2. Business Divisions

Shree Vishnu Shankar Mills operates across various segments within the textile industry, with a particular emphasis on the production of high-quality yarns. The company’s business divisions include:

• Yarn Production: Shree Vishnu Shankar Mills manufactures various types of yarns, including:
  • Ring Yarn (Ne): 30/1 to 80/1
  • Compact Yarn (Ne): 30/1 to 120/1
  • TFO Doubled Yarn (Ne): 40/2 to 80/2
  • OE Yarn (Ne): 10s to 20s
  • Gassed Yarn (Ne): 38/2 to 100/2
  • Slub Yarn (Ne): 20 to 40

  These yarns serve as essential materials for industries such as textiles, apparel, and home furnishings, catering to both domestic and international markets.

• Export Markets: A significant portion of Shree Vishnu Shankar Mills’ revenue is derived from exports. The company has successfully expanded its footprint in key international markets, including Turkey, Portugal, Italy, Belgium, Netherlands, Canada, and the United States, where its yarn is recognized for its superior quality.
• Textile Solutions for Global Markets: The company’s extensive experience and commitment to innovation in textile manufacturing have enabled it to offer high-quality, cost-effective yarn solutions, helping it remain competitive in the rapidly evolving global textile market.

3. Weaknesses

Despite Shree Vishnu Shankar Mills’ strong reputation and market presence, the company faces a few challenges:

• Volatility in Raw Material Costs: The textile industry is highly dependent on cotton, and fluctuations in cotton prices can impact profit margins. Any significant increase in raw material costs could adversely affect the company’s profitability.
• High Debt-to-Equity Ratio: Shree Vishnu Shankar Mills has a debt-to-equity ratio of 1.39, indicating that the company is somewhat reliant on external debt for financing its operations. This higher level of debt could increase financial risk, particularly if the company faces a downturn in sales or operational challenges.
• Profitability Pressure: The company has faced margin pressure in recent years, as evidenced by the decrease in its gross margin from 45.62% in FY2022 to 35.47% in FY2024. This suggests that rising costs or price competition in the textile market may be impacting profitability.
• Currency Risk in International Trade: As a significant exporter, Shree Vishnu Shankar Mills is exposed to foreign exchange fluctuations. Adverse currency movements could affect the company’s profitability, especially when trading in volatile markets.
• Dependence on Key International Markets: The company’s export performance is heavily dependent on the textile demand in countries like Turkey, Italy, and the United States. Any economic slowdown or trade restrictions in these countries could impact sales.

4. Strengths

Shree Vishnu Shankar Mills has several strengths that position it as a strong player in the textile industry:

• High-Quality Production: The company’s commitment to producing high tensile strength yarns has set it apart in a highly competitive market. Its advanced testing facilities, including Uster Machines, ensure that every batch of yarn meets international quality standards.
• Export Success: Shree Vishnu Shankar Mills has significantly grown its export business, with export sales reaching ₹102.93 crores in FY2022, a substantial increase from ₹42.44 crores the previous year. This demonstrates the company’s expanding reach in international markets, where its yarn is highly sought after.
• Strong Growth in Production and Sales: In FY2021-22, the company achieved 39% growth in production volume and 61% growth in sales value, reflecting its strong operational capabilities and demand for its yarn products.
• Technological Advancements: The company has continually invested in upgrading its production and testing infrastructure, ensuring consistency and superior quality in its products. Its quality control processes are rigorous, ensuring that every product meets stringent global standards.
• Diverse Product Portfolio: Shree Vishnu Shankar Mills offers a diverse range of yarns, catering to different market needs. This product diversification allows the company to tap into various sectors, reducing dependence on any single product or market.

5. Financial Highlights

Here are the key financial highlights of Shree Vishnu Shankar Mills Unlisted Shares:

1. Revenue Decline in FY2024: In FY2024, Shree Vishnu Shankar Mills reported revenue of ₹251.5 crore, down from ₹304.68 crore in FY2023. This decrease in revenue was partly due to challenges in the textile market, including rising raw material costs and competitive pricing pressures.
2. Earnings Pressure: The company experienced a decline in profitability, with a PAT of ₹-21.6 crore in FY2024, compared to ₹-7.43 crore in FY2023. This negative profitability is a concern for investors, highlighting challenges in managing costs and maintaining margins.
3. Gross Margin Decline: Gross margins fell to 35.47% in FY2024, down from 45.62% in FY2022. This reduction in gross margins reflects the impact of increasing raw material costs and price competition within the textile industry.
4. Operating Losses: Shree Vishnu Shankar Mills posted an EBITDA loss of ₹-1.7 crore in FY2024, a sharp decline from ₹19.43 crore in FY2023. This operating loss is indicative of the pressures on the company’s cost structure, requiring strategic adjustments.
5. Debt and Liabilities: The company’s total liabilities amounted to ₹483 crore in FY2024, with significant borrowings of ₹267 crore. The high debt levels pose a risk to the company, especially given the recent downturn in profits and margins.