Vivekanand Cotspin Limited is a Gujarat-based integrated cotton processing and yarn manufacturing company engaged in ginning raw cotton into bales and spinning them into yarn. The company has filed its Draft Red Herring Prospectus for an Initial Public Offering (IPO) on the SME platform. It reported revenue from operations of ₹408.01 crore in FY2026 and plans to use the proceeds for technology upgrades and working capital.

About the Company

Vivekanand Cotspin Limited operates from a single facility at Rangpurda, Kadi, Mahesana, Gujarat. The company is forward-integrated, covering both ginning and spinning operations. Its installed annual capacity includes approximately 4,551 MT of Cotton Yarn and 8,000 MT of Cotton Bales. The company serves domestic markets across India and exports to Bangladesh, China, Vietnam, and South Africa. The promoters hold 100% of the pre-IPO share capital and have signed non-compete agreements with related entities operating in similar business lines.

Financial Performance

The company’s revenue from operations grew significantly in FY2026 following a decline in FY2025. Profit margins remain thin, characteristic of the commodity-driven textile sector.

Total equity improved to ₹28.94 crore in FY2026 from ₹17.26 crore in FY2025. Non-current liabilities reduced to ₹17.78 crore in FY2026 from ₹34.53 crore in FY2025. Operating cash flow turned positive at ₹8.67 crore in FY2026 after recording a negative outflow of ₹10.79 crore in FY2025.

Why the Company Is Raising Funds

The company intends to utilize the net proceeds from the fresh issue for the following purposes:

• Capital Expenditure: ₹5.27 crore for procuring and installing technologically upgraded spinning machinery, including Comber Machines, Compact Spinning Systems, and Link Corner/Autoconer Winding Systems.
• Working Capital: ₹11.00 crore to meet ongoing working capital requirements.
• General Corporate Purposes: Subject to a maximum of 15% of gross proceeds as per SEBI regulations.

Business Strengths

The company highlights its forward-integrated model, which provides supply chain control and reduces dependency on external raw material suppliers. It emphasizes cost-effective production through efficient labor relations and strong supplier relationships. The scalable business model allows for capacity optimization, while consistent quality control supports its presence in both domestic and international markets. The promoter team brings 6 to 15 years of industry experience.

Key Risks

The company faces significant concentration risks, with up to 47.23% of revenue derived from sales to Ambica Cotseeds Limited and 23.13% to Vivekanand Industries in certain periods. Customer concentration remains high, with top 10 customers contributing 51.18% of revenue in FY2026. The business is vulnerable to fluctuations in raw cotton prices and availability, which can impact thin profit margins. Other risks include heavy dependence on a single manufacturing facility in Gujarat, outstanding export obligations under the Advance Authorization Scheme with potential duty liability of ₹303.97 lakhs, and regulatory compliance issues such as delays in GST returns and EPF payments.

Important IPO Dates

Offer Details

The IPO is structured as a Fresh Issue with no Offer for Sale. Specific details regarding the issue size, price band, face value, and lot size are not disclosed in the current filing.

Bottom Line

Vivekanand Cotspin Limited presents an integrated cotton processing business with recovering revenues and improved cash flows in FY2026. The IPO aims to fund capacity upgrades and working capital. Investors should note the high concentration of related-party transactions, customer base, and operational risks associated with a single facility and commodity price volatility.