Established track record of operations along with experienced promotors
SCPL has an operating track record of almost a decade in the manufacturing of cotton yarns. The company’s presence in the cotton-rich Jalgaon district ensures adequate raw material availability, thereby preventing operational downtime due to supply constraints. Further, the company’s promoters have more than two decades of experience in the cotton manufacturing business, leading to establishment of long-standing relationships with their customers and suppliers.

Sustained growth in the operating performance driven by improving capacity utilisations
The operating revenue of the company has reflected sustained growth that stood at Rs. 204.30 Cr. in FY26 (Prov.) as compared to Rs. 183.30 Cr. in FY25 owing to higher volumes sold in FY26 driven by better capacity utilization, which averaged at ~98 percent in FY26 compared with around 87 percent in FY25. Further, the operating margin of the company stood declined at 11.65 percent in FY26 (Prov.) (13.79 percent in FY25) owing to increase in input costs and other manufacturing expenses. Moreover, the company has clocked a revenue of Rs. 74.57 Cr. in 4MFY27 (Rs. 68.92 Cr. in 4MFY26). Additionally, the company has received textile subsidy amounting to Rs. 5.75 Cr. in 4MFY27 with another industrial subsidy of ~Rs. 4.27 Cr. expected to be received in FY27 .
Going forward, the continued momentum in the operating performance of the company shall remain monitorable.

Efficient working capital operations
The working capital operations of the company continue to remain efficient marked by gross current assets (GCA) of 58 days as on March 31, 2026 (Prov.) (59 days in FY25). The GCA days are primarily driven by the inventory holdings, with inventory days at 63 days in FY26 (Prov.) (60 days in FY25), owing to company’s practice of maintaining an average inventory of 60-75 days. Moreover, payments to suppliers and collections from customers are generally made on an immediate basis. Therefore, the debtor days stood low at 1 day in FY26 (Prov.) (5 days in FY25) and creditor days stood at nil in FY26 (Prov.) (2 days in FY25). Acuité believes that working capital operations of the company shall remain efficient over the medium term on account healthy relations with its suppliers and customers.

Moderate financial risk profile
The financial risk profile of the company is moderate marked by growing net worth of Rs. 64.78 Cr. as on March 31, 2026 (Prov.) as compared to Rs. 53.96 Cr. as on March 31, 2025, improved on account of accretion of profits to reserves. Also, the net worth includes unsecured loan amounting to Rs. 4.50 Cr. as of March 31, 2026 (Prov.) which has been treated as quasi equity on account of lender’s credit covenant and receipt of management’s undertaking to the banker. Further, the total debt of the company stood at Rs. 74.22 Cr. as of March 31, 2026 (Prov.), reduced from Rs. 82.21 Cr. as of March 31, 2025, owing to debt repayments. Therefore, the gearing (debt/equity) also stood improved at 1.15 times in FY26 (Prov.) as compared to 1.52 times in FY25. Moreover, the debt protection metrics stood comfortable marked by interest coverage ratio of 4.11 times in FY26 (Prov.) (3.21 times in FY25) and debt service coverage ratio of 2.48 times in FY26 (Prov.) (1.35 times in FY25).  However, debt-EBITDA stood high at 2.68 times in FY26 (Prov.).
Going forward, the financial risk profile of the company is expected to improve with steady cash accruals and no major debt funded capex plans.

Susceptibility to fluctuations in raw material prices and highly competitive industry
SCPL’s profitability margins are susceptible to fluctuations in the prices of raw material i.e., cotton bales. Cotton being a seasonal crop, the production of the same is highly dependent upon the monsoon and the climatic conditions. Furthermore, any abrupt change in cotton prices due to supply demand scenario can lead to distortion of prices and affect the profitability across the cotton value chain players. Moreover, the company is operating in a fragmented textile industry and is exposed to intense competition from several players operating in the industry.

• ­­Improvement in scale of operations leading to generation of net cash accruals above Rs. 25 Cr.          
• Improvement in the financial risk profile

• ­Decline in operating performance with revenues falling below Rs. 150 Cr. or decline in profitability margins
• Any significant increase in debt levels thereby impacting the financial risk profile
• Elongation in the working capital cycle