Press Release May 07, 2026 DHRUV COTTON PROCESSING 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	67.77	ACUITE BBB | Stable | Assigned	-	RBI
Bank Loan Ratings	0.00	4.23	-	ACUITE A3+ | Assigned	RBI
Total Outstanding	0.00	72.00	-	-	-
Total Withdrawn	0.00	0.00	-	-	-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 its long-term rating of ‘ACUITÉ BBB' (read as ACUITE Triple B) and short-term rating of ‘ACUITÉ A3+’ (read as ACUITE A Three plus) on the Rs. 72.00 Cr. bank facilities of Dhruv Cotton Processing Private Limited (DCPPL). The outlook is ‘Stable’. Rationale for Rating The rating assigned reflects the management’s extensive experience in the industry and the company’s established operational track record. The rating also factors in the moderate financial risk profile and efficient working capital management. However, these strengths are partially offset by stable albeit modest operating scale, significant exposure to group companies and susceptibility of profitability to volatility in raw material prices in a highly competitive and fragmented industry.

About the Company

Dhruv Cotton Processing Private Limited (DCPPL), incorporated in 2007 and based in Rajkot, Gujarat, specializing in the manufacturing of cotton ginning, pressing, seed crushing, and cotton hosiery yarn manufacturing. Dhruv Cotton Processing Private Limited offers a range of textile products, from raw materials to processed yarns. The current directors of the company are Mr. Bharat Khodabhai Boghara , Mr. Brijeshkumar Ratilal Patel, Mr. Tarakbhai Laxmanbhai Patel, Mr. Mukeshbhai Nagjibhai Patel, Mr. Parulbhai Laxmanbhai Patel, Mr. Rajesh Odhavjibhai Boghara, Mr. Natwarlal Ratilal Navadiya, Mr. Girish Vallabhdas Bhansali, and Mr. Bhupatbhai Bhayani.

Unsupported Rating

­Not Applicable

Analytical Approach

­Acuite has considered the standalone business and financial risk profile of Dhruv Cotton Processing Private Limited (DCPPL) to arrive at this rating.

Key Rating Drivers

Strengths

­Established operational track record and extensive promoter experience DCPPL has been operating for more than a decade, reflecting an established operational track record. The company is promoted and managed by Mr. Bharatbhai Khodabhai Boghara, supported by a team of experienced personnel. The promoter has over 15 years of experience in the cotton industry. This experience has enabled the company to build and maintain relationships with key suppliers and customers. The company is engaged in the manufacturing of cotton yarn with integrated operations comprising cotton ginning, pressing, and spinning. DCPPL was initially established as a cotton ginning and pressing unit at Atkot for the manufacture of cotton bales and subsequently expanded into cotton spinning as part of its forward integration strategy. Acuité believes that the long track record and rich experience of the directors’ augur well for the company's relationships with key suppliers and customers. Moderate Financial Risk Profile DCPPL’s financial risk profile is moderate, marked by low gearing, moderate net worth and debt protection metrics. Acuité has considered Rs. 15.74 Cr. of unsecured loans from promoters as quasi-equity, in accordance with the conditions stipulated in the sanction letter. The net worth of the company stood at Rs. 67.44 Cr. in FY25 (FY24: Rs. 56.47 Cr.), primarily driven by retention of profits. The gearing (debt-to-equity) is low at 0.29 times as on March 31, 2025 (March 31, 2024: 0.54 times). Debt protection indicators are moderate, with the interest coverage ratio (ICR) at 4.08 times in FY25 (FY24: 4.07 times) and the debt service coverage ratio (DSCR) improving to 1.24 times in FY25 (FY24: 0.92 times). The net cash accruals to total debt (NCA/TD) ratio stood at 0.42 times in FY25 (FY24: 0.31 times). The Debt-to-EBITDA ratio is moderate at 1.59 times in FY25 (FY24: 2.14 times). Acuité believes that the company’s financial risk profile is expected to remain moderate over the near to medium term. Efficient Working Capital Management The working capital operations of the company are efficient, marked by Gross Current Asset (GCA) days of 76 days in FY25, compared to 55 days in FY24. The increase in GCA days was primarily driven by increase in loans and advances to associate companies and an increase in debtor days. The debtor collection period stood at 14 days in FY25 (FY24: 3 days). The average collection period is around 10–15 days. The inventory holding period slightly increased to 37 days in FY25 (FY24: 34 days). Additionally, the creditor payment period stood at 21 days in FY25 (FY24: 4 days). The average credit period of the company is around 15–25 days. Further, the average utilisation of consolidated fund-based limits remained moderate at around 43% over the 12 months ended February 2026. Acuité expects working capital operations to remain stable over the medium term, supported by an efficient collection mechanism and controlled inventory levels.

Weaknesses

­Stable operating performance, albeit modest scale of operations DCPPL derives its revenues primarily from the sale of cotton yarn and cottonseed. In FY25, the company reported revenue of Rs. 192.63 Cr., compared with Rs. 224.63 Cr. in FY24. The decline in revenue during FY25 was mainly on account of lower price realisations. However, production and sales volumes improved during FY25 compared to FY24, indicating that the decline in revenue was price-driven rather than volume-led. The company has an installed capacity of 6,120 MT, with utilisation levels close to full capacity. Profitability remained broadly stable. The EBITDA margin stood at 6.37% in FY25 (FY24: 6.47 per cent), with the marginal decline attributable to lower realisations. PAT increased to Rs. 3.84 Cr. in FY25 (FY24: Rs. 2.00 Cr.), primarily due to lower finance cost and lower depreciation following revision in estimated useful lives of certain fixed assets. Consequently, PAT margin improved to 2.00% in FY25 (FY24: 0.89 per cent). In FY26 (Est.), the company reported revenue of ~Rs. 242 Cr. (up ~25% over FY25), supported by the commencement of direct export sales from December 2025. EBITDA is estimated at ~Rs. 15.60 Cr., translating into an EBITDA margin of ~6.45%, supported by operating efficiencies. Acuité believes that the company’s operating performance is expected to remain at similar levels over the near to medium term, as no major capacity expansion is envisaged during this period.   Significant exposure to group companies DCPPL has an aggregate exposure of Rs. 31.13 Cr. to group entities through investments and loans/advances as on March 31, 2025. which accounts for around 46 per cent of its net worth. Key exposures are to Raghav Cotspin Private Limited and Tribhuvan Spintex Private Limited, which operate in a similar line of business. Acuité believes that any incremental exposure to group companies that absorbs net cash accruals could exert pressure on liquidity and will continue to be a rating sensitivity. Susceptibility of profitability to volatility in raw material prices in a highly competitive and fragmented industry Cotton being a seasonal kharif crop makes ginning operations dependent on monsoon conditions, leading to volatility in raw cotton availability and prices. This price fluctuation affects operating margins across the value chain. with DCPPL’s margins remaining in the 6–7 per cent range over FY2023–25. The industry is highly competitive with low entry barriers and a large presence of organised and unorganised players, resulting in thin profitability due to the low value-additive nature of operations. Acuite believes that the group’s profitability will remain vulnerable to raw cotton price volatility and intense industry competition, given the seasonal nature of the crop and limited value addition in ginning and spinning.

Rating Sensitivities

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

Consistent improvement in scale of operation with revenue improving above Rs. 300 Cr Consistent Improvement in operating margins leading to improvement in overall liquidity

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

Significant deterioration in revenues and profitability Increase in debt levels impacting the financial risk profile with DSCR below 1.20 times Significant increase in exposure to group companies Elongation in working capital cycle

Liquidity Position

Adequate

­The Company’s liquidity position is adequate, supported by net cash accruals of Rs. 8.43 Cr. in FY2025 against maturing debt obligations of Rs. 6.23 Cr., during the year. Further, the company is expected to generate cash accruals in the range of Rs. 10.44–10.72 Cr., against repayment obligations of Rs. 4.72 – 4.33 Cr. over the medium term. Reliance on fund-based working capital limits is moderate, with an average utilisation of 42.93% over the 12 months ending February 2026. The cash and bank balance stood at Rs. 0.01 Cr. and the current ratio stood at 1.11 times as of March 31, 2025. Acuité believes that the company’s liquidity position will remain adequate over the medium term on account of expected steady cash accruals.

Outlook: Stable

­

Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 25 (Actual)	FY 24 (Actual)
Operating Income	Rs. Cr.	192.63	224.63
PAT	Rs. Cr.	3.84	2.00
PAT Margin	(%)	2.00	0.89
Total Debt/Tangible Net Worth	Times	0.29	0.54
PBDIT/Interest	Times	4.08	4.07

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

­CRISIL, vide its press release dated February 10th, 2026 had denoted the rating of Dhruv Cotton Processing Private Limited as Crisil BB+/ Stable/ A4+ 'Downgraded, and Issuer not cooperating ’.

Any other information

­None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.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 Amay Gupta Analyst - Rating Operations	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in

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