| Established track record of operations supported by an experienced management
VG entities were established in 1983 by Mr. Bharat Patel and Mr. Vishnu Patel. Both the partners have more than three decades of experience in the industry and continue to actively participate in the business; Mr. Nirav Patel is currently leading the group since 2008. Further, the operations of the group are based out of Mehsana, Gujarat, which is one of the major cotton producer states in the country. Acuité believes that VG will continue to benefit from its proximity to its supplier base, promoters experience, and its established presence in the industry while improving the business risk profile in the near to medium term.
Stable Operating Performance and Margin Profile
Operating income remained stable at Rs 591.15 crore in FY2025, broadly in line with Rs 591.96 crore in FY2024. The stagnancy in sales was primarily attributable to lower sales volumes of cotton bales, owing to reduced open-market cotton availability following higher market procurement by the Cotton Corporation of India under the Minimum Support Price (MSP) mechanism. Subsequently, the group reported an operating income of Rs 922 crore up to March 2026, reflecting a substantial improvement in scale for undertaking more trading sales. Profitability indicators remained broadly steady during the period, with EBITDA margin at 3.72% in FY2025 compared with 3.82% in FY2024, while PAT margin stood at 0.63% against 0.71% over the same period. Management expects operating performance to remain broadly at these levels in the near term. Acuité believes that the scale of operations is likely to improve over the medium term, although margins in FY2026 may witness some moderation due to volatility in cotton prices and competitive pricing pressures.
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| Moderately Intensive Working Capital Cycle
The group continues to operate with a moderately intensive working capital cycle, although there has been a visible improvement. Gross Current Assets (GCA) days declined to 94 days as on March 31, 2025, from 102 days as on March 31, 2024. Despite this improvement, GCA levels remain elevated, primarily due to higher inventory holding and the presence of other current assets, which largely comprise advances to suppliers and security deposits aggregating Rs 23 crore. Inventory days stood to 53 days in FY2025 from 56 days in FY2024; however, inventory levels remain influenced by the seasonal nature of raw cotton procurement, with stocking typically peaking around the harvest period. On a normalised basis, inventory holding is materially lower and generally remains in the range of 15–20 days. At the same time, the group has demonstrated improved receivables management, with debtor days reducing to 20 days in FY2025 from 34 days in FY2024. Creditor days increased moderately to 17 days in FY25 from 13 days in FY24.Going forward, Acuité expects the working capital cycle to remain at similar levels over the medium term, supported by efficient collection mechanisms, while continuing to be influenced by the inherently seasonal inventory requirements of the business.
Moderate Financial Risk Profile
The group’s financial risk profile is moderate, characterised by stable leverage levels and healthy debt-protection metrics. As on March 31, 2025, the group reported a net worth of Rs 57.85 crore, lower than Rs 68.17 crore as on March 31, 2024, primarily on account of structural changes following the conversion of Vivekanand Cotspin from an LLP to a company, including reclassification of partners’ current account balances as unsecured loans. Gearing remained largely at 2.15 times in FY2025 compared with 2.18 times in FY2024, reflecting a broadly unchanged leverage position. Debt-protection indicators remain at healthy levels, with an Interest Coverage Ratio of 2.09 times and a Debt Service Coverage Ratio of 1.27 times in FY2025, supporting the group’s ability to meet its debt servicing obligations. Acuité believes that the group’s financial risk profile will improve with absence of any major debt-funded capital expenditure plans.
High competition, volatility in raw material prices, and risk of capital withdrawal
VG operates in the textile industry, which is highly competitive and marked by the presence of a large number of unorganized players. The main raw material used is cotton, prices of which are highly fluctuating and depend upon the monsoon. Thus, the group is exposed to fluctuations in the raw material prices of cotton. Further, prices of cotton are regulated by the government that assigns a Minimum Support Price (MSP) and any adverse changes in the government policies with respect to MSP could have an impact on margins. Further, Vivekanand Group is exposed to the risk of capital withdrawal considering its partnership constitution. Any significant withdrawal from the partner’s capital will have a negative bearing on the financial risk profile of the group.
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