Siddhi Cotspin

• Siddhi Cotspin is coming out with an initial public offering (IPO) of 64,68,000 equity shares in a price band of Rs 102-108 per equity share.
• The issue will open on September 19, 2025 and will close on September 23, 2025.
• The shares will be listed on SME Platform of NSE.
• The face value of the share is Rs 10 and is priced 10.20 times of its face value on the lower side and 10.80 times on the higher side.
• Book running lead manager to the issue is Swastika Investmart.
• Compliance Officer for the issue is Asha Bhavabhai Parmar.

Profile of the company

Siddhi Cotspin is primarily engaged in manufacturing and selling of Cotton Yarns. Its manufacturing process adheres to stringent quality standards and is backed by advanced technology and machinery. It has set up a Greenfield project of manufacturing value added and specialty cotton yarn at Unit No.13, Sub Plot No. 18, Survey No. 279 & 280, Village Dholi, Taluka Dholka, District Ahmedabad, Gujarat, with a total spinning capacity of 29,376 spindles. The installed unit is capable of producing cotton yarn including value added yarns. Its current capacity of production is 90,11,850 Kgs for Cotton Yarn and 90,11,850 Kgs (can be used multiple times) for Value added yarn.

The company’s manufacturing facility is equipped with modern and automatic plant and machinery. The level of advancement determines the productivity of machines and labour, which in turn, determines the production and profitability of the company. Its technical team in spinning is well equipped with modern spinning technology and processing techniques by virtue of which it is able to ensure quality yarn. Technology is a crucial aspect of the cotton yarn industry. Its experienced team of technicians and operators ensure that every batch of cotton yarn produced meets the highest quality parameters. It has implemented a comprehensive quality management system that covers every stage of production. It conducts rigorous testing and inspection of raw materials, intermediate products and final yarns to ensure they meet the specified standards. The company is committed to sustainable manufacturing practices and environmental responsibility.

The company’s processes are designed to minimize waste, conserve energy and reduce the environmental impact. It has built strong relationship with a diverse range of clients, including textile manufacturers, garment exporters and distributors. Its emphasis on quality, reliability and timely delivery has helped it to establish long term partnerships with its customers. The company is manufacturing various value added cotton yarns like Compact Carded Hosiery, Compact Combed Hosiery, Compact Carded Weaving, Compact Comb Weaving, Carded Weaving, Combed Weaving, Carded Hosiery, Combed Hosiery, Eli KW, Eli CW, Slub Yarn, Siro Slub Yarn, CSY-Lycra-Core Spin Yarn (Spandex), TFO Yarn - Double etc.

Proceed is being used for:

• Funding the working capital requirements of the company
• Repayment or prepayment of all or a portion of certain outstanding borrowings availed by the company
• General corporate purposes

Industry Overview

India is the world’s largest producer of cotton India’s total production of cotton in the 2024-25 season have been estimated at 302.25 lakh bales of 170 kgs. Natural fibres are regarded as the backbone of the Indian textile industry, which is expected to grow from $138 billion to $195 billion by 2025. In FY 25 the production of cotton in India stood at 29.42 million bales. According to the Cotton Association of India (the total cotton supply till end of the cotton season 2024 25 (i.e. up to September 30, 2025 is estimated at 357.44 lakh bales of 170 kgs. The cotton exports for 2024-25 crop year are estimated to be at 18 lakh bales of 170 kgs. Cotton and fibres are the two major segments in this category Production of man-made fibre has also been on an upward trend.

India's home textile sector is known for its rich traditions and craftsmanship, with various regions specializing in unique textile techniques and patterns Gujarat is renowned for its vibrant and intricate embroidery, while Kashmir is famous for its luxurious woollen shawls and rugs This diversity reflects India's extensive heritage and expertise in textile production. The Indian home textiles exports spurred from $5.3 billion in CY 17 to $8 billion in CY 22 at a CAGR of 7.1%. India’s home textile industry is expected to expand at a CAGR of 8.9% during 2023-32 and reached $23.32 billion in 2032 from $10.78 billion in 2023. India accounts for 4% of the global home textiles trade. The growth in home textiles is driven by growing household income, increasing population and growth of end use sectors like housing, hospitality, healthcare, etc. Home textile companies in India are also leveraging strategic partnership to strengthen their business operations and foothold in the country.

The Government is taking initiatives to attract foreign investment in the textile sector through promotional visits to countries such as Japan, Germany, Italy and France. According to the new Draft of the National Textile Policy, the Government is planning to attract foreign investment and creating employment opportunities for 35 million people. In December 2019, online clothing brand Henry & Smith raised $1 million from WEH Ventures and Rukam Capital. India can become the one-stop sourcing destination for companies from Association of Southeast Asian Nations (ASEAN) as there exist several opportunities for textile manufacturing companies from 10-nation bloc to invest in India.

Pros and strengths

Strong and diversified supplier base for sourcing raw materials: One of the critical factors to grow and develop in its business is the ability to source raw materials. The essential raw material used by the company’s manufacturing facilities is raw cotton. The company has been procuring cotton yarn from Maharashtra, Gujarat, Madhya Pradesh, Rajasthan, Haryana, Punjab etc. While it does not have any long-term contracts with any of its raw material suppliers, it has maintained long term relationships with most of its major suppliers. Production quantity and cost of its offerings are dependent on its ability to source raw materials at acceptable prices and maintain a stable and sufficient supply of its raw materials. The company’s strong relationships with its raw material suppliers enable it to obtain such good quality of raw material.

Quality standards: The company has provided best quality in its processes and products. It has been certified Global Organic Textile Standard (GOTS) (Ver 6.0) certified for Greige Yarns, Warehousing, Spinning and Trading by IDFL Laboratory and Institute, Taiwan. The company is dedicated towards the quality of its products, processes and inputs. It adheres to quality standards as prescribed by its customers, which has given it a brand name among its customers.

Optimal utilization of resources: The company constantly endeavours to improve its execution process, capabilities, skill up gradation of employees, modernization of plant and machineries to optimize the utilization of resources. It regularly analyses its material procurement policy and project execution process to de‐bottle neck the grey areas and take corrective measures for smooth and efficient working thereby putting resources to optimal use. 

Risks and concerns

Maximum revenue comes from limited customers: The substantial portion of its revenues has been dependent upon few customers. For instance, its top ten customers for the Financial Year ended March 31, 2025, March 31, 2024 and March 31, 2023 accounted for 88.36%, 85.55%, and 82.68% of its revenue from operations for the respective year. Its reliance on a limited number of customers for its business exposes it to risks, that may include, but are not limited to, reductions, delays or cancellation of orders from its significant customers, a failure to negotiate favourable terms with its key customers or the loss of these customers, all of which would have a material adverse effect on the business, financial condition, results of operations, cash flows and future prospects of its company.

Geographical constrain: The company’s operations are concentrated in the state of Gujarat. Its manufacturing facility is also located in Dholi, Gujarat. It sourced majority of its raw material from the state of Gujarat. Consequently, any significant social, political or economic disruption, or natural calamities or civil disruptions in the state of Gujarat or any changes in the policies of the state or local governments of this state or in the Government of India could require it to incur significant capital expenditure and change its entire business strategy in parts or in entirety. The occurrence of its inability to effectively respond to any such event or adapt to the changes in such policies could have an adverse effect on its business, results of operations, financial condition and cash flows.

High working capital requirement: The company’s business requires a significant amount of working capital and a major portion of its working capital is utilized towards inventories and trade receivables. Its growing scale and expansion, if any, may result in an increase in the quantum of current assets. Its inability to maintain sufficient cash flow, credit facility and other sources of funding, in a timely manner, or at all, to meet the requirement of working capital or pay out debts, could adversely affect its financial condition and result of its operations. Further, the company has a high outstanding amount due from its debtors which may result in a high risk in case of nonpayment by these debtors. In case of any such defaults from its debtors, may affect its business operations and financials.

Outlook

Siddhi Cotspin is engaged in manufacturing and selling cotton yarns, including value-added and specialty yarns. It supplies products to textile manufacturers, garment exporters, and distributors, focusing on quality, reliability, and timely delivery. Over time, it has built strong and long-term customer relationships. The company has strong and diversified supplier base with long-standing relationships with its customers. On the concern side, substantial portion of the company’s revenues has been dependent upon few customers, with which it does not have any firm commitments. The loss of any one or more of its major customers would have a material adverse effect on its business, cash flows, results of operations and financial condition. Moreover, the company’s operations are concentrated in the state of Gujarat and any adverse developments affecting Gujarat could have an adverse effect on its business, results of operations and financial condition. 

The company is coming out with a maiden IPO of 64,68,000 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 102-108 per equity share. The aggregate size of the offer is around Rs 65.97 crore to Rs 69.85 crore based on lower and upper price band respectively. On performance front, the company’s revenue from operation has increased from Rs 58,088.75 lakh in FY 2023-24 to Rs 72,454.45 lakh in FY 2024-25, showing an increase of 24.73%. Moreover, the company recorded increase in its profit after tax from Rs 1,218.29 lakh in the FY 2023-24 to Rs 1,308.41 lakh in the FY 2024-25, an increase of 7.40%.

The technology used in the textile industry is continuously changing. New technologies are constantly being developed for the various processes of manufacturing. The company has invested in the latest technology, Plant & Machinery and intend to continue upgrading its technology in the future to keep itself competitive and efficient. Moreover, the business of the company is customer oriented and always strives to maintain good relationships with the marketers. Leveraging its market skills and relationships is a continuous process in its organization and the skills that it imparts in its people give importance to customers. It aims to do this by leveraging its operations expertise as well as marketing skills and its industry relationships.