💰 Financial Performance

Revenue Growth by Segment

Total Operating Income (TOI) grew 13% YoY to INR 378.16 Cr in FY25 from INR 334.35 Cr in FY24. The Terry Towel and Made-ups segment remains the primary driver, contributing over 75% of TOI. The Artificial Leather segment saw marginal growth of 0.9%, reaching INR 45.02 Cr compared to INR 44.61 Cr in FY24.

Geographic Revenue Split

Exports accounted for 76% of TOI in FY24, an increase from 69% in FY23. The revenue is heavily concentrated in the USA market, with secondary contributions from Chile and South America.

Profitability Margins

Operating margins improved to 7.43% in FY25 from 6.48% in FY24, driven by better sales realizations and a recovery in export demand. However, margins remain significantly lower than the 12.04% achieved in FY22. ROCE stood at 6.18% in FY25, up slightly from 5.56% in FY24.

EBITDA Margin

PBILDT margin recovered to 7.43% in FY25. Core profitability is sensitive to raw material price corrections; a decline in PBILDT margin below 7% on a sustained basis is identified as a negative rating sensitivity factor.

Capital Expenditure

The company has planned a total capex of INR 8 Cr. This includes INR 5.65 Cr for acquiring a building to increase storage space for raw materials and finished goods, and INR 2.34 Cr for importing printing machinery to optimize production. INR 6 Cr is funded via term loans.

Credit Rating & Borrowing

The company maintains a CARE BBB-; Stable (Long Term) and CARE A3 (Short Term) rating as of July 2025. Borrowing costs are impacted by high working capital utilization, which averaged 74.87% to 80% over the 12 months ending April 2025.

⚙️ Operational Drivers

Raw Materials

Raw cotton is the primary raw material, representing a significant portion of the cost structure. Other materials include polymers for the agency division and chemicals for artificial leather production.

Import Sources

Cotton is primarily sourced domestically within India, subject to monsoon conditions. Printing machinery is imported from international markets to enhance manufacturing efficiency.

Key Suppliers

The company acts as a consignment stockist for GAIL (India) Limited for its polymer distribution business in the Rajasthan region.

Capacity Expansion

Current expansion focuses on storage and processing rather than raw volume; the INR 8 Cr investment targets a new storage building and advanced printing machinery to improve throughput and product quality.

Raw Material Costs

Cotton prices are highly volatile, influenced by yield, monsoon vagaries, and government export quotas. Profitability is directly linked to these fluctuations, though the company employs forward booking and inventory management to mitigate risks.

Manufacturing Efficiency

Efficiency is being targeted through the import of specialized printing machinery (INR 2.34 Cr) and comprehensive staff training aimed at reducing waste and increasing productivity.

Logistics & Distribution

Distribution is characterized by a 60-100 day credit period offered to customers. The company faces geographical concentration, with the majority of logistics geared toward US-based retail chains.

📈 Strategic Growth

Expected Growth Rate

13%

Growth Strategy

Growth is targeted through the ramp-up of the artificial leather business, expansion into new international markets beyond the USA and Chile, and enhancing production capabilities via an INR 8 Cr capex plan for printing and storage.

Products & Services

Terry towels, made-ups (linens), artificial leather (technical textiles), and polymer distribution services.

Brand Portfolio

The company operates primarily as a manufacturer for global brands and retailers; specific owned brand names were not disclosed, but they serve major labels like Walmart Inc. and Jay Franco & Sons.

New Products/Services

The company is focusing on the 'Technical Textiles' segment through the manufacturing of artificial leather, aiming to diversify revenue away from traditional terry towels.

Market Expansion

Targeting expansion into new international regions to reduce the current 76% dependency on the US and South American markets.

Market Share & Ranking

Not disclosed in available documents, but identified as an established player with over two decades of operations in the terry towel segment.

Strategic Alliances

Maintains a long-term agency agreement with GAIL (India) Limited for polymer marketing and distribution in Rajasthan.

🌍 External Factors

Industry Trends

The textile industry is currently benefiting from increasing urbanization and fashion trends, but remains cyclical. The industry is shifting toward technical textiles, where the company is positioning itself via its artificial leather division.

Competitive Landscape

Faces intense competition from both domestic Indian textile firms and international manufacturers in low-cost countries, putting pressure on operating margins.

Competitive Moat

The moat is built on the 50+ years of experience of promoter Mr. G.S. Kandoi and established relationships with global retail giants. This ensures repeat business but is challenged by high customer concentration.

Macro Economic Sensitivity

Highly sensitive to global economic cycles, particularly US consumer spending, and Indian monsoon patterns which dictate cotton availability and pricing.

Consumer Behavior

Demand is driven by changing lifestyles and growing fashion trends in the home textile segment, particularly in developed economies.

Geopolitical Risks

Vulnerable to changes in Indian government policies regarding cotton export quotas and political instability in major export markets like the USA.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by textile manufacturing standards, pollution control board norms for dyeing units, and SEBI/BSE listing regulations for corporate governance.

Environmental Compliance

The company monitors environmental and legal compliances through internal and external audits, though specific ESG costs in INR were not disclosed.

Taxation Policy Impact

Subject to Indian corporate tax laws and export incentives; changes in GST or export duty drawbacks would directly impact the 76% export revenue base.

Legal Contingencies

The company has extended significant corporate guarantees: INR 24 Cr to HEX Exports Private Limited and INR 20 Cr to Suave Casa Ideas Private Limited, representing substantial contingent liabilities.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the slow ramp-up of the artificial leather business and the delayed recovery of payments from one major customer, which could impact liquidity.

Geographic Concentration Risk

High geographic risk with the majority of export revenue (76% of total) originating from the USA and Chile.

Third Party Dependencies

Significant dependency on top 10 customers (68% of revenue) and GAIL (India) Limited for the agency division's supply.

Technology Obsolescence Risk

The company is mitigating technology risks by importing modern printing machinery to stay competitive with global textile manufacturing standards.

Credit & Counterparty Risk

Counterparty risk is moderated by dealing with reputed players like Walmart, though an elongated collection period (60-100 days) and specific delayed recoveries remain concerns.