T.C. Terrytex Limited IPO

01At a glance

What the company does: makes terry towels (dobby, jacquard, face, hand and bath towels) and dyes and processes yarn at a plant at Sarsini, Mohali, Punjab, in operation since 2005 (AP p.3, DRHP p.77).

Who pays it: retail chains, institutional and hospitality customers, trading houses and yarn mills, mostly overseas; exports were 76.86% of product sales in the six months to September 2025, and the largest customer, Kmart Australia, was 29.17% of revenue (AP p.4, DRHP p.27, DRHP p.29).

Why it is raising money: ₹1,200.00 million to repay borrowings and the rest for general purposes (AP p.6).

How fast it has grown: slowly: revenue from ₹5,441 million in FY23 to ₹6,735 million in FY25, and ₹3,246 million in the six months to September 2025 (AP p.7).

The one thing to understand: the margin comes largely from government export incentives. Export incentives inside revenue were ₹516.51 million in FY25 against EBITDA of ₹590.41 million, and ₹251.22 million in the six months against EBITDA of ₹271.99 million (our arithmetic, DRHP p.278, AP p.7).

02The business, in plain words

A towel exporter dyes yarn, weaves it into terry fabric, finishes and packs towels to a retailer's specification, and ships them abroad. It works to order, often under the retailer's own label (AP p.3).

An Australian retail chain orders private-label bath towels → T.C. Terrytex dyes the yarn, weaves, finishes and packs the towels in Punjab → it ships them and is paid by the retailer → it also receives duty-credit scrips worth 8.2% of the export value under the government's ROSCTL scheme (DRHP p.182).

The company runs semi-automatic machinery imported mainly from Japan and was recognised as a Three Star Export House in 2024 (AP p.3). It had 1,714 employees at September 2025 (AP p.9).

Earnings equation: Profit ≈ tonnes shipped × (towel price − materials and conversion cost) + export incentives − interest. EBITDA margin was 8.38% in the six months to September 2025 (AP p.8).

03Where the money comes from

Source: DRHP p.35, DRHP p.278. H1 FY26 is six months. Revenue from operations also includes small other operating revenue.

Source: DRHP p.27, DRHP p.29. The largest customer is Kmart Australia; other customers are not named (DRHP p.27).

04The growth record

Source: AP p.7, AP p.8. H1 FY26 is six months.

Other income was ₹6.07 million in FY25 against profit before tax of ₹230.36 million, or 2.6% of profit before tax, our arithmetic (DRHP p.69).

05What the growth is made of

Revenue grew 20.27% in FY24 and 2.91% in FY25 (AP p.8). Towel sales rose each year while dyed-yarn sales peaked in FY24 (DRHP p.35). The United States share of exports fell from 40.25% in FY25 to 31.51% in the six months to September 2025 (DRHP p.29). The industry report cited in the document says the US imposed a 50% tariff on apparel imports (DRHP p.144); the document does not quantify the effect on the company in the pages read.

06Earnings quality

Operating cash flow has been well above profit in every period, and the cash has gone to repaying debt: financing cash flow was negative ₹402.37 million in FY25 (AP p.7). The weakness is what makes the margin. Export incentives were 94%, 92%, 87% and 92% of EBITDA in FY23, FY24, FY25 and the six months (our arithmetic, DRHP p.278, AP p.7). The auditors made no qualifications (AP p.10). The document reports delays in paying statutory dues (AP p.9).

07The balance sheet

Source: AP p.7, AP p.8.

Borrowings were 2.97 times EBITDA in FY25 (AP p.8). The ₹1,200 million for repayment equals 75% of borrowings at September 2025 (our arithmetic, AP p.6, AP p.7).

08What the money is for

Source: AP p.6.

The company may raise up to ₹150 million in a pre-IPO placement, which would reduce the fresh issue (AP p.6).

09Who is selling

Source: AP p.1.

Ashis Living holds 10,521,500 shares, or 8.14% (AP p.6). The promoters are not selling (AP p.1).

10Promoters

The promoters are Akhil Satia, Shravan Sethi and Shiv Parivar Trust (AP p.5). Akhil Satia, managing director, holds an MSc in international business from the University of Birmingham and has led the company since 2005 (AP p.5). Shravan Sethi holds a business administration degree from Amity University and holds no shares in the company (AP p.5, AP p.6). Shiv Parivar Trust was set up as Anil Satia Trust in 2015 and renamed in 2017 (AP p.5).

A promoter-group company, Satia Synthetics, defaulted on loans from State Bank of India, Indian Overseas Bank, Canara Bank and Indian Bank; the loans were assigned to Prudent ARC, which sanctioned a one-time settlement of about ₹602.1 million in October 2024 (DRHP p.28). Akhil Satia had given a personal guarantee for those loans (DRHP p.28).

Remuneration to Akhil Satia as managing director was ₹7.20 million in FY23 and ₹7.91 million in FY25 (DRHP p.75).

11Who already owns it

Source: AP p.6.

12What changed just before the IPO

• Debt: borrowings down from ₹2,044 million to ₹1,594 million since March 2023 (AP p.7).
• Promoter group: the Satia Synthetics settlement in October 2024 (DRHP p.28).
• United States: a smaller share of exports in the latest six months (DRHP p.29).

The company has not issued bonus shares in the five years before the latest reporting date (DRHP p.272). The last allotment of equity shares was a rights issue at ₹10 a share on 6 January 2021 (DRHP p.88). There has been no change of statutory auditor in the last three years (DRHP p.78). The company was incorporated as a public limited company in August 2005 (DRHP p.2).

13Capacity and expansion

Installed capacity was 9,349.90 tonnes a year for terry towels and 5,845.00 for dyed yarn, used at 88.60% and 93.13% in FY25 (DRHP p.33). The company also had 1,800 tonnes of fabric made outside in FY25 (DRHP p.33). The proceeds fund no new capacity (AP p.6).

14Market size and industry structure

The Dun & Bradstreet report cited in the offer document describes terry towels as a key segment of bath linen, and names China, Pakistan and Turkey as competing producers (AP p.5, DRHP p.146). newboard has not tested the report's statements.

15Competitive position

What the document claims, and what it rests on:

• Fast sampling and small order lots, from specialised machinery (AP p.4).
• Long relationships with consumer brands, including Kmart (AP p.3).
• Integration from yarn dyeing to packing (AP p.3).

Against that: dependence on export incentives, on one customer and on two countries, and no long-term customer contracts (AP p.9, DRHP p.27, DRHP p.29).

16Peers the company named

Source: DRHP p.119. Peer P/E uses prices on 27 March 2026.

No P/E is possible for the company until a price band is set.

17Risks, in plain words

• Export incentives. They equal most of EBITDA (DRHP p.278, AP p.7).
• One customer. Kmart Australia was 29% of recent revenue (DRHP p.27).
• Two countries. Australia and the United States were about three quarters of exports (DRHP p.29).
• Trade policy. Tariff changes in export markets (DRHP p.30).
• Staff. Attrition was 66.71% in FY25 (AP p.10).
• Orders. No long-term contracts; business runs on purchase orders (AP p.10).
• Promoter group. A past loan default at Satia Synthetics (AP p.9).

18Litigation and regulatory matters

Source: AP p.11. The abridged prospectus lists no proceedings against or by the promoters or directors (AP p.11).

19Related-party transactions

Not read in detail for this study.

20What the offer document does not say

In the sections read for this study, the document does not give:

• Profit without export incentives, stated by the company.
• The effect of US tariffs on orders, in the pages read.
• Why Shravan Sethi is a promoter without a shareholding, in the pages read.
• The names of customers other than Kmart.
• The price band, lot size or issue dates, which is normal at DRHP stage.

21Five questions for management

1. What would EBITDA be without export incentives, and what happens if the ROSCTL rate changes?
2. How have US tariff changes affected orders from US customers?
3. What is Shravan Sethi's role, and why is a promoter holding no shares?
4. Do Akhil Satia or the company have any remaining exposure from the Satia Synthetics settlement?
5. What is being done about staff attrition of two-thirds a year?

2Sources and cited facts

This study was read from 2 documents the company filed. The 71 figures it cites are listed under the document each came from, with the page and the sentence as printed.