Shree Rajasthan Syntex Ltd. (**SRSL**) is an Indian public listed company and registered **MSME** specializing in the manufacturing of synthetic spun yarns, cotton yarns, and polypropylene yarns. Following a period of financial distress, the company is currently undergoing a comprehensive strategic turnaround facilitated by a court-approved insolvency resolution process and a shift toward high-growth man-made fiber (MMF) segments. --- ### **Manufacturing Infrastructure & Divisional Capacity** The company’s operations are centralized in the tribal district of **Dungarpur, Rajasthan**. Following the **August 2023 Resolution Plan**, the manufacturing base has been restructured to focus on active quality production while earmarking underutilized assets for sale. | Division | Primary Products | Capacity / Infrastructure | Operational Status | |:---|:---|:---|:---| | **Texchem Division** | Synthetic & PPMF Yarn | **31,488 Spindles**; **2,000 TPA** | **Active**; Focus of current production. | | **Syntex Division** | Synthetic Yarn | **27,744 Spindles** | Partially sold or held for sale. | | **Polycot Division** | Cotton Yarn | **18,048 Spindles** | Non-operational; assets held for sale. | **Energy & Utilities:** * **Captive Power:** An **8 MW Thermal Power Plant** (investment of **₹35 crore**) has been idle since **2017** due to regulatory bans on pet coke. * **Current Power Sourcing:** The company relies on the state grid, resulting in power costs of **18-20%** of sales, significantly above the industry benchmark of **11-12%**. * **Conservation Initiatives:** Implementation of energy-saving spindles, **soft starters**, and **lightweight bobbins**. Management is exploring **bio-fuel** as a sustainable alternative for the thermal plant. --- ### **Product Portfolio & Market Specialization** SRSL has transitioned its product mix to align with global shifts toward synthetic fibers, moving away from traditional cotton and dyed segments. * **Grey Yarn:** Blends of polyester/viscose, **100% viscose**, and **100% polyester**. The company maintains a **niche market** for **100% Viscose fiber yarn**. * **PPMF (Polypropylene Multifilament) Yarn:** * **POY & Texturised Yarn:** Used in knitting, socks, and furnishings. * **BCF (Bulked Continuous Filament):** Specialized for the carpet industry. * **Dyed Yarn:** Historically used for home textiles (carpets/upholstery); however, this segment remained **non-operational** through the **2022-23** period as part of the strategic exit from low-margin lines. * **Job Work:** A vital revenue stream where SRSL provides textile processing services to external parties to maintain capacity utilization. --- ### **Insolvency Resolution & Capital Restructuring** SRSL is a pioneer in utilizing the **Pre-packaged Insolvency Resolution Process (PPIRP)** under the IBC Act 2016. * **Resolution Milestones:** The plan was approved by the **NCLT** on **August 22, 2023**, and implementation was completed by **February 15, 2024**. * **Debt Settlement:** A **One-Time Settlement (OTS)** of **₹31.81 crore** was paid to settle borrowings and interest totaling **₹181.43 crore**, resulting in a massive liability write-back of **₹148.53 crore**. * **Equity Infusion & Preferential Allotments:** * **March 2024:** Allotted **1,43,10,000** shares at **₹10.00** (mix of cash and loan conversion). * **February 2026:** Allotted **1,27,25,000** shares at **₹13.25**. This included **46,00,000** shares via conversion of unsecured loans (**₹6.09 Crore**) and **81,25,000** shares via preferential allotment (**₹10.76 Crore**). * **Authorized Capital Expansion:** Increased from **₹34.50 Crore** in early 2024 to **₹47.50 Crore** by August 2025 to facilitate ongoing fundraising. --- ### **Financial Performance & Revenue Mix** The financial profile reflects a company in transition, with "paper profits" driven by debt waivers masking underlying operational pressures. | Metric (₹ in Lakhs) | FY 2023-24 | FY 2022-23 | FY 2021-22 | |:---|:---|:---|:---| | **Domestic Product Sales** | **1,311.86** | **2,054.63** | **2,127.44** | | **Income from Job Work** | **1,216.83** | **3,108.90** | **2,950.01** | | **Export Sales** | **NIL** | **NIL** | **NIL** | | **Total Revenue** | **2,528.69** | **5,163.53** | **5,077.45** | | **Net Profit / (Loss)** | **11,288.00** | **(4,342.00)** | **(N/A)** | *Note: The FY 2023-24 profit is primarily due to the **₹148.53 crore** liability write-back following the NCLT order.* --- ### **Strategic Roadmap & Industry Alignment** Management is pivoting toward a leaner, more specialized manufacturing model to capture opportunities in the Indian textile market, projected to reach **US$250 billion** by **2030**. * **Operational Realignment:** Shifting the **Registered Office** to the **Dungarpur factory** (Sept 2024) to improve oversight. * **Growth Targets:** Management anticipates a **20% increment in net profit** over the next **1–2 years** through improved capacity utilization at the Texchem and Filament plants. * **Policy Tailwinds:** Positioning to benefit from the **PLI Scheme** for Man-Made Fibers and the **Sustainable Textiles for Sustainable Development (SusTex)** project. * **Leadership:** **Mr. Vikas Ladia** has been re-appointed as **Managing Director** through **May 2030** to ensure continuity during the turnaround. --- ### **Risk Factors & Contingent Liabilities** Despite the successful PPIRP, several "Material Uncertainties" persist regarding the company's status as a **Going Concern**. * **Liquidity & Working Capital:** Current liabilities remain substantially higher than current assets. Survival depends on the successful liquidation of non-core assets and continued investor support. * **Legal Challenges:** * **Bank of Baroda:** While the **NCLAT** upheld the resolution plan in **February 2025**, it required a differential payment of **₹77.94 lakhs** to the bank. * **AVVNL Dispute:** Ongoing litigation over **₹3.15 crores** in fuel surcharges; the company is invoking the **"clean slate"** doctrine to extinguish these pre-insolvency claims. * **Contingent Liabilities Table:** | Dispute | Amount (₹ Lakhs) | Forum | |:---|:---|:---| | **Urban/Water Cess** | **1,228.00** | Supreme Court (SLP) | | **RIPS 2003 Subsidy** | **646.00** | High Court (Writ) | | **Excise/GST/Service Tax** | **51.93** | Various (Disputed) | | **Sales Tax (2016-18)** | **29.49** | Rectification Pending | * **Operational Risks:** High sensitivity to crude oil prices (affecting synthetic fiber costs) and technological obsolescence compared to global competitors with lower capital costs.