Lagnam Spintex Limited is an **ISO 9001:2015** certified manufacturer of high-quality cotton yarn and a recognized **Three Star Export House**. Headquartered in Bhilwara, Rajasthan, the company has evolved from a regional player into a technologically advanced, export-oriented powerhouse. Following a transformative capital expenditure program completed in early 2024, the company has doubled its production capacity and pivoted toward high-margin, sustainable textile solutions for the global market. --- ### **Strategic Manufacturing Infrastructure & Capacity Expansion** The company operates a state-of-the-art facility at the **RIICO Growth Centre, Hamirgarh (Bhilwara)**, spanning **48,263 square meters**. The facility is characterized by high levels of automation and integration with global technology leaders. | Asset Type | Installed Capacity | | :--- | :--- | | **Compact Ring Spinning** | **41,472 Spindles** | | **Normal Ring Spinning** | **25,536 Spindles** | | **Open End Spinning** | **1,920 Rotors** | | **Total Daily Production** | **~70 Tonnes Per Day (MT)** | * **The 2024 Expansion Milestone:** On **January 31, 2024**, the company commissioned its "Compact Cotton Yarn" project, adding **41,472 spindles**. This **₹218 Crore** investment was completed **two months ahead of schedule** without cost overruns. * **Technological Edge:** The plant utilizes advanced machinery from German, Swiss, and Spanish manufacturers. Quality control is managed via **USTER Laboratory** equipment (HVI-1000, UT-5) and **USTER QUANTUM-4** electronic yarn clearers. * **Operational Efficiency:** The facility features real-time monitoring and **Bale Management systems** to minimize human error and ensure consistent yarn quality across large batches. --- ### **Value-Added Product Portfolio & Global Certifications** Lagnam Spintex produces 100% cotton yarn tailored for premium applications in denim, terry towels, knitting, and industrial fabrics. **Core Product Range:** * **Compact Ring Spun (Combed & Carded):** Counts **Ne 20 to Ne 40**. * **Ring Spun (Combed & Carded):** Counts **Ne 16 to Ne 40**. * **Open End (OE) Yarn:** Counts **Ne 4 to Ne 24**. * **Specialty Yarns:** Includes **Compact Eli Twist (Siro) Ne 40/2**, **Compact Slub**, and **Low Twist/High RKM OE** yarns. **Quality & Sustainability Credentials:** * **USTERIZED Trademark:** Lagnam is one of only **~70 mills globally** to hold this mark and the first standalone Open-end spinning segment in the world to receive it. * **Sustainability Standards:** Certified under **GOTS, OCS, BCI, GRS, RCS**, and **Oeko-Tex Standard 100**. * **Traceability:** Active participant in the **Kasturi Cotton Bharat** program, utilizing blockchain-based traceability to verify premium Indian cotton origins. --- ### **Financial Trajectory & Performance Analysis** The company has entered a high-growth phase, with the FY 2024-25 results reflecting the first full year of expanded operations. | Metric (₹ in Crores) | FY 2024-25 | FY 2023-24 | FY 2022-23 | | :--- | :--- | :--- | :--- | | **Revenue from Operations** | **605.56** | **437.50** | **304.66** | | **Operating Profit (PBIDTA)** | **65.68** | **45.37** | **31.03** | | **PBIDTA Margin (%)** | **10.85%** | **10.37%** | **10.19%** | | **Profit After Tax (PAT)** | **12.84** | **14.57** | **9.76** | | **Export Revenue** | **280.14** | **204.63** | **135.64** | | **ROCE (%)** | **9.06%** | **7.02%** | **N/A** | * **Revenue Growth:** Achieved a **38% YoY increase** in FY25, following a **43.6%** increase in FY24. * **Establishment Phase Impact:** While revenue and operating profit grew, PAT was impacted by high depreciation (**₹16.79 Crores**) and finance costs (**₹30.98 Crores**) associated with the new project. * **Asset Utilization:** The expansion project outperformed initial estimates by **34%**, contributing **₹321 Crores** to the top line in its first year. --- ### **Global Market Presence & Export Strategy** Lagnam maintains a diversified geographic footprint, reducing reliance on any single domestic market. * **Export Contribution:** International sales account for **46%** of total revenue, growing at a **CAGR of 44%** over the last three years. * **Market Reach:** The company exports to over **20 countries**, including the **USA, Portugal, Spain, Italy, South Korea, Egypt, and Peru**. * **Risk Mitigation in Exports:** Sales to high-volume hubs like **Bangladesh** are secured via **100% Letters of Credit (LC)**. * **New Market Entry:** The shift to **Compact Yarn** has enabled entry into quality-sensitive European and South American markets that were previously inaccessible with standard OE yarn. --- ### **Cost Optimization & Sustainability Initiatives** To combat rising energy costs and global carbon mandates, Lagnam has integrated renewable energy and lean manufacturing into its core strategy. * **Captive Solar Power:** The company has commissioned **4.4 MW** of rooftop solar capacity, with an additional **0.5 MW** in the pipeline to further reduce grid dependency. * **Energy Efficiency:** Electricity represents **15%** of production costs; the new automated machinery from Switzerland and Germany is designed to lower power consumption per unit of output. * **Digitalization & AI:** Implementation of **Lean Manufacturing** and **Artificial Intelligence** for real-time monitoring to minimize waste and improve asset reliability. --- ### **Policy Alignment & Government Incentives** Lagnam is strategically positioned to benefit from both State (Rajasthan) and Central (India) government schemes: * **RIPS 2022:** Eligible for **Turnover Linked Incentives (TLI)**, **Capital Subsidies**, and a **5% Interest Subsidy** on term loans. * **Export Support:** Benefits from the **RoDTEP** (tax refund) scheme and the **Market Access Initiative (MAI)**. * **Sectoral Tailwinds:** Aligned with the **PLI Scheme for Textiles** (₹10,683 crore outlay) and the **PM MITRA** park initiatives aimed at strengthening the Indian textile value chain. --- ### **Risk Profile & Mitigation Strategies** Investors should note the following risks inherent to the spinning industry and Lagnam’s specific capital structure: * **Raw Material Volatility:** Cotton prices are subject to monsoon patterns and pests (e.g., pink bollworm). India’s production for 2024-25 is lower than historical averages, which may pressure margins. * **Leverage & Interest Rates:** The company carries a **Gearing Ratio of 3.46** (as of March 2024) due to the **₹163 Crore** term loan for expansion. Finance costs doubled in FY25, making the company sensitive to interest rate fluctuations. * **Geopolitical Disruptions:** Recent political unrest and floods in **Bangladesh**—a key market—pose temporary risks to export volumes and logistics. * **Export Obligations:** The company has an outstanding obligation of **₹193.70 Crores** under the **EPCG Scheme**, to be fulfilled by **March 2029**. * **Currency Risk:** Significant exposure to the **USD/INR** exchange rate, managed through natural hedges and financial instruments. --- ### **Investment Summary** Lagnam Spintex has successfully transitioned from a mid-sized spinner to a high-capacity, technologically advanced manufacturer. The **₹218 Crore expansion** has doubled its production capacity to **70 MT per day** and shifted the product mix toward premium **Compact Yarns**. While the current fiscal period reflects the high depreciation and interest costs of this transition, the company’s strong export growth (**44% CAGR**), commitment to **ESG standards**, and early commissioning of assets position it to capture significant market share as global supply chains seek "China Plus One" alternatives.