Image Source: Laxmi Cotspin Limited
Laxmi Cotspin Ltd, a well-established industry player in the Indian textiles industry, has declared a temporary closure of its yarn manufacturing division, effective from the date May 5, 2025. This is disclosed through official releases in the face of persistent operational and financial difficulties by the company.
Brief Introduction
Established in 2005, Laxmi Cotspin Ltd is a Government of India Star Export House company that focuses on the manufacture of cotton yarn for both domestic and export markets. The company supplies to home textile, denim, and hosiery industry manufacturers, with a strong presence in Maharashtra and Gujarat.
Announcement Details
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Laxmi Cotspin Ltd has announced a temporary closure of its yarn production unit, effective May 5, 2025.
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The news was made public via regulatory filings and is a "Temporary Shutdown" in the company's official release.
Scope of Shutdown
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The shutdown specifically targets the yarn manufacturing division, encompassing both ring spinning and open-end units.
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The shutdown is termed temporary, with no clear timeline indicated for restarting operations.
Operational and Financial Context
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The firm has had dwindling sales growth over the last five years, with compounded sales falling -4.06% and poor return on equity.
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Current financial reports demonstrate operational difficulties through dwindling profits and a poor interest coverage ratio.
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The shutdown is preceded by a series of board meetings and compliance reports, reflecting continuous strategic reevaluation.
Effect on Stakeholders
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The shutdown will potentially affect employees, vendors, and customers relying on the yarn division for business continuity.
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Investors have been informed via stock exchange filings, and trading windows have been closed as per SEBI guidelines.
Management and Governance
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Chairman & Managing Director Sanjay Kachrulal Rathi heads the company, with a board made up of seasoned industry experts.
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Promoter holding in the company has risen in recent quarters, reflecting ongoing promoter confidence in spite of operating disappointments.
Industry Position
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Laxmi Cotspin Ltd is regarded as a small-cap company in the textiles industry with a market capitalization of around ₹43 crore as of early May 2025.
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The company can be generally compared with similar textile companies like STL Global Ltd., Morarjee Textiles Ltd., and Bannari Amman Spinning Mills Ltd.
Conclusion
The temporary closure of Laxmi Cotspin Ltd's yarn producing division is a landmark moment for the company and its investors. Though the management has not announced a definite time frame for restart, the decision reflects the financial and operational pressures being experienced by the business.
Sources: Stock Insights, Screener, Economic Times
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