💰 Financial Performance

Revenue Growth by Segment

The company operates in a single segment (Cotton Ginning and Trading). Revenue from operations declined by 40.8% YoY, falling from INR 1,102.58 Cr in FY 2023-24 to INR 652.72 Cr in FY 2024-25. This sharp decline was primarily driven by geopolitical conflicts disrupting export operations and domestic market volatility.

Geographic Revenue Split

Export sales experienced a massive 86.9% decline, dropping from INR 68.53 Cr in FY 2023-24 to just INR 8.94 Cr in FY 2024-25. Exports now contribute only 1.37% of total revenue, down from 6.21% in the previous year, as geopolitical instability restricted trade access in major overseas markets.

Profitability Margins

Profitability margins saw a severe contraction. Net Profit Margin (PAT Margin) plummeted from 1.84% in FY 2023-24 to 0.17% in FY 2024-25. Return on Equity (ROE) dropped by 95.07% YoY, falling from 34.78% to 1.72%, while Return on Capital Employed (ROCE) fell by 90.88% YoY from 43.70% to 3.98% due to margin pressures and cotton price volatility.

EBITDA Margin

EBITDA margin collapsed from 2.66% in FY 2023-24 to 0.44% in FY 2024-25. Absolute EBITDA fell by 90.2% YoY, from INR 29.36 Cr to INR 2.88 Cr, reflecting the company's inability to pass on raw material price fluctuations and the impact of reduced scale on fixed cost absorption.

Capital Expenditure

Property, Plant & Equipment (PPE) stood at INR 3.57 Cr as of March 31, 2025, and slightly decreased to INR 3.32 Cr by September 30, 2025. The company invested INR 0.024 Cr in PPE and intangible assets during H1 FY26, indicating a focus on maintenance rather than aggressive capacity expansion.

Credit Rating & Borrowing

Current financial borrowings surged to INR 21.35 Cr as of September 30, 2025, compared to zero borrowings as of March 31, 2025. Finance costs increased by 25.4% YoY in H1 FY26 to INR 0.70 Cr, reflecting higher utilization of working capital limits to manage increased inventory levels.

⚙️ Operational Drivers

Raw Materials

The primary raw material is Kapas (seed cotton), which is processed into cotton bales and yarns. Purchase of stock-in-trade (including raw cotton) accounted for INR 586.95 Cr in FY 2024-25, representing approximately 90% of total revenue, highlighting the company's high sensitivity to cotton price fluctuations.

Import Sources

Raw materials are primarily sourced domestically from major cotton-producing states in India, particularly Gujarat, to ensure the procurement of premium varieties like Shankar-6.

Capacity Expansion

The company continues to invest in technology upgrades and operational efficiencies at its manufacturing locations in Gujarat, though specific MTPA (Metric Tonnes Per Annum) capacity figures for its ginning and pressing units were not disclosed.

Raw Material Costs

Raw material costs are highly volatile; the company reported a 'Purchase of Stock-In-Trade' of INR 225.29 Cr for H1 FY26, which is 102.4% of its revenue from operations for the same period, indicating extreme margin pressure and potential inventory valuation impacts.

Manufacturing Efficiency

Manufacturing efficiency is being addressed through technology upgrades. However, the drop in the net capital turnover ratio from 20.60 to 11.56 (a 43.87% decline) indicates reduced operational efficiency and slower inventory rotation.

Logistics & Distribution

The company expects government infrastructure investments to improve logistics efficiency, though specific distribution costs as a percentage of revenue were not provided.

📈 Strategic Growth

Growth Strategy

Growth is targeted through technology upgrades, operational efficiencies, and a focus on premium cotton varieties like Shankar-6. The company is also diversifying its export markets to mitigate risks and leveraging favorable government policies in the textile industry to strengthen its domestic presence.

Products & Services

The company sells cotton bales, cotton yarns, and agri-commodities including cottonseed and sesame seeds.

Brand Portfolio

Axita Cotton.

New Products/Services

The company is focusing on enhancing its value-added product offerings in the cotton and textile industry to ensure sustainable growth, though specific new product revenue contributions were not disclosed.

Market Expansion

The company is diversifying its export markets to mitigate risks from global disruptions and is strengthening its domestic market presence in India.

Strategic Alliances

The company acquired a 55% equity stake in KPR Sports and Media Private Limited on June 17, 2024, but subsequently disinvested from this subsidiary on June 27, 2025.

🌍 External Factors

Industry Trends

The cotton and textile industry is benefiting from growing domestic consumption in India and favorable government policies. The industry is shifting toward technology-driven operational efficiencies and high-quality premium cotton varieties.

Competitive Landscape

The company operates in a competitive market for cotton bales and yarns, facing pressures from both domestic ginners and international market dynamics.

Competitive Moat

The company's moat is built on its ability to procure premium cotton varieties like Shankar-6 and its established presence in the ginning and pressing segment. However, this moat is currently challenged by extreme price volatility and geopolitical barriers.

Macro Economic Sensitivity

The company is highly sensitive to global geopolitical stability and domestic agricultural output. GDP growth and rural development policies are expected to boost cotton cultivation and logistics efficiency.

Consumer Behavior

Growing consumption within India is a key driver for the company's domestic market positioning.

Geopolitical Risks

Geopolitical conflicts in key international markets significantly disrupted export operations, causing export revenue to fall from INR 68.53 Cr to INR 8.94 Cr in FY 2024-25.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to agricultural reforms and government policies regarding cotton cultivation and textile exports.

Taxation Policy Impact

The company's current income tax expense for FY 2024-25 was INR 41.53 Lakhs, a significant decrease from INR 698.48 Lakhs in the previous year due to lower taxable profits.

⚠️ Risk Analysis

Key Uncertainties

Key risks include cotton price volatility (which caused a 95% drop in ROE) and geopolitical instability (which caused an 87% drop in exports).

Geographic Concentration Risk

The company has a high concentration in the Indian domestic market following the collapse of its export business, which now accounts for less than 2% of revenue.

Third Party Dependencies

High dependency on cotton farmers and suppliers for raw Kapas; trade payables decreased as the company moved toward faster settlements to secure supply.

Technology Obsolescence Risk

The company is mitigating technology risks by continuously investing in technology upgrades to maintain high-quality production standards.

Credit & Counterparty Risk

Trade receivables stood at INR 20.55 Cr as of September 30, 2025. The net capital turnover ratio drop suggests slower receivable collections or inventory rotation, increasing credit risk exposure.