Rating Rationale

Brickwork Ratings has assigned a BWR BB (Stable) rating to the firm's long-term bank loan facilities and A4 to its short-term bank loan facilities, aggregating to Rs. 49.84 Crs. The rating draws strength from the vast business experience of the promoters, a relatively moderate scale of operations, and locational advantage. However, the ratings are constrained by the risk of volatility in raw material prices and moderately high working capital requirements. 
BWR believes that the business risk profile of Kian Cotspin LLP will be maintained over the medium term. The long-term rating has been assigned a ‘Stable’ outlook as the business risk profile of the company is stable. The rating outlook may be revised to 'Positive' in case there is an improvement in revenues, operating margin on a sustained basis, and financial risk profile. The rating outlook may be revised to 'Negative' if there is any deterioration in the financial risk profile and decline in revenue.
Brickwork Ratings (BWR) has essentially relied upon the audited financial statements of the company up to FY24(A), FY25(A), FY26(Prov) and relevant data to the extent available for projected financials for FY27 and FY28, as well as information/clarifications provided by the company’s management and its bankers, to arrive at the present ratings. 
 

The terms of sanction of the rated facilities include standard covenants normally stipulated for such facilities.

• Experience of Promoters :

  The firm is promoted by the Vansjaliya, Detroja, and Amrutiya families; the firm benefits from its leadership's extensive background in the cotton sector. Their long-standing industry presence has equipped the firm with a deep understanding of market dynamics and allowed it to build a well-established customer base.
   

• Plant location near major cotton hubs secures a reliable, direct supply chain :

   The firm leverages its location in Jamnagar, Gujarat—a major center for Indian cotton cultivation—to source cotton bales close to the point of origin. By working with nearby ginners and partnering with its associate, Jay Dwarkadhish Ginning and Oil Industries, KCL lowers transportation expenses, reduces storage lag, and ensures a highly integrated supply pipeline. 
   

• Augmentation in operating performance, albeit moderately leveraged capital structure :

  The firm’s operating income improved to Rs.125.04 Cr in FY2026 from Rs.119.79 Cr in FY2025, reflecting a year-on-year growth of around 4 percent. This growth in revenue is attributable to the fact that the firm became fully operational in FY25. The firm is expected to close the year with revenue of Rs.140 Cr. The operating profit margin improved sharply to 9.59 percent in FY2026 from a modest 7.65 percent in FY2025. Similarly, at the net level, losses narrowed, with PAT at Rs.-0.98 Cr in FY2026 from Rs.-1.48 Cr in FY2025. The firm has a leveraged capital structure, with total debt of Rs.47.11 Cr. in FY2026, mainly owing to recently completed debt-funded capex and TNW of Rs. 20.12 Cr.
   

• Exposure to Raw Cotton Volatility and Intense Industry Competition :

  Operating margins remain highly vulnerable to severe raw cotton price swings driven by unpredictable weather, fluctuating crop yields, shifting global demand, and government policy interventions. In this commoditized and fragmented market, independent yarn producers possess limited pricing power due to intense competition from large integrated players, trade policy and subsidy shifts, and tight exposure to global macroeconomic cycles.
   

• Constitution as a limited liability concern :

   LLP status caps KCL’s financial flexibility by limiting access to outside growth capital. The structure also introduces entity-level risk, where partner insolvency or death can lead to forced capital withdrawals or sudden dissolution.
   

• Moderately intensive working capital operations :

  The working capital operations of the firm remained intensive in nature as the current ratio remained at 1.99 times in FY26, against 1.28 times in FY25. The company’s reliance on bank limits remained moderate, with average utilization of ~89.46 percent over the past 12 months. Debt coverage indicators remained moderate, marked by Interest coverage of 2.74x and DSCR of 1.25x in FY26. BWR believes the working capital operations will remain at similar levels due to the nature of the industry.
   

Positives:

• Growth in the scale of operation with total operating income (TOI) above Rs.150 crore and an operating margin above 9.5% on a sustained basis.

• Improvement in its capital structure, marked by overall gearing below 2.00x on a sustained basis.

Negatives:

• Decline in TOI below Rs.120 crore on a sustained basis.

• A rising debt burden, accompanied by a decline in key ratios such as Total Debt to Tangible Net Worth (TOD/TNW) deteriorating from current levels,  along with any withdrawal of capital and USL, would lead to negative rating action.
   

The liquidity position of the firm remains adequate, marked by a current ratio of 1.99x as of 31 March 2026 (Provisional), and debt indicators such as ISCR and DSCR were 2.74x and 1.25x, respectively. The firm has achieved net cash accruals of ~Rs. 7.75 crore as against the CPLTD  of ~Rs. 4.75 crore in FY26(Prov). It has cash and bank balance of Rs.0.19 crore as on March 31, 2026. Average fund-based working capital utilisation remained modest at 89.46% for 12 months ended  31 August 2026. 
 

Environmental: The firm has obtained all the necessary regulatory licenses related to the manufacturing of yarn. The firm has an automatic fire system. Along with these, the firm sells the waste generated to different firms manufacturing threads or yarns related to jeans during the manufacturing process. The firm has also implemented a solar power plant, reducing their reliability on regular electricity supply. 
Social: The firm maintains a good workforce of 200 - 210 employees and strictly adheres to labour laws, workplace safety protocols, accident prevention frameworks, and training initiatives, offering insights into operational resilience.
Governance: The company focuses on board independence, financial transparency, audit mechanisms, and risk-management practices.

Kian Cotspin LLP was incorporated on 23rd April, 2021 and operates in the textile sector. It is a cotton yarn manufacturer based in Gujarat, India, specializing in combed and carded compact yarns for knitting, weaving, and embroidery. Utilizing advanced manufacturing techniques and raw materials, the firm produces strong, durable, and versatile yarns tailored to diverse client needs. The firm began its operations in July 2023. The firm is promoted by the Vansjaliya, Detroja, and Amrutiya families. 

The Complexity Indicator refers to the ease with which the returns associated with the rated instrument could be estimated. It does not indicate the risk related to the timely payments on the instrument, which is rather indicated by the instrument's credit rating. It also does not indicate the complexity associated with analysing an entity's financial, business, industry risks or complexity related to the structural,transactional or legal aspects. Details on the complexity levels of the instruments are available on BWR's website Complexity Levels.

Creadit Rating Agency	Status and Reason for Non-Cooparation	Date of Press Release
CARE	CARE Ratings revised KCL’s ratings to CARE B+/Stable/CARE A4 and migrated them to the Issuer Not Cooperating (INC) category due to non-receipt of the required information.	18Sep2026

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Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI]. BWR is the 5th agency to get a credit rating registration in India in 2009 and its corporate office in Bengaluru. It has a country-wide presence with representatives in 150+ locations. Canara bank is an institutional investor in Brickwork.

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