Vivekanand Cotspin IPO

The Indian textile and apparel industry contributes approximately 2.3% to India’s GDP, 13% to industrial production, and 12% to total export earnings. It is the country’s second-largest employment generator after agriculture, directly supporting more than 45 million jobs across the value chain.  

The industry was valued at USD 185.6 billion in FY 2025, up from USD 174 billion in FY 2024, and is projected to reach USD 350.0 billion by FY 2030, implying a CAGR of around 13%. India is the world’s sixth-largest exporter of textiles and apparel, with exports of USD 37.75 billion in FY 2025.  

India accounts for nearly 24% of global cotton production and has the world’s largest cotton cultivation area, covering around 40% of the global area, or approximately 12–12.5 million hectares. Raw cotton production stood at 323–325 lakh bales in FY 2024 and is estimated at 320.50 lakh bales in FY 2025–26, partly due to weather variations across key growing regions.  

India has the second-largest spinning capacity globally, with major spinning clusters located in Gujarat, Maharashtra and Telangana.  

Domestic cotton yarn production stood at 3.76 million tonnes in FY 2025 and 3.74 million tonnes in FY 2026. Production is projected to reach 5.00 million tonnes by FY 2030, supported by demand from downstream textile and apparel segments.  

Around 70% of India's cotton yarn production is consumed domestically by weaving, knitting and garment manufacturing units, while cotton yarn imports remain limited.  

India is also a major global exporter of cotton yarn, with exports accounting for around 20–25% of domestic production. In FY 2026, cotton yarn exports stood at ₹326.04 billion, with export volumes of 1,182.81 thousand tonnes. Bangladesh accounted for 43% of exports, followed by China at 17%, Egypt at 8%, Peru at 5% and Vietnam at 4%.  

Demand for cotton textiles is supported by urbanisation, a growing middle class, rising rural incomes and the expansion of retail markets in tier-II and tier-III cities.  

The growth of fast fashion, organised retail and e-commerce, along with changing preferences among younger consumers, has increased garment replacement cycles and supported demand across the textile value chain.  

The China+1 sourcing strategy is encouraging global buyers to diversify supply chains, creating opportunities for Indian textile manufacturers due to their established production ecosystem and competitive costs.  

Government initiatives are supporting sector development through measures such as the PM MITRA scheme, which aims to establish 7 Mega Integrated Textile Region and Apparel Parks, with an outlay of ₹4,445 crore.  

The PLI Scheme for Textiles has an approved outlay of ₹10,683 crore and focuses on promoting production of man-made fibre fabrics and apparel and technical textiles. 

Other initiatives, including Samarth, the National Technical Textiles Mission and ATUFS, aim to improve workforce skills, promote research and development, and support technology modernisation across the textile industry.  

The sector faces risks from raw material price volatility, as raw cotton accounts for more than 50% of yarn manufacturing costs. Weather conditions, crop diseases and seasonal availability can affect cotton prices and yarn manufacturers’ margins. 

Cotton yarn manufacturers also face competition from man-made fibres such as polyester and viscose, which can offer lower production costs and functional benefits such as durability, quick drying and wrinkle resistance.  

Plant & Machinery - ₹526.89 lakh: The company plans to use the IPO proceeds for technological upgrades at its existing spinning unit. The funds will be used to purchase Comber Machines, Compact Spinning Systems and Automatic Cone Winding - Link Coner - Systems to improve yarn quality and process efficiency.  

Working Capital - ₹1,100.00 lakh: The proceeds will be used to meet incremental working capital requirements for FY27 and FY28 and support the company’s operational needs.  

General Corporate Purposes: A portion of the net proceeds will be used for general corporate requirements and ongoing business expenses.  

Forward Integration Across the Value Chain: Vivekanand Cotspin operates an integrated business model covering cotton ginning and spinning. Locally procured raw cotton is ginned into cotton bales, which are then used as raw material in the company’s ring-spinning operations.  

Value Monetisation of By-products: Cotton seeds generated during the ginning process are supplied to group entity Vivekanand Industries, which processes them into cotton seed oil and oil cake. This helps the group utilise by-products across its operations.  

Established Export Channels: The company uses Ambica Cotseeds Limited for accessing international markets through its existing distribution network and trade finance infrastructure, reducing the need for a standalone export setup.  

Cost-Efficient Operations: The company procures raw materials during peak harvesting seasons and maintains supplier relationships to support cost-efficient production. Its operations are also supported by stable labour relations and processes aimed at timely order fulfilment.  

Scalable Business Model: The company’s strategy focuses on improving production capacity utilisation, strengthening supplier relationships and achieving economies of scale, allowing it to increase output as demand develops.  

Quality-Focused Product Portfolio: With 25,536 spindles, the company manufactures combed compact yarn, carded compact yarn, organic yarn and BCI-compliant yarn. Its spinning operations use modern ring-spinning machinery and quality control systems.  

Experienced Promoters and Management: The promoter group comprises Nirav Bharatbhai Patel, Jasmin Vishnubhai Patel, Bharatbhai Prahaladbhai Patel, Vishnubhai Prahaladdas Patel and Gautam Bharatkumar Patel, with individual industry experience ranging from 6 to more than 15 years across areas including cotton ginning, spinning, quality control and technical operations.  

Technological Upgradation: The company plans to use IPO proceeds to install Comber Machines, Compact Spinning Systems and Automatic Cone Winding - Link Coner - Systems. The upgrades are intended to increase the share of higher-value combed compact yarn, reduce yarn breakage and manual handling, and improve production efficiency.  

Expansion into New Markets: The company plans to expand its distribution network across additional domestic states and international markets. It also intends to strengthen its sales and marketing team to develop direct customer relationships and diversify its customer base.  

Opportunity from Domestic and Global Yarn Demand: Growing domestic textile demand and changes in global sourcing patterns could provide opportunities for the company to expand its cotton yarn business, supported by the group’s existing export infrastructure.  

Customer Base Diversification: The company aims to add new customers, including local fabric manufacturers and corporate buyers, while strengthening relationships with existing customers to support repeat orders and reduce dependence on a limited customer base. 

Significant Customer Concentration: The top 10 customers contributed 51.18% of total revenue in FY26, compared with 83.08% in FY25 and 88.73% in FY24. The largest customer contributed 12.02%, 29.31% and 38.84% of revenue, respectively, during these periods.  

High Supplier Concentration: The top 10 suppliers accounted for 52.06% of total purchases in FY26, compared with 74.08% in FY25 and 72.71% in FY24.  

Lack of Long-Term Contracts: The company operates on an order-by-order basis and does not have fixed or long-term contracts with customers or raw material suppliers. Customers may cancel, delay or reduce orders without penalty or prior notice.  

Under-Utilisation of Spinning Capacity: The 25,536-spindle spinning facility operated below full capacity during the review period due to a shift towards specialised yarns, customised counts and production based on commercial viability.  

Single Manufacturing Location: All manufacturing operations are concentrated at a single facility in Kadi, Gujarat. Operational disruptions such as fire, power outages or other local events could affect production.  

High Related-Party Transactions: A significant portion of sales and purchases is conducted through promoter group entities. Ambica Cotseeds Limited primarily handles exports of cotton yarn and bales, while Vivekanand Industries purchases cotton seeds generated from ginning operations.  

Potential Conflicts of Interest: Promoter group entities, including Ambica Cotseeds Limited, Vivekanand Industries and Avadh Cotton Industries, operate in overlapping areas such as cotton ginning, seed oil processing and yarn or bale trading. This may create potential conflicts of interest despite the existence of non-compete agreements.  

Limited Alternate Funding for IPO Objects: The company has not identified alternative funding sources if the IPO proceeds are delayed or fall short of the planned amount, which could affect machinery upgrades or working capital requirements.  

Raw Material Price Volatility: Raw cotton accounts for more than 50% of total yarn manufacturing costs. Seasonal availability, weather conditions, pest infestations and changes in crop yields can affect cotton prices and manufacturing margins.  

No Commodity Hedging: The company does not use derivative or hedging contracts to manage adverse movements in raw cotton or finished yarn prices.  

Competition from Synthetic Fibres: Increasing adoption of man-made fibres such as polyester and viscose, supported by their cost and functional advantages, may affect demand for natural cotton yarn.  

Fire and Inventory Risks: Cotton and cotton yarn are highly flammable. Machinery sparks, static electricity and improper storage can create fire risks, while excessive moisture can affect inventory quality.  

Working Capital and Debt Requirements: The business requires substantial working capital for inventory and trade receivables. As of March 31, 2026, secured bank borrowings stood at ₹3,837.81 lakh.  

Foreign Exchange Exposure: Export earnings are subject to fluctuations in the Rupee exchange rate. The company also has outstanding export obligations under the Advance Authorisation Scheme, exposing it to related compliance and foreign exchange risks. 

Vivekanand Cotspin IPO DRHP 

Vivekanand Cotspin IPO RHP 

Swastika Investmart Limited 

Contact Number: 022-49186000 

Email Address: vivekanand.smeipo@linkintime.co.in