TO ANALYSE THE FINANCIAL PERFORMANCE OF MODERN THREADS (INDIA) LTD.
1. Introduction
- Introduction of the company
Modern Threads (India) is an Indian textile manufacturing company producing woollen and synthetic-blend yarns along with fabrics. Located in Bhilwara, Rajasthan - a key center for textiles - the firm focuses on spinning and woven wool products. Over decades, skill evolved through consistent work in domestic trade as well as global supply. Operations remain rooted in one central facility where material processing takes place continuously. Market presence extends beyond national borders due to long-term buyer relationships. Expertise shows in product texture, consistency and batch reliability. Textile output meets varied demand without shifting core methods.
- Industry overview
The company operates in the textile industry, playing a major role in jobs, shipping goods abroad, and making products. Among global suppliers, few match its output when it comes to cotton, wool, or man-made threads. From yarn creation to cloth formation, stitching shapes, treatment stages, right through to clothing assembly - each phase exists here. With scale spread across many regions, activity flows continuously through these linked processes.
Still, patterns in this field shift over time due to multiple causes including:
- Raw material price volatility
- Global demand for textile products
- Export market fluctuations
- Changes in global economic conditions and trade policies
- Purpose of the Analysis
The main purpose of this study is to analyse the business operations and structure of Modern Threads (India) and to understand the financial performance of the company.
2. Company Overview
- Background and History
Modern Threads (India) Ltd. was started in 1980 dealing in woollen yarns and blended yarn products. The company has expanded its operations, by bringing together spinning and yarn manufacturing capabilities.
Over the years, the company has focused on improving operational efficiency, quality of the product and market position in the woollen textile segment.
- Business Model
The company's business model depends on manufacturing and selling textile products in Indian and foreign markets.
The Business model flow is as follows:
- Procurement of raw materials such as wool and synthetic fibres
- Manufacturing through processing units
- Distribution to garment manufacturers and textile exporters
- Revenue generation through product sales
Key Products / Services
The major products and services manufactured by Modern Threads (I) include:
- Woollen yarns
- Synthetic blended yarns
- Lanolin
- Textile fabrics
These products are used in knitting garments and textile manufacturing industries.
Market Position
Modern Threads (I) comes under the category of mid-cap textile companies with the market capitalization of 184 Cr .However, the company is at a lower level financially as compared to other giants in the industry but it maintains a stable presence in the woollen yarn segment and benefits from India's strong textile ecosystem.
3. Promoter /Founder Introduction
Rajesh Ranka
Name | Professional Background | Role in Company Growth |
Rajesh Ranka | Experienced businessman in the textile sector | Chairman & Managing director |
Ranka Family | Good experience in textile manufacturing and business management | Promoters group |
4. Financial Statement Analysis
- Income Statement Analysis
Metric | FY2025 | FY2024 | FY2023 |
Net Sales Revenue | ₹260 Cr | ₹300 Cr | ₹301 Cr |
Net Profit After Tax | ₹3 Cr | ₹25 Cr | ₹214 Cr |
Key Observations of Income Statement:
- In FY 2025, Revenue decreased by 13% approx.
- Net profit was sharply down in FY 2025.
- Profit went up exponentially in FY 2023 due to exceptional items in other income.
Revenue Chart
- Balance Sheet Analysis (Rs. In crore)
As of FY25:
- Borrowings: Went from 2 Cr to 23 Cr from previous year
- Investments: Increased to 28 Cr from 15 Cr of last year
- Current Assets: Touched 143 Cr from 136 Cr of last year
- Cash Flow Statement Analysis (Rs. In crore)
Narration | 21 Mar-21 | 21 Mar-22 | 21 Mar-23 | 21 Mar-24 | 21 Mar-25 |
Cash from Operating Activity | 9.29 | (5.17) | 15.60 | 24.41 | (7.53) |
Cash from Investing Activity | (1.58) | (4.21) | (9.27) | (21.92) | (18.30) |
Cash from Financing Activity | (1.76) | (2.79) | (4.04) | (3.06) | 19.80 |
Net Cash Flow | 5.95 | (12.16) | 2.29 | (0.57) | (6.04) |
FY25 highlights:
- Operating cash flow turned negative (₹7.53 Cr).
- Investing cash flow improved significantly from prior year but remained negative.
- Financing cash flows sharply increased from previous year.
- Key Financial Ratios (Indicative)
Ratio Type | Interpretation |
Profitability | Profitability significantly reduced due to rising costs and declining sales. |
Liquidity | Indicates moderate liquidity position |
Leverage | Company is dependent moderately high on debt borrowing |
Efficiency | Efficiency of asset utilization is moderate |
- Year-on-Year Comparison (3 years)
- FY23: Sharp increase in revenue and exponential increase in net profits due to exceptional items in other income categories.
- FY24: Profit reduced sharply but sales remained almost the same.
- FY25: Declined revenue and profit as textile demand reduced.
5. Key Insights & Interpretation
Strengths
- Long and strong presence in the woollen and yarn segment.
- Strategic location advantage in Bhilwara, known as the “Textile City of India.”
- Integrated yarn and spinning manufacturing facilities
Weaknesses
- Profitability instability due to dependence on textile market cycles.
- Limited diversification compared to large textile companies.
- Instability in raw materials prices.
Risk Factors
- Global economic slowdown impacting the exports of textile.
- Intense competition in the industry from local as well as foreign players.
Future Outlook
The future outlook for Modern Threads (India) Ltd. seems a bit unstable due to its profit and sales instability. However, with India's textile sector getting government support through schemes like the Production Linked Incentive (PLI) scheme, the company may benefit from industry growth in India.
6. Conclusion
- Final Evaluation of Financial Health
Modern Threads (India) Ltd. shows a moderate working in the textile manufacturing sector but faced some profitability issues in FY2025. The decline in net profit and stagnant revenue numbers show the challenges related to rising production costs, less margins and demand fluctuations. While the company maintains adequate assets and a good operational environment, improving profitability and cash flow generation will be very important for strengthening its financial health.
- Investment or Performance Perspective
From an investment perspective, Modern Threads (India) Ltd. should currently be viewed as a moderate-risk company with cycle-wise earning opportunities, due to its dependence on textile market demand and raw material price instability. However, if the company successfully becomes operationally efficient, manages its financial leverage, and benefits from the expected growth in the Indian textile industry, it may gradually strengthen its performance and long-term growth prospects.
Data Sources
https://www.screener.in/company/MODTHREAD