Norspin International Limited

Norspin International Limited - Related Party Transactions

Introduction

Based on the Draft Red Herring Prospectus (DRHP) dated July 27, 2026, and subsequent filings, here are the “Related Party Transactions” (RPT) details of Norspin International Limited.

Business Model Operations

Business Model: The Company follows an asset-light business model. It designs, brands, and retails readymade garments for men and women under the single brand ‘CANOE’. Manufacturing is a mix of in-house production and a network of third-party job workers.

Advances from Customers: Yes, the Company receives advances. As of January 31, 2026, "Advances from Customer" stood at ₹341.97 Lakhs.

Comparable Peers: Listed peers include Kiaasa Retail Limited and Rajnandini Fashion India Limited.

Raw Materials & Sourcing: The company consumes printed fabric, plain fabric, trims, and threads. Materials are sourced both domestically and through imports (Imports accounted for ₹123.71 Lakhs vs. Indigenous ₹7,952.08 Lakhs in FY 2025).

Key Factors & Landscape: The business is affected by competition, changing fashion trends, and general economic conditions. The landscape is highly unorganized and competitive.

Legal Cases: There are 15 criminal proceedings (primarily cheque bounce cases under Section 138 of the NI Act) and 6 tax proceedings against the Company, involving an aggregate amount of approximately ₹676.90 Lakhs.

Total Addressable Market (TAM): The Indian textile and apparel market is projected to reach US$ 350 billion by 2030.

Order Book & Customer Concentration: The Company operates on a Sale or Return (SOR) model, meaning it recognizes revenue when goods are sold by franchisees to end customers. There is high customer concentration, with the top 10 customers contributing 72.40% of revenue in the period ended Jan 31, 2026.

Financial Performance Health

Balance Sheet Health: Total Equity and Liabilities increased from ₹4,617.14 Lakhs in FY 2023 to ₹13,974.87 Lakhs as of January 31, 2026. The Company relies heavily on short-term borrowings (₹3,632.06 Lakhs) and trade payables (₹4,607.16 Lakhs).

Operating Cash Flows (CFO): The Company reported negative CFO for FY 2023 (₹304.12 Lakhs), FY 2024 (₹58.25 Lakhs), and FY 2025 (₹2,987.92 Lakhs), turning positive (₹102.05 Lakhs) only in the 10-month period ended Jan 2026.

Debt & CapEx: Total debt as of Jan 31, 2026 was ₹3,952.56 Lakhs. Capital expenditure was relatively low (₹33.20 Lakhs in FY 2025) as the model is asset-light.

Ratios (FY 2025): Return on Net Worth (RoNW) was 51.93%, and Return on Capital Employed (ROCE) was 49.24%. The Asset Turnover (Total Revenue / Total Assets) was approximately 0.92 in FY 2025.

Growth Trends: Sales (Revenue from Operations), EBITDA, and PAT are all showing an increasing trend. EBITDA margins improved significantly from 4.13% in FY 2023 to 23.07% in the period ended Jan 2026.

Financial Summary Table:

Risks Management Outlook

Red Flags:

Negative Free Cash Flow in all full fiscal years presented.
Regulatory Non-compliance: Multiple instances of delayed and incorrect filings with the MCA.
Pending Legal Cases: 15 criminal proceedings against the company.
Debtors Ageing: Significant increase in trade receivables; the holding period rose to 315 days as of Jan 31, 2026.

Key Risks: Dependence on a single brand (‘CANOE’), high working capital intensity, customer and supplier concentration, and lease-based operations.

Growth Plans: The Company plans to establish a new manufacturing unit in Gurugram and expand its Exclusive Brand Outlet (EBO) network.

Government Intervention: The industry overview mentions supportive government policies like the PLI scheme and MITRA Parks.

Promoter Quality: Promoters are highly experienced. However, they have been involved in the company's past regulatory non-compliances and are parties to the outstanding legal proceedings.

Industry Trends: Management notes that the textiles and apparel industry is emerging with themes of sustainability and innovation. They do not explicitly categorize trends as structural or cyclical but emphasize the projected growth of the Indian market to US$ 350 billion by 2030.

Disclaimer

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