| Extensive experience of the promoters
The promoters’ experience of over three decades in the felt and non-woven fabric industry, their strong understanding of market dynamics, and established relationships with customers and suppliers continue to support the group’s business risk profile. The group caters to reputed customers and benefits from a diversified end-user base across segments such as automotive, consumer goods, home furnishings and energy-saving industries. This diversification provides resilience against slowdown in any single industry and supports stable revenue growth. Acuité believes that, going forward, diversification into new products and the addition of new customers are expected to further strengthen the business risk profile over the near to medium term.
Scale of Operations & Profitability
The group’s revenue from operations recorded marginal growth of 1.4% to Rs. 218.52 crore in FY2025 from Rs. 215.51 crore in FY2024. While sales volumes improved during FY2025, the overall topline growth remained modest owing to moderation in price realisations during the year. Operating profitability witnessed a moderate improvement, with operating margins increasing by 49 basis points to 11.93% in FY2025 from 11.44% in the previous year. The improvement in margins was primarily on account of the commissioning of a 650 kW captive solar power plant in September 2024, which led to partial savings in power costs. Net margin also improved marginally, increasing to 3.66% in FY2025 from 3.42% in FY2024. Further, the group achieved net revenues of Rs. 204.44 crore during the nine months ended December 2025. Acuité believes that the group’s scale of operations and profitability are expected to improve over the near to medium term, supported by higher sales volumes and gradual stabilisation in price realisations.
Comfortable Financial Risk Profile
The group’s financial risk profile remains comfortable, supported by a healthy net worth, low gearing, and healthy debt protection metrics. The tangible net worth improved to Rs. 96.35 crore as on March 31, 2025, from Rs. 86.89 crore as on March 31, 2024. The increase in net worth is primarily attributable to the accretion of net profits to reserves and an equity infusion, including share capital and securities premium, aggregating to Rs. 1.40 crore in P A R K Industries Private Limited during the year. The capital structure improved further, with gearing and total outside liabilities to tangible net worth (TOL/TNW) standing at a comfortable 0.69 times and 1.25 times, respectively, as on March 31, 2025. Debt protection metrics also remained healthy, with interest service coverage ratio (ISCR) and debt service coverage ratio (DSCR) recorded at 4.78 times and 1.32 times, respectively, for FY2025.
Acuité notes that the group is planning to undertake a debt-funded capital expenditure in Park Industries for setting up a new manufacturing line for geosynthetics. These polymer-based materials are used in civil engineering and geotechnical applications such as road construction, landfills and erosion control. The total project cost is estimated at approximately Rs. 70 crore, with commercial operations expected to commence by April 2027. The group is in discussions with lenders for sanction of a term loan, proposed to be funded in an approximate debt-equity ratio of 80:20, with the equity portion to be met through internal accruals and/or unsecured loans.
Acuité believes that, notwithstanding the currently comfortable financial risk profile, the planned debt-funded capex is expected to moderate the group’s financial risk profile over the near to medium term.
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| Intensive Working Capital Operations
The working capital operations of the group are intensive, as reflected in elevated gross current assets (GCA) days, which increased to 153 days in FY2025 from 137 days in FY2024. The intensiveness is primarily driven by higher receivable and inventory holding levels. Debtor realisation days stood at 77 days, while inventory holding remained elevated at 47 days during FY2025. The group largely caters to mid-to-large manufacturers and institutional customers, including OEMs and bulk buyers. These customer segments typically operate on longer credit cycles due to structured procurement processes, multi-stage manufacturing requirements and their own inventory management practices. Consequently, sales to such customers are governed by pre-agreed credit terms that are longer than those prevalent in retail-oriented businesses. While this results in moderately elevated receivable days, the ageing profile remains stable and manageable, with no significant collection concerns. Acuite believes that the group’s working capital operations are expected to remain intensive over the near to medium term, owing to the inherent nature of the business and the customer profile.
Susceptibility of profitability to volatility in raw material prices
The prices of key raw materials such as fibre, polyester, zinc and other related inputs remain volatile. The group primarily supplies to original equipment manufacturers (OEMs) and Tier-I suppliers in the automotive segment, which constrains its ability to immediately pass on increases in input costs. As a result, the operating margins of the group have witnessed fluctuations over the past three years. Further, polyester-based raw materials are crude-oil-linked petrochemical derivatives and are therefore exposed to volatility in crude oil prices, import-parity pricing mechanisms and currency movements. Acuité notes that diversification of the client base through the addition of new customers is expected to support an improvement in profitability. However, given that raw material costs account for around 60–70% of operating income and the benefits from new client onboarding are yet to fully materialise, improvement in operating margins continues to remain a key sensitivity factor.
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