­Acuité has consolidated the business and financial risk profiles of Pashupati Cotspin Limited and its group companies i.e. Pashupati Texspin Export LLP and Pashupati Cotyarn LLP together referred to as the ‘Pashupati Group’. The consolidation is in view of the similar line of business, common ownership and significant intercompany financial and operational linkages.

­Reputed family held business with a vintage track of operations
Pashupati Group, based out of Kadi, Gujarat, is a family-owned business with existence since 1993 started by Mr. Saurin Parikh and his family members through a small cotton ginning company. Since then, the activities in the group has expanded into diverse activities of textile space under the management of Mr. Saurin Parikh who has an overall experience of more than two decades in the textile processing industry and is the President of the Gujarat Textile Association. The other family members, who are directors in the group companies look after the day-to-day operations and allied activities in the group. Over the years, the brand name of “Pashupati” has been established by Mr. Parikh through association the domestic and international markets. Acuité believes that with a vast experience of the management is likely to support the operations over the medium term.

­Susceptibility to volatility in prices of key raw materials
Pashupati Group’s profitable margins are susceptible to fluctuations in the prices of major raw materials such as domestic cotton (MECH, Shankar 6). Cotton being a seasonal crop, the production of the same is highly dependent upon the monsoon. Thus, inadequate rainfall affects the availability of cotton in adverse weather conditions. Furthermore, any abrupt change in cotton prices due to supply-demand scenario and government regulations of changes in Minimum Support Price (MSP) can lead to distortion of prices and affect the profitability of players across the cotton value chain. Acuité believes that the group’s business profile and financial profile can be adversely impacted on account of presence of inherent risk of susceptibility of volatility in raw cotton prices, since the industry is highly commoditized.