Press Release June 02, 2026 Harman Cottex And Seeds Private Limited Rating Assigned

Product	Quantum (Rs. Cr) (SEBI)	Quantum (Rs. Cr) (Other FSR)	Long Term Rating	Short Term Rating	Regulated By
Bank Loan Ratings	0.00	103.55	ACUITE BB+ | Stable | Assigned	-	RBI
Total Outstanding	0.00	103.55	-	-	-
Total Withdrawn	0.00	0.00	-	-	-

Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.

Rating Rationale

­Acuite has assigned long term rating of 'ACUITE BB+' (read as ACUITE double B plus) on the Rs. 103.55 Cr. bank facilities of Harman Cottex And Seeds Private Limited. The outlook is 'Stable'. Rationale for rating The rating takes into cognizance long track record of operations and experienced management in the cotton industry, stable revenues with slight increase in operating profitability in FY 25 with significant improvement in revenues in FY 2026, majorly from the trading activities, moderate working capital cycle and adequate liquidity. However these strengths are partly offset by average financial risk profile and susceptibility of operating performance to input price volatility, agro-climatic risk in a competitive industry.

About the Company

­Incorporated in 2009, Harman Cottex and Seeds Private Limited is based out of Madhya Pradesh. The company is engaged in cotton ginning and pressing activity, cotton seed oil extraction, cotton trading of organic and non- organic cotton, manufacturing and retail sale of garments. The company has ginning capacity of 14,13,400 quintals per annum and oil extraction of 5,00,000 quintals per annum (plants in Madhya Pradesh and Maharashtra). The directors of the company are Mr Rasdeep Singh Chawla, Mr Manjeet Singh Chawla, Mr Rabmeet Singh Chawla and Mr Nitesh Rathore.

Unsupported Rating

­Not Applicable

Analytical Approach

­­Acuite has taken standalone business and financial profile of Harman Cottex and Seeds Private Limited (HCSPL) to arrive at the rating.

Key Rating Drivers

Strengths

­Benefits derived from ­the Experienced promoters The operations of the company are managed by Mr. Rasdeep Singh Chawla, Mr. Manjeet Singh Chawla, Mr Rabmeet Singh Chawla and Mr. Nitesh Rathore. The company has presence in the entire value chain of cotton industry and is expected to continue to benefit from the operational synergies of such integration. The company has presence in India and also exports to China, Indonesia among others. Acuite believes that the benefits derived from promoters in cotton industry and geographical presence will help the company going forward. Stable revenues along with thin profitability The revenues of the company have slightly decreased to Rs. 530.13 Cr. in FY 25 as compared to Rs. 554.39 Cr. in FY 25 on account of decrease in volume sold albeit increase in realisation for products. As of FY 26, the company has achieved revenues of Rs. 723.64 Cr. wherein the major revenue contribution was from trading of ginned cotton. The operating profitability although thin had increased to 2.11 percent in FY 25 as compared to 1.09 percent in FY 24 on account of decrease in manufacturing costs, selling and administrative costs coupled with better realisation from products.  The company has completed capex of installing solar plant of 6.9 MW under the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan scheme of Ministry of new and renewable energy, Government of India to support the agriculture sector through solarisation of existing grid connected to agricultural pumps in July 2025. The project cost was Rs. 25 Cr. of which Rs.11.66 Cr. was disbursed by the bank (sanctioned from Union Bank of India) and balance was unsecured loans. The company is also expecting a one time subsidy from the Government of Rs. 7.25 Cr. in July 2026. The company has an ongoing capex since 2024 of its own spinning unit (Butibori Unit) of 12,640 MTPA of a project cost of Rs. 53.44 Cr. to be funded in a mix of debt of Rs. 31.50 Cr. (sanctioned from HDFC Bank) and unsecured loans. The commercial production is expected to start from July 2026 onwards.  Acuite believes that the scale of operations and operating profitability is expected to increase on the completion of the capex plans. Moderate Working Capital Cycle The working capital cycle of the company is moderate as reflected by Gross Current Assets (GCA) of 88 days for March 31, 2025 as compared to 86 days for March 31, 2024. The debtor period stood at 40 days as on March 31, 2025 as compared to 30 days as on March 31, 2024. The payments are received within 30-40 days. Further, the inventory days stood at 34 days as on March 31, 2025 as compared to 46 days in FY2024. As it is a seasonal product, the year-end procurement is always high for cotton due to cotton season cycle. The company procures raw cotton majorly from farmer mandies, Cotton Corporation of India and known entities like Manjeet Cotton Private Limited among others . The creditors stood at 22 days as on March 31, 2025 as compared to 25 days as on March 31, 2024. It takes around 20-25 days on an average to make payments to the suppliers. Advance payments are made to CCI for procurement of raw materials. Acuité believes that the working capital operations of the company is expected to remain in the similar lines over the medium term

Weaknesses

­Average financial risk profile The financial risk profile of the company is average marked by moderate net worth, low gearing and debt protection metrices. The tangible net worth of the company stood at Rs. 79.27 Cr. as on March 31, 2025 as compared to Rs. 46.09 Cr. as on March 31, 2024 due to accretion to reserves. Acuite has considered unsecured loans of Rs. 27.80 Cr. as quasi equity, as the same is subordinated to bank loans. The gearing of the company stood at 0.84 times as on March 31, 2025 and 2.00 times as on March 31, 2024 because unsecured loans were treated as quasi equity in FY 25. The Total Outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 1.45 times as on March 31, 2025 as compared to 3.03 times as on March 31, 2024. The debt protection metrices of the company marked by Interest Coverage ratio (ICR) of 3.69 times as on March 31, 2025 and debt service coverage ratio (DSCR) stood below unity at 0.98 times for March 31, 2025. The shortfall was met by the infusion of unsecured loans. The net cash accruals to total debt (NCA/TD) stood at 0.10 times as on March 31, 2025 as compared to 0.02 times as on March 31, 2024.  Debt/EBITDA stood high at 5.72 times in 2025 as compared to 14.43 times in 2024 due to large debt funded capex among thin margins. Acuité believes that the financial risk profile is expected to improve over the medium term with improvement in the debt protection metrices expected in the absence of any major additional debts. Susceptibility of operating performance to input price volatility, agro-climatic risk in a competitive industry Cotton prices are regulated by the government under the Minimum Support Price (MSP) mechanism, making profitability sensitive to fluctuations in raw material costs. At the same time, the selling price of output is determined by prevailing demand–supply dynamics, which limits the company’s bargaining power with customers and, in turn, impacts profitability margins. The company operates in a highly fragmented industry with a significant presence of unorganised players, which limits its pricing power. Raw material availability is closely linked to climatic conditions, as seed cotton is exposed to agro-climatic risks and production depends heavily on the monsoon and other weather patterns.

Rating Sensitivities

Potential triggers (individual or collective) for an upward rating action:

­­Sustained increase in the revenues and increase in operating profitability Debt equity to continue to remain below unity Improvement in Debt to EBDITA to below 2 times Sufficient net cash accruals to repay the debt obligations Timely completion of the capex plans

Potential triggers (individual or collective) for a downward rating action:

­­DSCR continues to remain below unity Elongation of working capital cycle

Liquidity Position

Adequate

­The company has adequate liquidity marked by net cash accruals of Rs 6.38 Cr. as on FY2025 as against long term debt repayment of Rs. 6.55 Cr. over the same period. The shortfall was met by unsecured loans infusion in the business. Going forward, the net cash accruals range in Rs. 9.50 Cr- Rs. 20 Cr. with a debt obligation in the range Rs. 6.81 Cr- Rs. 7.14 Cr.  The management has financial flexibility to infuse funds as and when required to support the business. The cash and bank balance stood at Rs. 5.30 Cr. as on March 31, 2025 and Rs. 6.44 Cr. March 31, 2024. Further, the current ratio of the company stood at 1.44 times as on March 31, 2025 as compared to 1.32 times as on March 31, 2024. The average bank utilization limit of the company for last 4 months ended March 2026 is 51 percent. The company has ongoing capex to be funded in a mix of debt and unsecured loans. Acuité believes that the liquidity of the company is expected to improve over the near to medium term on account of steady cash accruals and ow bank limit utilisation.

Outlook: Stable

­

Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 25 (Actual)	FY 24 (Actual)
Operating Income	Rs. Cr.	530.13	554.39
PAT	Rs. Cr.	5.38	1.26
PAT Margin	(%)	1.01	0.23
Total Debt/Tangible Net Worth	Times	0.84	2.00
PBDIT/Interest	Times	3.69	1.76

Status of non-cooperation with previous CRA (if applicable)

BWR, vide its press release dated July 4th, 2025 had denoted the rating of Harman Cottex and Seeds Private Limited as 'BWR C; REAFFIRMED AND ISSUER NOT CO-OPERATING’. IVR, vide its press release dated May 4th, 2026 had denoted the rating of Harman Cottex and Seeds Private Limited as 'IVR BB/Negative; DOWNGRADED AND ISSUER NOT CO-OPERATING’.

Any other information

­None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Trading Entities: https://www.acuite.in/view-rating-criteria-61.htm

Note on complexity levels of the rated instrument

­In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History:Not Applicable

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Contacts

Mohit Jain Chief Analytical Officer - Rating Operations Vedika Lahoti Associate Analyst - Rating Operations	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in

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