To determine this rating, Acuité has consolidated the business and financial risk profiles of VPTPL and VPTYIPL, collectively referred to as the ‘V.P Tex Group’. This consolidation is based on common management, a similar line of business in the textile processing industry along with operational and financial linkages between the entities.

Promoters’ extensive industry experience and continued focus on expansions 
The promoters of V.P Tex Group have an established presence in the textile industry spanning for nearly two decades, supported by a competent management team and qualified second line personnel. This experience has enabled the group to build strong relationships with suppliers and customers, ensuring a steady supply of raw materials and repeat business. The group’s revenue is expected to improve over the medium term, driven by capacity enhancement from 246 air-jet looms to 274 looms in FY2025, with further expansion to 353 air-jet looms in FY2026. Additionally, the group is increasing its solar power generation capacity from 9 MW to 12 MW during FY2026, which is expected to support operational efficiency.

Acuité believes the group will continue to benefit from its experienced management, established stakeholder relationships, and strong local presence. 

Improving revenues with stable profitability 
The group’s revenue improved to Rs. 530.12 crore in FY25 from Rs. 404.50 crore in FY24, reflecting a year-on-year growth of around 31 per cent. Of the total revenue at the group level, V.P Tex Private Limited contributed approximately 80 per cent, amounting to Rs. 425 crore in FY25. This growth was driven by a steady flow of orders at VPTPL and a continuous increase in air-jet loom capacity to meet demand. During 8MFY26, the group reported consolidated revenue of Rs. 387.51 crore, with VPTPL contributing Rs. 309.67 crore and VPTYIPL accounting for Rs. 77.84 crore. Revenue is expected to improve further in the near to medium term as the air-jet loom capex incurred during FY26 becomes fully operational, enhancing overall production capacity. The group estimates closing FY26 with a topline in the range of Rs. 570–575 crore. At the consolidated level, operating profitability margins moderated to 10.77 per cent in FY25 from 11.38 per cent in FY24, primarily due to a marginal increase in raw material costs. However, in absolute terms, operating profit rose by ~24 per cent to Rs. 57 crore in FY25 compared to Rs. 46 crore in FY24. Net profit margins improved slightly to 2.41 per cent in FY25 from 2.27 per cent in FY24.

Acuité expects the group’s operating performance and profitability margins to strengthen in the near to medium term. 

Moderate financial risk profile 
The group’s financial risk profile remains moderate, characterized by a balanced capital structure, average gearing, and healthy debt protection indicators. Net worth improved to Rs. 73.85 crore as on March 31, 2025, compared to Rs. 61.23 crore as on March 31, 2024, driven by profit accretion to reserves. Gearing improved marginally however remains average at 2.10 times as on March 31, 2025, against 2.32 times in the previous year. The gearing level remains moderate due to higher overall debt, primarily incurred for capital expenditure. Debt coverage indicators, though slightly moderated, continue to be healthy, as reflected by an Interest Coverage Ratio (ICR) of 4.42 times and a Debt Service Coverage Ratio (DSCR) of 1.64 times as on March 31, 2025, compared to 4.67 times and 2.03 times, respectively, in FY24.

Acuité expects the group’s financial risk profile to remain moderate, supported by improved operational scale despite debt-funded capex in the medium term.

Moderately Intensive working capital operations 
The V.P Tex Group operates with a moderately intensive working capital cycle, reflected by average gross current asset (GCA) days of around 128 days during FY23–FY25. GCA days improved to 128 days in FY25 from 138 days in FY24, primarily due to lower receivables and inventory levels relative to the operating income recorded in FY25. Inventory days stood at 21 days in FY25 compared to 23 days in FY24, while debtor days reduced to 92 days from 99 days during the same period. The group allows an average credit period of approximately 95 days to customers. Creditor days stood at 58 days in FY25 against 65 days in FY24. The group’s average bank limit utilization of fund-based working capital limits was around ~68.76 per cent over the six months ending September 2025.

Acuité believes that the group’s ability to further improve its working capital cycle over the medium term will remain a key rating sensitivity. 

Exposure to supplier concentration risk and intense competition 
The group remains exposed to significant supplier concentration risk, as over 75 per cent of its raw material requirement (viscose yarn) is sourced from Mothi Spinners Private Limited (rated ACUITE A-/Stable/A2+). However, this risk is partially mitigated by the group’s longstanding relationship with the supplier. Additionally, the textile industry is highly competitive, with a large presence of unorganized players, which limits pricing flexibility and bargaining power with both customers and suppliers. The group’s operating profitability is further vulnerable to volatility in key raw material prices, including polyester and viscose, given its relatively limited pricing flexibility in a fragmented market.