💰 Financial Performance

Revenue Growth by Segment

The company operates in a single segment, 'Spinning of Cotton Yarn', which generated INR 48.53 Cr in H1 FY26, representing a decline of 19.4% compared to INR 60.21 Cr in H1 FY25.

Geographic Revenue Split

100% of revenue is derived from domestic operations in India, with the sole manufacturing facility located in Haripar, Jamnagar, Gujarat.

Profitability Margins

Net Profit Margin worsened from -1.6% in H1 FY25 to -6.6% in H1 FY26. The company reported a net loss of INR 3.20 Cr for H1 FY26, a 229.7% increase in loss compared to INR 0.97 Cr in H1 FY25.

EBITDA Margin

EBITDA margin (PBILDT) was negative 2.4% (INR -2.08 Cr) for 9MFY25. Core profitability remains negative as total expenses of INR 52.83 Cr exceeded total income of INR 49.50 Cr in H1 FY26.

Capital Expenditure

Historical capital expenditure for H1 FY26 was INR 1.02 Cr for Property, Plant & Equipment. No future planned capex was disclosed.

Credit Rating & Borrowing

The company is rated CARE D (Default) as of April 2025. Total bank facilities are INR 18.27 Cr, including INR 16.92 Cr long-term and INR 1.35 Cr short-term. Borrowing costs are high due to default status and poor liquidity.

⚙️ Operational Drivers

Raw Materials

Cotton (86.3% of total cost).

Import Sources

Gujarat, India.

Capacity Expansion

Current installed capacity is 24,480 spindles (6,000 MTPA). No expansion plans were disclosed.

Raw Material Costs

Raw material costs were INR 41.89 Cr in H1 FY26, representing 86.3% of revenue, compared to INR 51.02 Cr in H1 FY25.

📈 Strategic Growth

Growth Strategy

The company raised INR 48.75 Cr via a Rights Issue in October 2024, allocating INR 33 Cr for working capital and INR 3.45 Cr for debt repayment to stabilize operations and reduce finance costs, which fell 66% YoY in H1 FY26.

Products & Services

Carded, combed, and compact cotton yarn (16s to 44s counts).

🌍 External Factors

Industry Trends

The cotton textile industry is facing demand headwinds. ASL is struggling with a 19.4% revenue decline and a 'Default' rating, positioning it as a high-risk entity compared to solvent peers.

Competitive Landscape

Fragmented industry with significant competition from larger, more liquid spinning mills.

Competitive Moat

No durable moat. The company lacks internal controls, as evidenced by the auditor's inability to verify fixed assets (INR 37.79 Cr) and inventories (INR 40.33 Cr).

Macro Economic Sensitivity

Highly sensitive to cotton price cycles and domestic textile demand.

⚖️ Regulatory & Governance

Industry Regulations

Compliance with pollution control norms and textile manufacturing standards is required for spinning operations.

Taxation Policy Impact

Standard corporate tax rates apply; the company reported a deferred tax asset of INR 0.81 Cr as of September 2025.

⚠️ Risk Analysis

Key Uncertainties

Default status (CARE D), poor liquidity, and auditor's disclaimer on asset verification.

Geographic Concentration Risk

100% of manufacturing and revenue concentrated in Gujarat.

Third Party Dependencies

High dependency on cotton suppliers for 86% of input costs.

Technology Obsolescence Risk

Risk of technological obsolescence for 24,480 spindles due to lack of a fixed asset register and maintenance tracking.

Credit & Counterparty Risk

Trade receivables of INR 5.96 Cr; quality is uncertain given the auditor's disclaimer on internal controls.