Fascinate Textiles Limited

Related Party Transactions Promoters

Financial performance of such private companies owned by the promoters? The standalone financial statements for these private entities are not provided. However, prior to their takeover, they engaged in significant transactions with the company:

1. Raiment Lifestyle Co.: Had sales of ₹284.95 lakhs in FY 2022-23 and ₹81.53 lakhs in FY 2023-24.
2. S.R. Creation: Had purchases of ₹251.76 lakhs in FY 2023-24.

Key details of the related party transactions in financial terms? The company has engaged in various transactions with promoters and relatives, including:

1. Remuneration/Salary: Paid to promoters like Vishal Nahar (₹12.00L in FY25) and Chirag Ahuja (₹9.60L in FY25).
2. Loans Taken: Outstanding loans from relatives like Ranjini Ahuja (₹40.94L) and Narinder Kumar Ahuja (₹70.00L) as of March 31, 2025.
3. Reimbursements: ₹53.62L reimbursed to Vishal Nahar in FY 2024-25.

Related Party Transactions with the private companies owned by the promoters? Prior to their takeover, the company sold goods worth ₹81.53L to Raiment Lifestyle in FY 2023-24 and made purchases of ₹251.76L from S.R. Creation in the same year.

Closing Balance of Trade Receivables with these private companies? The closing balance for trade receivables with Raiment Lifestyle Co. was ₹131.05 lakhs in FY 2022-23, which was cleared to Nil in FY 2023-24 following payments and the subsequent takeover.

Business Model Operations

Business Model: The company specializes in the manufacturing of readymade garments for urban and semi-urban markets. It operates through a multi-channel approach focusing on domestic B2B supply to major Indian corporate retail brands and its own brand, "C2B2".

Advances from customers: The financial summaries do not list significant customer advances as a separate material line item in current liabilities.

Comparable Peers: The company identifies Karnika Industries Limited as a broader industry peer, although management notes they are not strictly comparable due to differences in turnover and nature of business.

Raw Materials: The company primarily consumes cotton yarn, ready-to-use fabrics, dyes, and chemicals.

Sourcing: Raw materials like cotton yarn and fabrics are sourced from domestic suppliers.

Volatility in Prices: Management acknowledges that input material prices are volatile, and they attempt to mitigate this by negotiating early payment terms for better rates.

Key Raw Material Vendors: While specific names are not fully listed, the Top 5 vendors accounted for 37.48% of total purchases in FY 2024-25.

Key Factors affecting business: These include the ability to manage working capital, raw material price fluctuations, competition in the garment sector, and seasonal demand (weddings and festivals).

Competitive & Regulatory Landscape: The industry is highly competitive with many regional and national players. The company must comply with standards like ISO 9001:2015 and environmental/labor laws applicable to textile manufacturing.

Legal Cases: There are no criminal proceedings against the company or promoters. However, there is an outstanding income tax demand of ₹35,409 against promoter Narinder Kumar Ahuja for AY 2010-11 and a demand of ₹88,080 for AY 2019-20.

Total Addressable Market (TAM) & Order Book: Specific quantitative figures for the TAM and the current order book are not explicitly provided in the source excerpts.

Financial Performance Health

Balance Sheet Health: The company has a positive net worth which grew significantly from ₹272.76 lakhs in FY23 to ₹1,044.54 lakhs in FY25. However, it is highly leveraged, with a Total Debt/Equity ratio of 1.74 as of March 31, 2025.

Operating Cashflows: The company has generated negative cash flow from operating activities for the last three years: ₹(31.92)L in FY23, ₹(362.34)L in FY24, and ₹(357.52)L in FY25.

Revenue Mix:

1. Domestic vs. Exports: Revenue is predominantly domestic. Local sales account for 17% of total revenue and are targeted to reach 30–35% by FY27.

Financial Metrics (Last 3 Years):

1. Total Debt: Increased from ₹642.88L (FY23) to ₹1,820.91L (FY25).
2. CAPEX: ₹250.67L (FY23), ₹280.71L (FY24), and ₹354.34L (FY25).
3. ROCE: Fluctuated from 13.29% (FY23) to 11.66% (FY24) and spiked to 42.41% (FY25).
4. Asset Turnover (Net Capital Turnover): 8.63 (FY23), 17.49 (FY24), and 9.64 (FY25).

Sales, Operating Profit (EBITDA), and PAT Trends:

Breakdown of Growth: Revenue grew by 108.61% in FY25, and EBITDA grew by 494.18%. This is attributed to expansion into local markets, increased demand for readymade garments, and improved operational efficiencies following the takeover of the promoters' partnership firms.

Free Cash Flow and EBITDA Conversion:

Analysis of the Trend: The EBITDA to Cash flow from operation conversion % is not consistently increasing. It fluctuated significantly over the three-year period:

1. In FY 2022-23, the conversion was -34.48%.
2. In FY 2023-24, it decreased sharply to -215.05%, driven by a significant increase in inventory and receivables which consumed cash despite a positive EBITDA.
3. In FY 2024-25, it increased to -35.71% as operating cash flow improved relative to the much higher EBITDA, though it remained slightly below the FY 2022-23 level.

Risks Management Outlook

Key Risks: High working capital requirements, concentration of suppliers, potential delays in customer payments, and significant dependence on the promoters' personal guarantees for debt.

Red Flags:

1. Negative Operating Cash Flows: Despite high growth in PAT and Sales, the company has not generated positive cash from operations in the last 3 years.
2. Skyrocketing Receivables: Trade receivables increased by 224.67% in FY25 (₹1,733.03L) compared to FY24.
3. Debt Growth: Total borrowings nearly tripled in three years to support working capital.

Growth Plans: The company plans to use IPO proceeds to repay ₹300 lakhs of debt and fund increased working capital. It is also looking to expand its local market share to 35% and has signed an MOU for land to set up a new manufacturing facility.

Government Intervention: There is no specific adverse intervention mentioned, though the company benefits from MSME registration and maintains balances with government authorities for tax credits.

Promoter Quality: Promoters have over 7 years of history with the entity (incorporated 2017) and have successfully scaled the business, though they rely heavily on personal guarantees to secure company debt.

Management Commentary on Trends: Management views the business as being influenced by seasonal/cyclical trends (festivals and wedding seasons) which impact quarterly debtor levels and inventory needs. They have not explicitly labeled industry trends as structural or cyclical in a broad sense.