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 period ended on
September 30, 2025 and for the financial year ended on 2025, 2024 and 2023 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 190 of this Draft
Red Herring Prospectus. Our Restated Financial Statements have been derivedfrom our
audited financial statements
and restated in accordance with the SEBI ICDR 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 Draft Red Herring Prospectus. You should also read
the section titled "Risk
Factors" beginning on page 30 of this Draft 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 period ended on September 30,
2025 andfor the Fiscal ended on 2025, 2024
and 2023 included in this Draft Red Herring Prospectus beginning on page 190 of
this Draft 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 12s to Ne 32 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 5500 MT of cotton yarn, with
18240 spindles as on September
30, 2025. 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 135 of this Draft Red Herring
Prospectus.
SIGNIFICANT DEVELOPMENTS AFTER FISCAL 2025
1. Pursuant to Resolution passed by our Board of Director dated October 06, 2025 and
Special Resolution passed at
the Extraordinary General Meeting held on November 01, 2025, our company has been
converted from Private
Company to Public Company. Consequently name of our company was changed from Shreedhar
Spinners
Private Limited to Shreedhar Spinners Limited w.e.f. November 17, 2025.
2. Pursuant to Resolution passed by our Board of Director dated September 15, 2025 and
Special Resolution passed
at the Annual General Meeting held on September 22, 2025, our company has allotted
6,50,000 equity shares of
face value of Rs. 10 each at the issue price of Rs. 50 each for cash through private
placement. Consequently, paid up
share capital of our company has increased from Rs. 15,00,00,000.00 divided into
1,50,00,000 equity shares of face
value of Rs. 10 each to Rs. 15,65,00,000.00 divided into 1,56,50,000 equity shares of face
value of Rs. 10 each.
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 30 beginning of this Draft 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 and for the period ended September 30, 2025, we procured cotton bales from more
than 10 Suppliers and top
10 suppliers contribute 96.04 %, 91.05 %, 71.51% and 67.21% of the total purchase during
the period ended September
30, 2025 and Fiscals 2025, 2024 and 2023, 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 period ended September
30, 205, Fiscal 2025,
Fiscal 2024 and Fiscal 2023 are raw material consumed to revenue from operations were
77.55%, 78.59%, 80.81%
and 97.44%, 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 190 of this Draft Red Herring Prospectus.
Set out below are a few key performance indicators:
Particulars |
Unit | For the period ended September 30,2025 | For the financial year ended March 31, 2025 | For the financial year ended March 31, 2024 | For the financial year ended March 31, 2023 |
| Revenue from Operations(1) | t | 7,000.62 | 13,426.66 | 12,613.85 | 2,024.11 |
| Total Income(2) | t | 7009.64 | 13442.60 | 12635.16 | 2027.68 |
| Revenue CAGR(3) | % | NA | 157.55% | ||
| EBITDA(4) | t | 785.17 | 1,310.50 | 1,340.91 | 150.57 |
| EBITDA Margin(5) | % | 11.22% | 9.76% | 10.63% | 7.44% |
| Profit After Tax(6) | t | 303.78 | 341.53 | 335.20 | -143.18 |
| Profit After Tax Margin(7) | % | 4.34% | 2.54% | 2.66% | -7.07% |
| Return on Equity (RoE) (8) | % | 13.00% | 16.79% | 19.81% | -10.55% |
| Return on Capital Employed(9) | % | 6.82% | 11.49% | 13.14% | 0.49% |
Particulars |
Unit | For the period ended September 30,2025 | For the financial year ended March 31, 2025 | For the financial year ended March 31, 2024 | For the financial year ended March 31, 2023 |
| Net Fixed Asset Turnover Ratio(10) | Times | 1.22 | 2.27 | 2.04 | 0.31 |
| Working Capital Turnover Ratio(11) | Times | 4.50 | 7.99 | 8.85 | 2.27 |
| Working Capital Days(12) | Number of days | 14 | 26 | 29 | 218 |
| Debt to Equity Ratio(13) | Times | 2.88 | 3.21 | 3.67 | 4.64 |
| Return on Assets(14) | % | 0.03 | 0.03 | 0.04 | -0.02 |
| Current Ratio(15) | Times | 0.94 | 1.02 | 1.00 | 0.86 |
| Inventory turnover ratio(16) | Times | 3.40 | 6.26 | 7.48 | 2.75 |
| Trade Receivables turnover ratio(17) | Times | 61.28 | 99.81 | 200.89 | 538.95 |
| Trade payables turnover ratio(18) | Times | 5.11 | 10.11 | 15.89 | 8.54 |
As certified by M R B & Associates, Chartered Accountant by their certificate dated January 09, 2026.
Notes:
<1) Revenue from operations as derived from restated financial statements
<2)Total Income as derived from restated financial statements
<3)Revenue CAGR is calculated by dividing the Revenue from operation for
the FY 2025 by the Revenue from operation
for the FY 2023, raising to the power of one divided by the number of compounding period
i.e. 2 years and subtracting
by one.
<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
<6> Profit After Tax as derived from restated financial statements
<V pat Margin is calculated as PAT for the period/year divided by revenue from operations.
<8 Return on Equity <RoE) is equal to profit for the year divided by
the average total equity and is expressed as a
percentage.
<99 Return on Capital Employed is calculated as EBIT divided by total
capital employed. Capital employed is calculated
as sum of total equity and total borrowings. EBIT is calculated as EBITDA minus
depreciation and amortization
<107) Net Fixed Asset Turnover ratio is calculated as Revenue from operation
divided by Net fixed Asset
<119Working Capital Turnover Ratio is calculated as Revenue from operation
divided by Capital employed
<12)Working Capital days is Inventory days + Receivables Days - Trade
Payable Days
<13) Debt to Equity Ratio is calculated as total borrowings divided by
total equity. Total Borrowings is calculated as
sum of non - current borrowings, current borrowings and lease liabilities.
<14 Return on Assets is calculated by dividing the total assets by the profit after tax.
<15 Current Ratio is a liquidity ratio that measures our ability to pay
short - term obligations <those which are due
within one year) and is calculated by dividing the current assets by current liabilities.
<16) Inventory Turnover Ratio = Cost of Goods Sold v Average Inventory
<17 Trade Receivables turnover ratio = Revenue from Operations v Average
Trade Receivables
<18 Trade Payable turnover ratio = Purchases v Average Trade Payables
DETAILS 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, GST subsidy on sales & interest subsidy.
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, 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, Foreign Exchange Fluctuation Expense,
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 period ended September 30, 2025 and for the financial years ended on
2025, 2024 and 2023:
Particulars |
For the period ended Septemb er 30, 2025 | % of Total Income | f iscal 2025 (Rs.) | % oi Total Income | Fiscal 2024 (Rs.) | % oi Total Income | Fiscal 2023 (Rs.) | % of Total Inco me |
Revenue |
||||||||
| Revenue from Operations | 7,000.62 | 99.87% | 13,426.66 | 99.88% | 12,613.85 | 99.83% | 2,024.11 | 15.06% |
| Other Income | 9.02 | 0.13% | 15.94 | 0.12% | 21.31 | 0.17% | 3.57 | 0.18% |
Total Income |
7,009.64 | 100.00% | 13,442.60 | 100.00% | 12,635.16 | 100.00 % | 2027.68 | 100.00 % |
Expenses |
||||||||
| Cost of materials consumed | 5,428.73 | 77.45% | 10,552. 41 | 78.50% | 10,193.1 1 | 80.67 % | 1,972.30 | 97.27 % |
| Changes in inventories of finished goods work-in-progress and Stock-in- Trade | (78.89) | (1.13)% | (36.46) | (0.27)% | (252.16) | (2.00) % | (471.68) | (23.26 )% |
| Employee Benefit expenses | 274.51 | 3.92% | 528.66 | 3.93% | 464.25 | 3.67% | 129.94 | 6.41% |
| Financial Costs | 277.23 | 3.95% | 584.73 | 4.35% | 640.17 | 5.07% | 201.10 | 9.92% |
| Depreciation and amortisation expense | 170.72 | 2.44% | 337.24 | 2.51% | 331.26 | 2.62% | 120.36 | 5.94% |
| Other Expenses | 587.06 | 8.38% | 1,063.3 1 | 7.91% | 853.45 | 6.75% | 239.63 | 11.82 % |
Total expenses |
6,659.36 | 95.00% | 13,029. 89 | 96.93% | 12,230.0 8 | 96.79 % | 2,191.65 | 108.0 9% |
Profit before tax |
350.28 | 5.00% | 412.71 | 3.07% | 405.08 | 3.21 % | (163.97) | (8.09) % |
Tax expense |
||||||||
| Current tax | 24.80 | 0.35% | 2.38 | 0.02% | - |
- |
- |
- |
| Deferred tax (credit)/charge | 21.70 | 0.31% | 68.80 | 0.51% | 69.88 | 0.55% | (20.79) | (1.03) % |
| Earlier Year Taxes | - | - | - | - | - | - | - | - |
Profit for the period / year |
303.78 | 4.33% | 341.53 | 2.54% | 335.20 | 2.65 % | (143.18) | (7.06) % |
FINANCIAL INFORMATION FOR THE PERIOD ENDED SEPTEMBER 30, 2025
Components of Balance Sheet
Long Term Borrowings:
Long Term Borrowing for the period ended September 30, 2025 stood at Rs. 4,979.10 Lakhs
consisting of 71.03 % of
total income.
Short Term Borrowings:
Short Term Borrowing for the period ended September 30, 2025 stood at t 1,750.83 Lakhs
consisting of 24.98 % of
total income.
Trade receivables:
Trade receivables for the period ended September 30, 2025 stood at t 77.50 Lakhs
consisting of 1.11 % of total
income.
Trade Payables:
Trade payables for the period ended September 30, 2025 stood at t 916.79 Lakhs
consisting of 13.08 % of total
income.
Investments:
There were no Investments for the period ended September 30, 2025.
Loans and Advances:
Long term loans and advances for the period ended September 30, 2025 stood at t 126.50
Lakhs consisting of 1.80 %
of total income.
Short term loans and advances for the period ended September 30, 2025 stood at t 334.51
Lakhs consisting of 4.77 %
of total income.
Income
Total Income:
Total Income for the period ended September 30, 2025 stood at t 7,009.64 Lakhs
consisting of 100.00 % of total
income.
Revenue from Operations:
Revenue from Operations for the period ended September 30, 2025 stood at t 7,000.62
Lakhs consisting of 99.87 %
of total income.
Other Income
Other income for the period ended September 30, 2025 stood at t 9.02 Lakhs consisting
of 0.13 % of total income.
Expenditure
Total Expenses:
Our total expenses for the period ended September 30, 2025 stood at t 6,659.36 Lakhs
consisting of 95.00 % of total
income.
Cost of materials consumed
Cost of materials consumed for the period ended September 30, 2025 stood at t 5,428.73
Lakhs consisting of 77.45
% of total income.
Changes in inventories of finished goods & work-in-progress
Changes in inventories of finished goods work-in-progress and Stock-in-Trade for the
period ended September 30,
2025 were t (78.89) Lakhs consisting of (1.13) % of total income.
Employee benefit expenses
The Employee Benefit Expenses for the period ended September 30, 2025 stood at t 274.51
Lakhs consisting of 3.92
% of total income.
Financial Costs
Our Financial Costs for the period ended September 30, 2025 stood at t 277.23 Lakhs
consisting of 3.95 % of total
income.
Depreciation and amortisation expense
The Depreciation and Amortization expenses for the period ended September 30, 2025
stood at t 170.72 Lakhs
consisting of 2.44 % of total income.
Other expenses
Other expenses for the period ended September 30, 2025 stood at t 587.06 Lakhs consisting of 8.38 % of total income.
Profit before Tax
Our profit before tax for the period ended September 30, 2025 stood at t 350.28 Lakhs
consisting of 5.00 % of total
income.
Tax Expenses
Our total tax expense for the period ended September 30, 2025 stood at t 46.50 Lakhs
consisting of 0.66 % of total
income.
Profit after Tax
After accounting for taxes at applicable rates, our Profit after Tax for the period
ended September 30, 2025 stood at t
303.78 Lakhs consisting of 4.33 % of total income.
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.
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
increased by 85.54 % from t
(252.16) Lakhs in Fiscal 2024 to t (36.46) Lakhs in Fiscal 2025. This increase 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 Rs. 464.25 Lakhs
in Fiscal 2024 to Rs. 528.66 Lakhs in Fiscal
2025. This increase was mainly due to an increase in manpower in Fiscal 2025.
Financial Costs
Our Financial Costs decreased by 8.66 % from Rs. 640.17 Lakhs in Fiscal 2024 to Rs.
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.
COMPARISON OF FINANCIAL YEAR ENDED 2024 TO FINANCIAL YEAR ENDED 2023
Components of Balance Sheet
Long Term borrowings:
Long Term Borrowings has decreased by 7.30 % this is mainly because of an increase in
current maturity of long term
debt in Fiscal 2024.
Short Term Borrowings:
Short term borrowings have increased by 24.82 % this is mainly because of an increase
in working capital facilities
and an increase of current maturity of long term debt in Fiscal 2024.
Trade receivables;
Trade receivables have increased by 1472.13 %, this is due to increase in production
post increasing the capacity
utilization after commissioning production activities in November 2022, thereby increasing
dispatches and normalcy
of operations in Fiscal 2024.
Trade Payables:
Trade payables have increased 161.96 %, this is mainly due to an increase in production
in Fiscal 2024, and thereby
an increase in cotton consumed and inventory required.
Loans and Advances:
Long term Loans and Advances have decreased by 27.88 %, this decrease is due to a
decrease in capital advance to
suppliers given the commercial production began in November 2022.
Short term Loans and Advances have decreased by 24.18 %, this increase is due to a
decrease in GST receivables
from Rs. 264.93 Lakhs in Fiscal 2023 to Rs. 184.42 Lakhs in Fiscal 2024.
Income
Total Income:
Our total income was increased by 523.13 % from Rs. 2,027.68 Lakhs in Fiscal 2023 to
Rs. 12,635.16 Lakhs in Fiscal
2024 due to the factors described below:
Revenue from Operations:
Our Revenue from Operations was increased by 523.18 % in the year Fiscal
2024. The amount increased from Rs.
2,024.11 Lakhs in Fiscal 2023 to Rs. 12,613.85 Lakhs in Fiscal 2024. This performance was
driven by a combination
of ramping up of capacity utilization from beginning commercial production in November
2022, to approximately
41% in Fiscal 2023, and approximately 94% in Fiscal 2024, resulting in higher production
and sales volumes.
Other Income
Other income increased by 497.72 % from Rs. 3.57 Lakhs in Fiscal 2023 to Rs. 21.31
Lakhs in Fiscal 2024. This is mainly
because of higher interest earned on deposits during Fiscal 2024.
Expenditure
Total Expenses:
Our total expenses increased by 458.03 % from Rs. 2,191.65 Lakhs in Fiscal 2023 to Rs.
12,230.08 Lakhs in Fiscal 2024
due to the factors described below:
Cost of materials consumed
The Cost of materials consumed_increased by 416.81 % from Rs. 1,972.30 Lakhs in Fiscal
2023 to Rs. 10,193.11 Lakhs
in Fiscal 2024. This increase was mainly due to higher number of production days in Fiscal
2024, since there were
fewer days in Fiscal 2023 post commencing commercial production in November 2022. Other
factors were also an
increase in capacity utilization and production volume per day.
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 46.54 % from Rs.
(471.68) Lakhs in Fiscal 2023 to Rs. (252.16) Lakhs in Fiscal 2024. This increase was
mainly due to stabilization of
operations following commencement of commercial production in November 2022, resulting in
higher production
levels and increase in inventories in Fiscal 2024.
Employee benefit expenses
The Employee Benefit Expenses increased by 257.28 % from Rs. 129.94 Lakhs in Fiscal
2023 to Rs. 464.25 Lakhs in
Fiscal 2024. This increase was mainly due to an increase in manpower in Fiscal 2024.
Financial Costs
Our Financial Costs increased by 218.33 % from Rs. 201.10 Lakhs in Fiscal 2023 to Rs.
640.17 Lakhs in Fiscal 2024.
This was mainly due to an increase in interest servicing days in Fiscal 2024, following
commencement of commercial
production in November 2022, Fiscal 2023.
Depreciation and amortisation expense
The Depreciation and Amortization expenses was increased by 175.22 % from Rs. 120.36
Lakhs in Fiscal 2023 to Rs.
331.26 Lakhs in Fiscal 2024. This was on account of commencement of commercial production
in November 2022,
therefore leading to a lower depreciation for Fiscal 2023.
Other expenses
Other expenses increased by 256.16 % from Rs. 239.63 Lakhs in Fiscal 2023 to Rs. 853.45
Lakhs in Fiscal 2024. This
was on account of a significant increase in Electricity charges, Transportation charges,
Water charges, Selling and
Distribution Expenses as well as Selling and Distribution expenses among others, given
Fiscal 2024 included a full
year of commercial production.
Profit before Tax
There was Loss before considering tax of Rs. (163.97) Lakhs in Fiscal 2023. In Fiscal
2024, Profit Before Tax stood at
Rs. 405.08 Lakhs.
Tax Expenses
In Fiscal 2023, there was no tax expense as our company incurred losses. In Fiscal
2024, Total Tax Expense incurred
were Rs. 69.88 Lakhs.
Profit after Tax
There was Loss after considering tax of Rs. (143.18) Lakhs in Fiscal 2023. In Fiscal
2024, Profit After Tax stood at Rs.
335.20 Lakhs. The Company reported a significant improvement in Profit After Tax and PAT
margin in Fiscal 2024,
mainly due to:
a. Sharp increase in operating scale following a full year of commercial production.
b. Total income increased by 523.13%, from Rs.2,027.68 Lakhs in Fiscal 2023 to
Rs.12,635.16 Lakhs in Fiscal 2024.
This growth was primarily driven by revenue from operations, which increased by 523.18% to
Rs.12,613.85
Lakhs, as capacity utilization increased substantially from approximately 41% in Fiscal
2023 to approximately
94% in Fiscal 2024. Fiscal 2023 included only a limited period of operations after
commercial production
commenced in November 2022, whereas Fiscal 2024 reflected a full year of stabilized
operations.
c. Although total expenses increased by 458.03% to Rs.12,230.08 Lakhs, the increase in
expenses was lower than
the growth in income. This led to improved operating leverage, as fixed and semi-fixed
costs such as
depreciation, employee costs, and administrative expenses were spread over significantly
higher production
and sales volumes.
d. The Company incurred a loss before tax of t163.98 Lakhs in Fiscal 2023, mainly due
to low production
volumes, under-absorption of fixed costs, and limited operating days. In contrast, Fiscal
2024 benefited from
higher production days, improved capacity utilization, and better cost absorption.
CASH FLOWS
The table below is our cash flows for the Fiscal 2025, Fiscal 2024 and Fiscal 2023:
(t in Lakhs)
Particulars |
For the period ended September 30, 2025 | Fiscal 2025 | Fiscal 2024 | Fiscal 2023 |
| Net cash (used)/from operating activities | 907.01 | 1,096.72 | 865.29 | (1,057.57) |
| Net cash (used)/from investing activities | (833.27) | (832.75) | (129.55) | (4,407.16) |
| Net cash (used)/from financing activities | (77.80) | (264.88) | (729.73) | (5,425.70) |
Cash Flows from Operating Activities
Cash Flows from Operating Activities
For the period ended September 30, 2025
Our net cash generated from operating activities was t 907.01 Lakhs for the period
ended on September 30, 2025.
Our net profit before tax of t 350.28 Lakhs for the period ended on September 30, 2025
which was primarily adjusted
against Depreciation and amortisation of t 170.72 Lakhs, Interest Expenses of t 277.23
Lakhs and Interest Income of
t 7.82 Lakhs. Operating profit before working capital changes was t 806.05 Lakhs for the
period ended on September
30, 2025.
The adjustments to operating profit before working capital changes included adjustments
for (i) Decrease in
inventories by t 438.41 Lakhs, (ii) Decrease in Trade receivables by t 73.48 Lakhs, (iii)
Increase in Short-term loans
and advances by t 87.37 Lakhs, (iv) Increase in Other current assets by t 362.11 Lakhs,
(v) Decrease in trade payables
by t 258.32 Lakhs, (vi) Increase in other current liabilities by t 292.34 Lakhs and (vii)
Increase in provisions by t
28.14 Lakhs. Tax paid for the period ended on September 30, 2025 amount to t 23.61 Lakhs.
For the Fiscal 2025
Our net cash generated from operating activities was t 1,096.72 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 and Interest Income of t 12.85 Lakhs. Operating
profit before working
capital changes was t 1,347.53 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 26.33 Lakhs, (iv) Increase in Other current assets by t 248.03 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 78.21 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 865.29 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 and Interest Income of t 19.74 Lakhs. Operating
profit before working
capital changes was t 1,396.25 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 676.42 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 19.38
Lakhs. Tax paid for the Fiscal 2024 amount to t 15.76 Lakhs.
For the Fiscal 2023
Our net cash used in operating activities was t 1,057.57 Lakhs for the Fiscal 2023. Our
net loss before tax of t 163.98
Lakhs for the Fiscal 2023 which was primarily adjusted against Depreciation and
amortisation of t 120.36 Lakhs,
Interest Expenses of t 201.10 Lakhs and Interest Income of t 3.57 Lakhs. Operating profit
before working capital
changes was t 161.05 Lakhs for the Fiscal 2023.
The adjustments to operating profit before working capital changes included adjustments
for (i) Increase in inventories
by t 1,092.10 Lakhs, (ii) Increase in Trade receivables by t 7.51 Lakhs, (iii) Increase in
Short-term loans and advances
by t 301.75 Lakhs, (iv) Increase in Other current assets by t 66.62 Lakhs, (v) Increase in
trade payables by t 340.08
Lakhs, (vi) Decrease in other current liabilities by t 191.72 Lakhs and (vii) Increase in
provisions by t 108.80 Lakhs.
Tax paid for the Fiscal 2023 amount to t 7.80 Lakhs.
Cash Flows from Investing Activities
For the period ended September 30, 2025
Net cash flow used in investing activities for the period ended September 30, 2025 was
t 833.27 Lakhs. This was
primarily on account of capital work in progress of t 769.83 Lakhs, capital advances given
of t 35.98 Lakhs, Changes
in Other Non-Current Assets of t 19.56 Lakhs, interest income of t 7.82 Lakhs and purchase
of fixed assets of t 0.08
Lakhs.
For the Fiscal 2025
Net cash flow used in investing activities for the Fiscal 2025 was t 832.75 Lakhs. This
was primarily on account of
capital work in progress of t 683.65 Lakhs, capital advances given of t 73.35 Lakhs,
interest income of t 12.85 Lakhs
and purchase of fixed assets of t 74.52 Lakhs. This was partially offset by Changes in
Other Non-Current Assets of t
11.63 Lakhs.
For the Fiscal 2024
Net cash flow used in investing activities for the Fiscal 2024 was t 129.55 Lakhs. This
was primarily on account of
capital work in progress of t 121.49 Lakhs, interest income of t 19.74 Lakhs and purchase
of fixed assets of t 83.82
Lakhs. This was partially offset by capital advances given of t 6.63 Lakhs and by Changes
in Other Non-Current
Assets of t 88.87 Lakhs.
For the Fiscal 2023
Net cash flow used in investing activities for the Fiscal 2023 was t 4,407.16 Lakhs.
This was primarily on account of
Changes in Other Non-Current Assets of t 286.39 Lakhs, interest income of t 3.57 Lakhs and
purchase of fixed assets
of t 6,546.76 Lakhs. This was partially offset by capital work in progress of t 2,215.67
Lakhs and capital advances
given of t 213.88 Lakhs.
Cash Flows from Financing Activities
For the period ended September 30, 2025
Net cash flow used in financing activities for the period ended September 30, 2025 was
t 77.80 Lakhs. This was
primarily on account of Interest Expenses of t 277.23 Lakhs and Repayment of Long term
Borrowings of t 191.03
lakhs. This was partially offset by Proceeds from Long-Term Borrowings of t 310.00
Lakhs and Short-Term
Borrowings of t 80.46 Lakhs.
For the Fiscal 2025
Net cash flow used in financing activities for the Fiscal 2025 was t 264.88 Lakhs. This
was primarily on account of
Interest Expenses of t 584.73 Lakhs and Repayment of Long term Borrowings of t 1,076.59
lakhs. This was partially
offset by Proceeds from Long-Term Borrowings of t 1,275 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.
For the Fiscal 2023
Net cash flow generated from financing activities for the Fiscal 2023 was t 5,425.70
Lakhs. This was primarily on
account of Interest Expenses of t 201.10 Lakhs. This was partially offset by Proceeds from
Long-Term Borrowings
of t 4,474.27 Lakhs and Short-Term Borrowings of t 1,151.53 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 190
of this Draft 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 227.
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 190 of this Draft 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 Draft 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 230 and 30 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 30 and 231 of
this Draft 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 30 of this Draft 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 yam. Relevant
industry data, as available, has
been included in the chapter titled "Industry Overview" beginning
on page 120 of this Draft 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 period ended
September 30, 2025 and for the Fiscals
2025, 2024 and 2023 are as follows:
(Rs. in Lakhs)
Particula rs |
Suppliers |
|||||||
For the period ended |
March 31, 2025 |
March 31, 2024 |
March 31, 2023 |
|||||
| Purchase contributi on | % of Purcha se |
Purchase contributi on | % of Purcha se |
Purchase contributi on | % of Purcha se |
Purchase contributi on | % of Purcha se |
|
Top 1 |
2,550.33 | 51.93% | 6,111.49 | 56.89% | 1,869.02 | 17.94% | 431.14 | 16.63% |
Top 3 |
4,025.97 | 81.97% | 7,766.73 | 72.29% | 4,343.23 | 41.70% | 979.60 | 37.78% |
Top 5 |
4,419.84 | 89.99% | 8,756.76 | 81.51% | 5,781.54 | 55.50% | 1,293.48 | 49.89% |
Top 10 |
4,717.13 | 96.04% | 9,782.22 | 91.05% | 7,448.28 | 71.51% | 1,742.53 | 67.21% |
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 Period
ended September 30, 2025
and for the Fiscals 2025, 2024 and 2023 are as follows:
(^ in Lakhs)
Period |
Revenue from Largest Customer (Rs.) | % Contribution of largest customer to revenue from operations |
Revenue from Top 5 Customers (Rs.) |
% Contribution of top 5 to revenue from operations |
Revenue from Top 10 Customers (Rs.) |
% Contribution of top 10 to revenue from operations |
For the |
1,046.33 | 14.95% | 3,757.90 | 53.68% | 5,509.84 | 78.70% |
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% |
Fiscal 2023 |
505.45 | 24.97% | 1,379.93 | 68.17% | 1,850.82 | 91.44% |
Status of any publicly announced new products or business segments
Please refer to the chapter titled "Our Business" beginning on
page 135 of this Draft 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 120 and 135 respectively of this Draft Red Herring
Prospectus.
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