factors, seasonal factors, environmental factors and changes in Government
policies and regulations.
Our business is dependent on our manufacturing facility and the loss of or shutdown of
operations of any of
these facilities could adversely affect our business
Our companys business faces a high operational risk due to its reliance on a single,
modern manufacturing facility in
Amaravati, Maharashtra. The concentration of the entire production capacity in one
location makes the company
extremely vulnerable to any event that could cause a shutdown. Should a natural disaster,
fire, major power outage,
or an internal issue like machinery failure or a labour strike occur, all production would
cease. This would lead to a
complete loss of revenue, as the company would be unable to full-fill orders. In addition,
extended shutdowns could
damage the companys reputation, potentially causing distributors and key customers to
seek more reliable suppliers.
Cybersecurity incidents, contamination, or quality control failures could also force
temporary shutdowns or product
recalls, affecting both revenue and brand trust. The resulting loss of revenue, coupled
with fixed operational expenses,
could impact the companys ability to meet debt obligations and jeopardize its long-term
viability as an unlisted, un-
funded entity.
Demand for our products
Demand for our products is also significantly affected by the general level of economic
activity and economic
conditions in the various geographies and sectors in which we operate. We have benefitted
from multi-national
companies contemplating diversifying their dependence on China to developing Asian
countries including India.
Deterioration in economic conditions in any of the key sectors that we operate in may lead
to lower demand for our
services. Any deterioration in global markets may also have a corresponding effect on our
operations as some of our
top customers have operations in India. Any decision by such customers to reduce or exit
their emerging markets
operations may have a significant adverse impact on our business and financial performance
Relationships with customers
Our business is dependent on our continuing relationships with our customers. Our
Company neither have any long-
term contract with any of customers nor have any marketing tie up for our products as our
sales are primarily conducted
through individual purchase orders that set out terms, volumes and delivery schedules. The
absence of long-term
commitments exposes us to the risk of customer retention and creates uncertainty in
production planning. If one or
more of our key customers reduce their orders, cease to source from us, or are unable to
perform their obligations due
to financial distress, insolvency, business restructuring, regulatory actions, or shifts
in procurement policies, our
revenue and profitability could be materially impacted.
We have an inhouse testing facility having advance equipment such as wrap reel machine
and weigh balance for denier
testing (i.e. to determine the fibre thickness of individual threads or filaments), yarn
strength tester to determine tensile
properties (i.e., to check elongation and tenacity of yarns).. The efforts of our product
team are supported by our sales
teams which give us constant feedback for customer requirements and market trends.
However, failure to meet the
expectations of the client can lead to cancellation of current and future orders.
Government policies
Our business and revenues are dependent on policies and regulations in relation to the
manufacturing activities and to
the textile sector. Any adverse changes in government policies, subsidies and benefits
could materially and adversely
affect our financing, capital expenditure, revenues, development or operations relating to
our existing and proposed
capacities as well as our ability to participate and compete with our peers. Further,
policies not limited to our services
rendered but largely affecting India could also affect the manner in which we carry out
and intend to carry out our
operations.
Macroeconomic Factors
The performance of our business is closely linked to macroeconomic conditions. Economic
downturns, recessions,
political instability, social unrest, or natural disasters in India or our other markets
can disrupt operations, supply
chains, and consumer demand. Furthermore, volatility in crude oil prices, rising interest
rates, and inflationary
pressures can increase operational costs, reduce margins, and affect consumer spending
patterns, all of which can
materially impact our financial results
SIGNIFICANT ACCOUNTING POLICIES
For Significant accounting policies please refer Significant Accounting Policies
beginning under "Restated Financial
Statements" on page 192 of this Red Herring Prospectus.
Set out below are a few key performance indicators:
(Z in Lakhs, unless otherwise specified)
Particulars |
Unit | For the financial year ended March 31, 2026 |
For the financial year ended March 31, 2025 |
For the financial year ended March 31, 2024 |
Revenue from Operations(1) |
t | 14,637.10 | 13,426.66 | 12,613.85 |
Total Income(2) |
t | 14,654.91 | 13442.60 | 12635.16 |
Revenue CAGR(3) |
% | 7.72% |
||
EBITDA(4) |
t | 1,761.65 | 1,310.50 | 1,340.91 |
EBITDA Margin(5) |
% | 12.04% | 9.76% | 10.63% |
Profit After Tax(6) |
t | 617.14 | 341.53 | 335.20 |
Profit After Tax Margin(7) |
% | 4.22% | 2.54% | 2.66% |
Return on Equity (RoE) (8) |
% | 24.64% | 18.33% | 21.99% |
Return on Capital Employed(9) |
% | 9.34% | 11.36% | 12.78% |
Net Fixed Asset Turnover Ratio(10) |
Times | 1.23 | 2.27 | 2.04 |
Working Capital Turnover Ratio(11) |
Times | -207.05 | 264.16 | 962.29 |
Working Capital Days(12) |
Number of days |
46 | 26 | 29 |
Debt to Equity Ratio(13) |
Times | 3.89 | 3.21 | 3.67 |
Particulars |
Unit | For the financial year ended March 31, 2026 |
For the financial year ended March 31, 2025 |
For the financial year ended March 31, 2024 |
Return on Assets(14) |
% | 3.59% | 3.34% | 3.63% |
Current Ratio(15) |
Times | 0.99 | 1.02 | 1.00 |
Inventory turnover ratio(16) |
Times | 4.76 | 6.26 | 7.48 |
Trade Receivables turnover ratio(17) |
Times | 109.63 | 99.81 | 200.89 |
Trade payables turnover ratio(18) |
Times | 8.06 | 10.14 | 16.29 |
As certified by M R B & Associates, Chartered Accountant by their certificate dated June 10, 2026.
Notes:
(1
Revenue from operations as derived from restated financial statements(3
Revenue CAGR is calculated by dividing the Revenue from operation for the FY 2026 by the Revenue from operation(4)
EBITDA is calculated as Profit before tax + Depreciation + Interest Expenses - Other Income.(5)
EBITDA Margin is calculated as EBITDA divided by Revenue from Operations(7)
pat Margin is calculated as PAT for the year divided by revenue from operations.(8)
Return on Equity (RoE) is equal to profit for the year divided by the average shareholders equity and is expressed(9)
Return on Capital Employed is calculated as EBIT divided by total capital employed. Capital employed is calculated(10)
Net Fixed Asset Turnover ratio is calculated as Revenue from operation divided by Net fixed Asset(11
> Working Capital Turnover Ratio is calculated as Revenue from operation divided by Working Capital(13)
Debt to Equity Ratio is calculated as total borrowings divided by total equity. Total Borrowings is calculated as(14)
Return on Assets is calculated by dividing the profit after tax by the total assets.(15)
Current Ratio is a liquidity ratio that measures our ability to pay short - term obligations (those which are due(16)
Inventory Turnover Ratio = Cost of Goods Sold ^ Average Inventory(17)
Trade Receivables turnover ratio = Revenue from Operations + Average Trade Receivables(18)
Trade Payable turnover ratio = Purchases ^ Average Trade PayablesDETAILS OF THE REVENUE RECOGNITION METHOD ADOPTED BY THE ISSUER AND ITS BASIC
PARAMETERS.
- Revenue is recognized to the extent that it is probable that the economic benefits
will flow to the Company and
the revenue can be reliably measured.
- Revenue from sale of goods is recognized when sufficient risks and rewards are
transferred to customers, which
is generally on dispatch of goods.
- Interest Income on fixed deposit is recognized on time proportion basis.
- Other Income is accounted for when right to receive such income is established
COMPONENTS OF INCOME AND EXPENDITURE
Total Revenue
Our total revenue is divided into revenue from operations and other income.
Revenue from operations consists of sale of goods and Other Operating Revenue which
includes GST subsidy on
sales, interest subsidy and Foreign Exchange Fluctuation Income.
Other income consists of interest income, interest on Income Tax Refund and other income.
Total Expenses
Our total expenses comprise of Cost of Materials consumed, Changes in inventories of
finished goods & work-in-
progress, Employee benefits expense, Finance costs, Depreciation and amortization expense,
other expenses.
Cost of Materials consumed
Cost of material consumed consists of Opening stock and purchase of material.
Changes in inventories of finished goods & work-in-progress
Changes in inventories of finished goods & work-in-progress consists of inventories
at the end of the year and
inventories at the beginning of the year.
Finance Costs
Finance costs includes Interest on Bank Loans, Interest on Other Loans, Bank Charges and Other Finance Cost.
Employee benefits expenses
Employee benefit expenses comprise of Salaries and Wages, Directors Remuneration,
Gratuity Expenses,
Contribution to Provident Fund & Other Funds, Staff Welfare Expenses.
Depreciation and Amortization Expenses
Depreciation and amortization expenses primarily Depreciation.
Other Expenses
Other expenses include Electricity Charges, Transportation Charges, Water Charges,
Auditors Remuneration, Rates
& Taxes, Rent, Professional Charges, Security Charges, Printing & Stationery,
Membership & Subscription, Selling
and Distribution Expenses, Insurance Expense, Testing & Inspection Charges, Repairs
and Maintenance, Vehicle
Expenses, Travelling Expenses, Other Expenses, Loading & Unloading Charges.
RESULTS OF OPERATIONS
The following discussion on results of operations should be read in conjunction with
the Restated Financial Statements
of our Company for the financial years ended on 2026, 2025 and 2024:
(T in Lakhs)
Particulars |
Fiscal 2026 (Rs.) |
% of Total Income |
Fiscal 2025 (Rs.) |
% of Total Income |
Fiscal 2024 (Rs.) |
% of Total Income |
Revenue |
||||||
Revenue from |
14,637.10 | 99.88% | 13,426.66 | 99.88% | 12,613.85 | 99.83% |
Other Income |
17.81 | 0.12% | 15.94 | 0.12% | 21.31 | 0.17% |
Total Income |
14,654.91 | 100.00% | 13,442.60 | 100.00% | 12,635.16 | 100.00% |
Expenses |
||||||
Particulars |
Fiscal 2026 (Rs.) |
% of Total Income |
Fiscal 2025 (Rs.) |
% of Total Income |
Fiscal 2024 (Rs.) |
% of Total Income |
Cost of materials |
11,415.48 | 77.90% | 10,552.41 | 78.50% | 10,193.11 | 80.67% |
Changes in inventories |
(402.30) | (2.75)% | (36.46) | (0.27)% | (252.16) | (2.00)% |
Employee Benefit |
611.57 | 4.17% | 528.66 | 3.93% | 464.25 | 3.67% |
Financial Costs |
648.53 | 4.43% | 584.73 | 4.35% | 640.17 | 5.07% |
Depreciation and |
400.64 | 2.73% | 337.24 | 2.51% | 331.26 | 2.62% |
Other Expenses |
1,233.83 | 8.42% | 1,063.31 | 7.91% | 853.45 | 6.75% |
Total expenses |
13,907.75 | 94.90% | 13,029.89 | 96.93% | 12,230.08 | 96.79% |
Profit before tax |
747.16 | 5.10% | 412.71 | 3.07% | 405.08 | 3.21% |
Tax expense |
||||||
Current tax |
24.47 | 0.17% | 2.38 | 0.02% | - | - |
Deferred tax |
105.55 | 0.72% | 68.80 | 0.51% | 69.88 | 0.55% |
Earlier Year Taxes |
- | - | - | - | - | - |
Profit for the period / |
617.14 | 4.21% | 341.53 | 2.54% | 335.20 | 2.65% |
RESULTS OF OPERATIONS FOR THE PERIOD ENDED MARCH 31, 2026
Income
Total Income
During the period ended March 31, 2026, Total Income for the period starting from April
01, 2025 to March 31, 2026
was Rs. 14,654.91 Lakhs. The total income consists of revenue from operations and other
income.
Revenue from Operations:
During the period ended March 31, 2026, revenue from operation of our Company was Rs.
14,637.10 Lakhs. The main
contribution to the revenue from operations is Sales.
Expenditure
Total Expenses:
During the period ended March 31, 2026, Total expenses of our Company was Rs. 13,907.75 Lakhs.
Cost of Material consumed
During the period ended March 31, 2026, Cost of Material consumed of our Company was
Rs. 11,415.48 Lakhs.
Changes in inventories of traded goods
During the period ended March 31, 2026, the changes in inventories of traded goods of
our Company was Rs. (402.30)
Lakhs.
Employee benefit expenses
During the period ended March 31, 2026, our Employee Benefit Expenses was Rs. 611.57
Lakhs, which included Salary
and wages of Rs. 563.63 Lakhs, Directors Remuneration of Rs. 3.83 Lakhs, Gratuity Expenses
of Rs. 7.86 Lakhs,
Contribution to employees PF & ESIC of Rs. 29.94 Lakhs and Staff Welfare Expenses of
Rs. 6.31 Lakhs.
Financial Costs
During the period ended March 31, 2026, Financial Costs of our Company was Rs. 648.53 Lakhs.
Depreciation and amortisation expense
During the period ended March 31, 2026, Depreciation and Amortization expenses of our
Company was Rs. 400.64
Lakhs.
Other expenses
Our other expenses for the period ended March 31, 2026 amounted to Rs. 1,233.83 Lakhs.
COMPARISON OF FINANCIAL YEAR ENDED 2026 TO FINANCIAL YEAR ENDED 2025
Components of Balance Sheet
Long Term borrowings:
Long Term Borrowings has increased by 80.11 % this is mainly because of
the drawdown of the term loan availed by
the Company for its capacity expansion. The proceeds of the term loan were mainly utilized
towards the acquisition
and installation of plant and machinery.
Short Term Borrowings:
Short term borrowings have increased by 69.60 % this is mainly because of
an increase in the Companys cash credit
facilities. The increase was driven by the additional working capital requirements arising
from the capacity expansion
commissioned by the Company in FY2026, in particular inventory levels increased to support
the expanded capacity.
There was also an increase in the current maturities of long-term debt which contributed
to the increase in short term
borrowings.
Trade receivables;
Trade receivables have decreased by 23.14 %, this is due to improved collection
efficiency and effective working
capital management efforts.
Trade Payables:
Trade payables have increased 41.05 %, this is mainly due to higher procurement of raw
material in connection with
the commissioning of the expanded capacity of the Company during the year, as well as
higher inventory levels
maintained by the Company during the year.
Loans and Advances:
Long term Loans and Advances have decreased by 98.90 %, this decrease is due to a
decrease in capital advances to
suppliers in FY2026 given the completion of the Companys capacity expansion during the
year.
Short term Loans and Advances have increased by 81.35 %, this increase is primarily due
to higher GST receivables,
increased advances to suppliers and higher prepaid expenses during the year, primarily
driven by the commissioning
of additional manufacturing capacity.
Income
Total Income:
Our total income was increased by 9.02 % from t 13,442.60 Lakhs in Fiscal 2025 to t
14,654.91 Lakhs in Fiscal
2026 due to the factors described below:
Revenue from Operations:
Our Revenue from Operations was increased by 9.02 % in the year Fiscal 2026. The amount
increased from t
13,426.66 Lakhs in Fiscal 2025 to t 14,637.10 Lakhs in Fiscal 2026. This performance was
driven by an increase in
production and sales volumes for the Company, driven by its production capacity expansion
from 5600MT in FY2025
to 6350MT in FY2026, leading to higher production volumes and thereby sales.
Other Income
Other income increased by 11.74 % from t 15.94 Lakhs in Fiscal 2025 to t 17.81 Lakhs in
Fiscal 2026. This is mainly
because of an increase in interest income from its deposits.
Expenditure
Total Expenses:
Our total expenses increased by 6.74 % from t13,029.89 Lakhs in Fiscal 2025 to
t13,907.75 Lakhs in Fiscal 2026
due to the factors described below:
Cost of materials consumed
The Cost of materials consumed_increased by 8.18 % from t 10,552.41 Lakhs in Fiscal
2025 to t 11,415.48 Lakhs in
Fiscal 2026. This increase was mainly due to higher consumption of raw materials to
facilitate its increase production
levels in FY2026, leading to a higher consumption of raw cotton.
Changes in inventories of finished goods & work-in-progress
The Changes in inventories of finished goods work-in-progress and Stock-in-Trade
increased by 1,003.45 % from t
(36.46) Lakhs in Fiscal 2025 to t (402.30) Lakhs in Fiscal 2026. This increase was mainly
due to higher closing
inventory levels of work in progress and finished goods as of March 31, 2026, driven by
the commissioning of
additional production capacity during the year.
Employee benefit expenses
The Employee Benefit Expenses increased by 15.68% from t 528.66 Lakhs in Fiscal 2025 to
t 611.57 Lakhs in Fiscal
2026. This increase was mainly due to an increase in the number of employees driven by the
Companys capacity
expansion, as well as an normal annual increments for existing employees.
Financial Costs
Our Financial Costs increased by 10.91 % from t 584.73 Lakhs in Fiscal 2025 to t 648.53
Lakhs in Fiscal 2026. This
was mainly due to higher borrowings during the year availed by the Company to facilitate
its capacity expansion.
Depreciation and amortisation expense
The Depreciation and Amortization expenses was increased by 18.80 % from Rs. 337.24
Lakhs in Fiscal 2025 to Rs.
400.64 Lakhs in Fiscal 2026. This was on account of the capitalization of plant and
machinery and other fixed assets
related to the capital expenditure incurred by the Company.
Other expenses
Other expenses increased by 16.04 % from Rs. 1,063.31 Lakhs in Fiscal 2025 to Rs.
1,233.83 Lakhs in Fiscal 2026. This
was primarily on account of an increase in electricity charges and transportation charges
for the Company, driven by
an increase in scale of operations.
Profit before Tax
Our profit before tax increased by 81.04 % from Rs. 412.71 for the Fiscal 2025 to Rs. 747.16 Lakhs in Fiscal 2026.
Tax Expenses
Our total tax expense increased by 82.68 % from Rs. 71.18 Lakhs in Fiscal 2025 to Rs. 130.02 Lakhs in the Fiscal 2026.
Profit after Tax
Our profit after tax increased by 80.70 % from Rs. 341.53 for the Fiscal 2025 to Rs.
617.14 Lakhs in Fiscal 2026.
COMPARISON OF FINANCIAL YEAR ENDED 2025 TO FINANCIAL YEAR ENDED 2024
Components of Balance Sheet
Long Term borrowings:
Long Term Borrowings have increased by 2.48 %. This is mainly because of an increase in
unsecured loans, infused
for capital expenditure
Short Term Borrowings:
Short term borrowings have increased by 14.00 %. This is mainly because of an increase
in current maturities of long
term debt and unsecured loans infused for capital expenditure.
Trade receivables;
Trade receivables increased by 27.87% during FY 2025, primarily driven by a
corresponding increase in sales and
normal timing differences in collections. However, when viewed relative to sales, the
increase in receivables remains
marginal, with receivables as a percentage of sales rising modestly from 0.94% in FY 2024
to 1.12% in FY 2025. This
indicates that despite higher absolute receivable levels, the Companys collection
efficiency and credit control have
remained largely stable.
Trade Payables:
Trade payables have increased 29.77 %, this is mainly due to higher procurement of raw
material to support the
increased production activity in Fiscal 2025. The rise in payables is aligned with the
scale-up in operations and higher
purchase volumes necessitated by increased demand.
Investments:
Long term Loans and Advances have increased by 427.17 %, this increase is due to capital advances for machinery.
T/l/C
Loans and Advances:
Short term Loans and Advances have increased by 5.81 %, this increase is due to an
increase in advances to suppliers.
Income
Total Income:
Our total income was increased by 6.39 % from t 12,635.16 Lakhs in Fiscal 2024 to t
13,442.60 Lakhs in Fiscal 2025
due to the factors described below:
Revenue from Operations:
Our Revenue from Operations was increased by 6.44 % in the year Fiscal 2025. The amount
increased from t
12,613.85 Lakhs in Fiscal 2024 to t 13,426.66 Lakhs in Fiscal 2025. This performance was
driven by a combination
of improved operational efficiency and higher capacity utilization, which increased from
approximately 94% in Fiscal
2024 to approximately 98% in Fiscal 2025.
Other Income
Other income decreased by 25.20% from t 21.31 Lakhs in Fiscal 2024 to t 15.94 Lakhs in
Fiscal 2025. This is mainly
because of increase in interest income
Expenditure
Total Expenses:
Our total expenses increased by 6.54 % from t 12,230.08 Lakhs in Fiscal 2024 to t
13,029.89 Lakhs in Fiscal 2025
due to the factors described below:
Cost of materials consumed
The Cost of materials consumed increased by 3.52 % from t 10,193.11 Lakhs in Fiscal
2024 to t 10,552.41 Lakhs in
Fiscal 2025. This increase was mainly due to an increase in capacity utilization,
resulting in increased consumption
of raw cotton.
Changes in inventories of finished goods & work-in-progress
The Changes in inventories of finished goods work-in-progress and Stock-in-Trade
decreased by 85.54 % from t
(252.16) Lakhs in Fiscal 2024 to t (36.46) Lakhs in Fiscal 2025. This decrease was mainly
due to higher dispatches
in FY2025, resulting in lower closing inventory levels.
Employee benefit expenses
The Employee Benefit Expenses increased by 13.87 % from t 464.25 Lakhs in Fiscal 2024
to t 528.66 Lakhs in Fiscal
2025. This increase was mainly due to factors beyond headcount, including revision in pay
scales, manpower-related
adjustments and statutory employee-related costs.
Financial Costs
Our Financial Costs decreased by 8.66 % from t 640.17 Lakhs in Fiscal 2024 to t 584.73
Lakhs in Fiscal 2025. This
was primarily due to scheduled repayments of term loan, thereby leading to lower
outstanding borrowings,
additionally a decrease in the effective interest rate on our term loan in Fiscal 2025
also contributed to a decrease in
financial costs.
Depreciation and amortisation expense
The Depreciation and Amortization expenses was increased by 1.80 % from Rs. 331.26 Lakhs in Fiscal 2024 to Rs. 337.24
Lakhs in Fiscal 2025 due to an increase in depreciable assets on account of capital expenditure incurred.
Other expenses
Other expenses increased by 24.59 % from Rs. 853.45 Lakhs in Fiscal 2024 to Rs. 1,063.31 Lakhs in Fiscal 2025. This
was mainly on account of an increase in electricity charges from Rs. 587.59 Lakhs in Fiscal 2024 to Rs. 742.73 lakhs in
Fiscal 2025.
Profit before Tax
Our profit before tax increased by 1.88 % from Rs. 405.08 for the Fiscal 2024 to Rs. 412.71 Lakhs in Fiscal 2025.
Tax Expenses
Our total tax expense increased by 1.86 % from Rs. 69.88 Lakhs in Fiscal 2024 to Rs. 71.18 Lakhs in the Fiscal 2025.
Profit after Tax
Due to foregoing reasons our Profit after Tax increased by 1.89 % from Rs. 335.20 Lakhs in Fiscal 2024 to Rs. 341.53
Lakhs in Fiscal 2025. Furthermore, the improvement in Profit After Tax in Fiscal 2025 was primarily attributable to
a. sustained growth in revenue from operations, which increased by 6.44% year-on-year.
This growth was driven
by enhanced operational efficiency and higher capacity utilization, which rose from
approximately 94% in
Fiscal 2024 to approximately 98% in Fiscal 2025. Higher utilization enabled increased
production volumes
and higher dispatches, leading to better recovery of fixed costs and improved contribution
margins.
b. While total expenses increased by 6.54%, largely in line with revenue growth, the
cost structure remained
broadly stable.
c. The increase in cost of materials consumed was limited to 3.52%, which was lower
than the growth in revenue,
indicating improved input efficiency despite higher raw cotton consumption due to
increased production.
d. These cost increases were partially offset by a meaningful reduction in financial
costs, which declined by 8.66%
as a result of scheduled term loan repayments and a reduction in effective interest rates.
Lower finance costs
contributed positively to profitability and strengthened earnings quality.
CASH FLOWS
The table below is our cash flows for the Fiscal 2026, 2025 and Fiscal 2024:
Particulars |
Fiscal 2026 | Fiscal 2025 | Fiscal 2024 |
Net cash (used)/from operating activities |
778.27 | 1,046.67 | 813.21 |
Net cash (used)/from investing activities |
(5,478.42) | (821.31) | (77.47) |
Net cash (used)/from financing activities |
4,696.99 | (226.27) | (729.73) |
Cash Flows from Operating Activities
For the Fiscal 2026
Our net cash generated from operating activities was Rs. 778.27 Lakhs for the Fiscal
2026. Our net profit before tax of
Rs. 747.16 Lakhs for the Fiscal 2026 which was primarily adjusted against Depreciation and
amortisation of Rs. 400.64
Lakhs, Interest Expenses of Rs. 648.53 Lakhs, Foreign Exchange fluctuation expense of Rs.
39.42 Lakhs, Gratuity
Expenses of Rs.7.86 and Interest Income of Rs. 16.55 Lakhs. Operating profit before
working capital changes was Rs.
1,827.05 Lakhs for the Fiscal 2026.
The adjustments to operating profit before working capital changes included adjustments
for (i) Increase in inventories
by t 1,035.52 Lakhs, (ii) Decrease in Trade receivables by t 34.93 Lakhs, (iii) Increase
in Short-term loans and
advances by t 181.93 Lakhs, (iv) Increase in Other current assets by t 686.61 Lakhs, (v)
Increase in trade payables
by t 482.34 Lakhs, (vi) Increase in other current liabilities by t 166.60 Lakhs and (vii)
Increase in provisions by t
215.97 Lakhs. Tax paid for the Fiscal 2026 amount to t 44.56 Lakhs.
For the Fiscal 2025
Our net cash generated from operating activities was t 1,046.67 Lakhs for the Fiscal
2025. Our net profit before tax
of t 412.71 Lakhs for the Fiscal 2025 which was primarily adjusted against Depreciation
and amortisation of t 337.24
Lakhs, Interest Expenses of t 584.73 Lakhs, Foreign Exchange fluctuation income of t 38.62
Lakhs, Gratuity
Expenses of t5.94 and Interest Income of t 12.85 Lakhs. Operating profit before working
capital changes was t
1,289.15 Lakhs for the Fiscal 2025.
The adjustments to operating profit before working capital changes included adjustments
for (i) Increase in inventories
by t 227.38 Lakhs, (ii) Increase in Trade receivables by t 32.91 Lakhs, (iii) Increase in
Short-term loans and advances
by t 26.34 Lakhs, (iv) Increase in Other current assets by t 233.75 Lakhs, (v) Increase in
trade payables by t 269.61
Lakhs, (vi) Increase in other current liabilities by t 82.12 Lakhs and (vii) Decrease in
provisions by t 84.16 Lakhs.
Tax refunded for the Fiscal 2025 amount to t 10.32 Lakhs.
For the Fiscal 2024
Our net cash generated from operating activities was t 813.21 Lakhs for the Fiscal
2024. Our net profit before tax of
t 405.08 Lakhs for the Fiscal 2024 which was primarily adjusted against Depreciation and
amortisation of t 331.26
Lakhs, Interest Expenses of t 640.17 Lakhs, Gratuity Expenses of t2.11 Lakhs and Interest
Income of t 19.74 Lakhs.
Operating profit before working capital changes was t 1,358.88 Lakhs for the Fiscal 2024.
The adjustments to operating profit before working capital changes included adjustments
for (i) Increase in inventories
by t 475.34 Lakhs, (ii) Increase in Trade receivables by t 110.56 Lakhs, (iii) Decrease in
Short-term loans and
advances by t 90.61 Lakhs, (iv) Increase in Other current assets by t 689.02 Lakhs, (v)
Increase in trade payables by
t 559.84 Lakhs, (vi) Increase in other current liabilities by t 116.04 Lakhs and (vii)
Decrease in provisions by t 21.49
Lakhs. Tax paid for the Fiscal 2024 amount to t 15.76 Lakhs.
Cash Flows from Investing Activities
For the Fiscal 2026
Net cash flow used in investing activities for the Fiscal 2026 was t 5,478.42 Lakhs.
This was primarily on account of
capital expenditure on fixed assets, including CWIP and capital advances of t 5,471.04
Lakhs, Changes in Other Non-
Current Assets of t 23.93 Lakhs. This was partially offset by interest income of t 16.55
Lakhs.
For the Fiscal 2025
Net cash flow used in investing activities for the Fiscal 2025 was t 821.31 Lakhs. This
was primarily on account of
capital expenditure on fixed assets, including CWIP and capital advances of t831.52 Lakhs,
Change in in Other Non-
Current Assets t 2.64 Lakhs. This was partially offset by interest income of t 12.85
Lakhs.
For the Fiscal 2024
Net cash flow used in investing activities for the Fiscal 2024 was t 77.47 Lakhs. This
was primarily on account of
capital expenditure on fixed assets, including CWIP and capital advances of t 198.68
Lakhs. This was partially offset
by Changes in Other Non-Current Assets of t 101.47 and interest income of t 19.74 Lakhs.
Cash Flows from Financing Activities
For the Fiscal 2026
Net cash flow generated from financing activities for the Fiscal 2026 was t 4,696.99
Lakhs. This was primarily on
account of Proceeds from Issue of Shares of t 325.00 Lakhs, Proceeds from Long-Term
Borrowings of t 5,150.28
and Short-Term Borrowings of t 971.46 Lakhs. This was partially offset by Interest
Expenses of t 648.53 Lakhs and
Repayment of Long term Borrowings of t 1,101.22 lakhs.
For the Fiscal 2025
Net cash flow used in financing activities for the Fiscal 2025 was t 226.27 Lakhs. This
was primarily on account of
Interest Expenses of t 584.73 Lakhs and Repayment of Long-term Borrowings of t 1,037.97
lakhs. This was partially
offset by Proceeds from Long-Term Borrowings of t 1,275.00 Lakhs and Short-Term Borrowings
of t 121.44 Lakhs.
For the Fiscal 2024
Net cash flow used in financing activities for the Fiscal 2024 was t 729.73 Lakhs. This
was primarily on account of
Interest Expenses of t 640.17 Lakhs and Repayment of Long term Borrowings of t 300.01
lakhs. This was partially
offset by Proceeds from Long-Term Borrowings of t 4.39 Lakhs and Short-Term Borrowings of
t 206.06 Lakhs.
RELATED PARTY TRANSACTIONS
Related party transactions with certain of our promoter, directors and their entities
and relatives primarily relate to
remuneration, salary, commission and issue of Equity Shares. For further details of
related parties kindly refer chapter
titled "Restated Financial Statements" beginning on page 192
of this Red Herring Prospectus.
OFF-BALANCE SHEET ITEMS
We do not have any other off-balance sheet arrangements, derivative instruments or
other relationships with any entity
that have been established for the purposes of facilitating off-balance sheet
arrangements.
QUALIFICATIONS OF THE STATUTORY AUDITORS WHICH HAVE NOT BEEN GIVEN EFFECT TO
IN THE RESTATED FINANCIAL STATEMENTS
The Restated Financial Statements do not contain any qualifications which have not been
given effect in the restated
financial statements.
QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Financial Market Risks
Market risk is the risk of loss related to adverse changes in market prices. We are
exposed to inflation and credit risk
in the normal course of our business.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of
changes in market interest rates. Our exposure to the risk of changes in market interest
rates relates primarily to our
long term debt obligations with floating interest rates. We manage our interest rate risk
by having a balanced portfolio
of fixed and variable rate loans and borrowings. For further information, see
"Financial Indebtedness" on page 233.
Effect of Inflation
We are affected by inflation as it has an impact on the salary, wages, etc. In line
with changing inflation rates, we
rework our margins so as to absorb the inflationary impact.
Credit Risk
We are exposed to credit risk on monies owed to us by our customers. If our customers
do not pay us promptly, or at
all, we may have to make provisions for or write-off such amounts.
OTHER MATTERS
Details of default, if any, including therein the amount involved, duration of default
and present status, in
repayment of statutory dues or repayment of debentures or repayment of deposits or
repayment of loans from
any bank or financial institution
Except as disclosed in chapter titled "Restated Financial Statements"
beginning on page 192 of this Red Herring
Prospectus, there have been no defaults in payment of statutory dues or repayment of
debentures and interest thereon
or repayment of deposits and interest thereon or repayment of loans from any bank or
financial institution and interest
thereon by the Company.
Material Frauds
There are no material frauds, as reported by our statutory auditor, committed against
our Company, in the last three
Fiscals.
Unusual or infrequent events or transactions
Except as described in this Red Herring Prospectus, during the period/ years under
review there have been no
transactions or events, which in our best judgment, would be considered
"unusual" or "infrequent".
Significant Economic Changes that Materially Affected or are Likely to Affect Income
from Continuing
Operations
Our business has been subject, and we expect it to continue to be subject, to
significant economic changes that
materially affect or are likely to affect our income from continuing operations identified
above in Managements
Discussion and Analysis of Financial Condition and Results of Operations -Significant
factors affecting our financial
condition and results of operations and the uncertainties described in Risk
Factors on pages 238 and 22 respectively.
Known trends or uncertainties that have had or are expected to have a material adverse
impact on revenue or
income from continuing operations
Other than as described in the section titled "Risk Factors and
chapter titled "Managements Discussion and
Analysis of Financial Conditions and Results of Operations", beginning on
page 22 and 238 of this Red Herring
Prospectus respectively to our knowledge there are no known trends or uncertainties that
have or had or are expected
to have a material adverse impact on revenues or income of our company from continuing
operations.
Future relationship between Costs and Income
Other than as described in the section titled "Risk Factors
beginning on page 22 of this Red Herring Prospectus, to
our knowledge there are no factors, which will affect the future relationship between
costs and income or which are
expected to have a material adverse impact on our operations and finances.
The extent to which material increases in revenue or income from operations are due to
increased volume,
introduction of new products or services or increased prices
Changes in revenue in the last three financial years are as explained in the part
"Financial Year 2024-25 compared
with financial year 2023-24".
Total turnover of industry segments
Our Company is engaged into business of production of spun cotton yarn. Relevant
industry data, as available, has
been included in the chapter titled "Industry Overview" beginning
on page 121 of this Red Herring Prospectus.
Significant dependence on a single or few Suppliers or Customers
Significant proportion of our purchases have historically been derived from a limited
number of suppliers. The % of
Contribution of our suppliers vis a vis the total purchases for the Fiscals 2026, 2025
and 2024 are as follows:
(Rs. in Lakhs)
Particulars |
Suppliers |
|||||
March 31, 2026 |
March 31, 2025 |
March 31, 2024 |
||||
| Purchase contribution | % of Purchase |
Purchase contribution | % of Purchase |
Purchase contribution | % of Purchase |
|
Top 1 |
5,506.95 | 45.71% | 6,111.49 | 56.89% | 1,869.02 | 17.94% |
Top 3 |
8,219.12 | 68.22% | 7,766.73 | 72.29% | 4,343.23 | 41.70% |
Top 5 |
8,890.46 | 73.79% | 8,756.76 | 81.51% | 5,781.54 | 55.50% |
Top 10 |
9,886.66 | 82.06% | 9,782.22 | 91.05% | 7,448.28 | 71.51% |
Significant proportion of our total revenue have historically been derived from a
limited number of Customers. The
% of Contribution of our Customers vis a vis the revenue from operations for the Fiscals
2026, 2025 and 2024 are as
follows:
Period |
Revenue from Largest Customer (Rs.
in Lakhs) |
% Contribution of largest customer to revenue from operations |
Revenue from Top 5 Customers (Rs. in Lakhs) |
% Contribution of top 5 to revenue from operations |
Revenue from Top 10 Customers (Rs. in Lakhs) |
% Contribution of top 10 to revenue from operations |
Fiscal 2026 |
2,240.28 | 16.16% | 7,840.53 | 56.56% | 11,298.15 | 81.51% |
Fiscal 2025 |
2,501.39 | 18.63% | 8,080.32 | 60.18% | 10,717.62 | 79.82% |
Fiscal 2024 |
5,518.94 | 43.75% | 9,706.82 | 76.95% | 11,463.02 | 90.88% |
Status of any publicly announced new products or business segments
Please refer to the chapter titled "Our Business" beginning on
page 136 of this Red Herring Prospectus for new
products or business segments.
Seasonality of business
Our business is not seasonal in nature. However, availability of raw materials being Cotton bales is seasonal in nature.
Competitive Conditions
Competitive conditions are as described under the Chapters titled "Industry
Overview" and " Our Business" beginning
on pages 121 and 136 respectively of this Red Herring Prospectus.
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