Cedaar Textile Ltd. IPO: Key Details

Cedaar Textile

• Cedaar Textile is coming out with an initial public offering (IPO) of 43,50,000 equity shares in a price band Rs 130-140 per equity share.
• The issue will open on June 30, 2025 and will close on July 02, 2025.
• The shares will be listed on SME Platform of NSE.
• The face value of the share is Rs 10 and is priced 13.00 times of its face value on the lower side and 14.00 times on the higher side.
• Book running lead manager to the issue is Fast Track Finsec.
• Compliance Officer for the issue is Neha Parbhakar Rawat.

Profile of the company

Cedaar Textile offers the widest range of Raw White Yarns, Melange Yarns, Solid Top dyed Yarns, and Grey Fancy Yarns in Cotton, Polyester, Acrylic, Viscose, Tencel, Modal, and other Fibers. All Yarns are being offered with sustainability as the prime focus, in 100% Organic, Recycle Fibers (Polyester & Cotton) for a Green Environment and Conservation of natural resources. The company’s focus is on Innovation, Customer Orientation, R & D, Technology Up Gradation, Digitalization, ERP, Continuous Improvement, and Moving towards Green Energy. The company manufacture and sells its products like Yarn, Technical Textile IFR, Fabrics, and Dyed Yarn. It is engaged in the manufacturing of Quality Melange Yarn for use in the household textile, woven goods, and hosiery.

The company’s business is divided into Six separate yarn business verticals, consisting of: 1) Melange yarn & Dyed Yarns; 2) Speciality Yarn; 3) Yarn Range for Sweaters Count Range 2/20 Ne to 2/40 Ne; 4) Raw White Yarns Counts: NE 16s to NE 40s for Knitting and Weaving; 5) Yarn Dyed in Cone Dyeing (Capacity 4 MT Per Day); 6) Sustainable Products.

The company’s objective is to cater the Top Line Customers Overseas and in India, who produce Garments for renowned Fashion Brands. Its production process begins with procurement of Raw material from the suppliers and processed the same in machine by mixing the different fabrics like cotton, polyester, viscos, acrylic and other fibers.

Proceed is being used for:

• Installation of Grid-tied Solar PV Rooftop System for Captive evacuation
• Modernization of the Machines
• Meeting working capital requirement
• General corporate purposes
• Issue expenses

Industry Overview

India’s textiles sector is one of the oldest industries in the Indian economy, dating back to several centuries. The industry is extremely varied, with hand-spun an d hand-woven textiles sectors at one end of the spectrum, with the capital-intensive sophisticated mills sector at the other end. The fundamental strength of the textile industry in India is its strong production base of a wide range of fibre/yarns from natural fibres like cotton, jute, silk, and wool, to synthetic/manmade fibres like polyester, viscose, nylon and acrylic. India is the world’s largest producer of cotton. Agriculture ministry projected cotton output for 2023-24 at 32.3 million bales. 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. The cotton production in 2023-24 is estimated to be 316.57 lakh bales (LB) with 75.76 LB in Maharashtra, 19.29 LB in Karnataka and 15.64 LB in Madhya Pradesh.

Major textile and apparel export destination for India is USA with around 28% share in total textile and apparel exports in FY24. Followed by European Union (EU)- 27 (19%), Bangladesh (8%), United Arab Emirates (6%), U.K. (6%) etc. India's textiles and apparel exports to USA is likely to improve in near term as newly appointed Trump administration announced duties of 20% on all imports from China. China is the largest supplier of textiles and apparel to USA. It will lead to slow down of imports from China, and the gap may be filled by other suppliers like India and other textile exporting nations. This policy shift is likely to accelerate diversification strategies of global brands, positioning India as a key sourcing hub.

Indian textile sector is likely to witness significant growth in the coming years driven by rising demand, easing inflation, and the festive and wedding seasons. The increasing preference for affordable, trendy fashion clothing that mimics high-fashion designs is expected to be the primary revenue driver in the coming time. The budget announced an outlay of Rs 5272 crore (Budget Estimates) for the Ministry of Textiles for 2025-26 will strengthened India’s position as a global textile hub. Further, Trump’s 20% tariffs on all imports from China will create new opportunities for Indian textiles exporters. Union Cabinet has given its approval for continuation of RoSCTL Scheme will help to make textiles products cost competitive in coming time. RoSCTL scheme will also help the sector to boost the exports. The Government has approved setting up of 7 (Seven) PM Mega Integrated Textile Region and Apparel (PM MITRA) Parks in Greenfield/Brownfield sites with world class infrastructure including plug and play facility with an outlay of Rs 4,445 crore for a period of seven years upto 2027-28, it is envisaged that each park will lead to an investment (both foreign and domestic) of about Rs 10,000 crore, benefiting the local economy and textile ecosystem.  

Pros and strengths

Multiple sources for raw material procurement: Generally, there are multiple sources that can supply the raw materials that the company requires. Its raw material sourcing is not dependent on a single source of supply and it has access to alternate sources for its procurement of raw materials. All raw materials and packing materials are easily available in India. Most of the cases company has 2-3 suppliers of each type of Raw material which is mostly use for production and in case if there is any new Raw material requirement it repeats the process to find out new supplier and ask for quotation. Evaluation of supplier on their production capacity, quality, market reputation and past performance.

Strong marketing skills: The company has a dedicated sales team that manages the relationship with distributors and customers. The experience of the sales team helps in penetrating the market and in reaching out to more customers. It also regularly participates in several trade fairs which help in networking, attracting potential customers, and updating its customers about the new products that it manufactures. The marketing team taps the various entities through the direct marketing approach. Its team through their vast experience owing to timely and quality delivery of services plays an instrumental role in creating and expanding a work platform for the company.

Strong quality control: The company has in-house quality management systems which ensures good quality and at all steps from procurement till dispatch. The company has established a quality control team which has the responsibility to ensure compliance with manufacturing practices. Before commencement of the manufacturing process, the materials purchased by the company has to undergo a quality check, to ensure that it is of relevant quality and match the standards as specified. The finished products are tested done by its in-house team to ensure that the same is of relevant standards and design as specified by the customer to achieve the norms of self- certification; the products are then packed and dispatched.

Risks and concerns

Maximum revenue comes from top 10 customers: The company’s top ten customers have contributed 63.30%, 47.04%, 37.08% and 56.83% of its revenues for the period ended December 31, 2024, March 31, 2024, March 31, 2023, and March 31, 2022 based on Restated Financial Statements. However, its top ten customers may vary from period to period depending on the demand and thus the composition and revenue generated from these customers might change as it continues to add new customers in normal course of business. It could experience a reduction in its results of operations, cash flows and liquidity if it loses one or more of these customers or the amount of business it obtains from them is reduced for any reason, including but not limited on account of any dispute or disqualification.

Geographical constrain: Its production facility located in Punjab, is subject to operating risks such as the breakdown or failure of equipment, power supply or processes, performance below expected levels of output, raw material shortage or unsuitability, obsolescence, labour disputes, strikes, lock-outs, non-availability of services of its external contractors, earthquakes and other natural disasters, pandemic, social unrests, industrial accidents, its ability to respond to technological advances and emerging industry and safety standards and practices in the industries in which it operates and proposes to operate on a cost-effective and timely basis and any other factors which may or may not be within its control and also it needs to comply with the directives of relevant government authorities. The occurrence of any of these risks could significantly affect its operating results.

Exporting to Bangladesh involves risks due to political instability: It has exported 25.45%, 19.60%, 31.91% & 40.78% percent of its total revenue for the period ended December 31, 2024 and for the financial year ending on March 2024, 2023, and 2022 respectively in future it intends to continue the export its good Bangladesh. Exporting goods to Bangladesh exposes it to several risk as there is as political instability in Bangladesh which is due to internal power struggles, strikes, or protest which may lead to logistical challenges and delays. If the instable political environment in Bangladesh will remain same, it could impact the predictability of trade and lead to sudden policy changes or trade restrictions. Political tensions can lead to increased security costs, insurance premiums, and risk mitigation measures for exporters like it. These added costs can either erode profit margins or be passed on to buyers, making the cost of yarn exports less competitive in the Bangladeshi market.

Outlook

Cedaar Textile specializes in manufacturing diverse yarns. The company manufactures quality melange yarn for household textiles, woven goods, and hosiery. The company has growing customer base coupled with scalable and reliable business model. On the concern side, the company’s top ten customers contribute significant portion in the revenue of the company. Any loss of business from one or more of them may adversely affect its revenues and profitability. Moreover, the company’s business depends on its production facility situated in city of Punjab. Any loss of or shutdown of operations of the production facility on any grounds could adversely affect its business or results of operations.

The company is coming out with a maiden IPO of 43,50,000 equity shares of face value Rs 10 each. The issue has been offered in a price band of Rs 130-140 per equity share. The aggregate size of the offer is around Rs 56.55 crore to Rs 60.90 crore based on lower and upper price band respectively. On performance front, the company has reported 18.37% rise in its revenue from operation at Rs 18968.38 lakh in FY24 as compared to Rs 16024.98 lakh in FY23. Moreover, the company’s net profit surged 140.78% to Rs 1105.04 lakh in FY24 as compared to Rs 458.95 lakh in FY23.

The company’s core priorities include cost optimization and reduction in production and supply chain management. It uses Time and Motion studies to optimize parameters and suggest environmentally friendly production methods like solar energy. It focuses on efficient raw material sourcing to increase cost efficiency and competitiveness in both domestic and overseas markets. Further, looking at increased demand of the recycle yarn it is also focusing on 100% recycle yarn for garments which not only boost to its sales and revenue. Apart from that production of yarn, the company has expanded its business in fabric dyeing.