VARVEE GLOBAL LIMITED

Varvee Global Limited, post-acquisition of Aarvee Denims in July 2025, has strategically pivoted its manufacturing focus from denim to the non-denim segment. This shift was driven by the current market conditions and the broader product range offered by non-denim fabrics, including shorts, cotton pants, and ladieswear. The company is currently operating on a job work model, where customers provide yarn, and VGL handles processing, dyeing, printing, finishing, and weaving, charging a conversion fee of ₹70-80 per meter. This model significantly reduces raw material costs and working capital requirements.

In Q2 FY26 (July-September 2025), VGL reported a revenue of approximately ₹28 crore, achieving an impressive EBITDA margin of almost 50%. This high margin is primarily attributed to the job work model, which eliminates raw material costs for VGL. Management expects these strong EBITDA margins to continue in the 45-50% range for the next 2-3 quarters, even if they normalize slightly with increased scale. The company's debt-free status, minimal depreciation, and carry-forward tax losses are projected to result in a robust PAT margin of 35-40%.

A key highlight of the post-acquisition turnaround is VGL's debt-free balance sheet. The new management repaid all bank loans taken over during the acquisition, which previously amounted to over ₹300 crore for the old promoters. This eliminates interest costs, significantly boosting profitability. The conversion of denim capacity to non-denim requires a modest capex of approximately ₹10 crore, which will be funded by selling unrequired machinery, thus avoiding new fund infusions. An additional ₹4-5 crore is allocated for maintenance and changeover.

VGL plans a phased ramp-up of its non-denim production capacity. Starting January 2026, the company aims for 30 lakh meters per month, with a target to reach 50-60 lakh meters per month by April 2026. The ultimate goal is to make the factory 100% operational within the next 2-3 quarters. At 50-60 lakh meters per month through job work, the company projects an annual turnover of ₹200 crore. For this level of revenue, working capital needs are estimated at ₹15-20 crore, with potential banking facilities of ₹20-30 crore available for future growth up to ₹200 crore turnover by FY26-27, leveraging its zero-debt position.

Beyond textiles, VGL's long-term vision is to evolve into an "enterprise company" with multiple verticals over the next five years. Leveraging its 60,000 square yards of land and existing infrastructure, the company aims to explore sectors such as infrastructure, renewable energy, and chemicals. The strategy involves generating internal accruals from the textile business over the next 3-4 quarters to fund investments in backward integration (e.g., chemicals, machinery) and new verticals, thereby diversifying its revenue streams and business segments.

The new management team, led by Chairman & Managing Director Mr. Jaimin Kailash Gupta (with 12+ years in textiles), includes a Director for production (20+ years experience) and a CFO. This core team focuses on tighter execution, optimized purchasing, strong production-floor management, and real-time data analysis through ERP integration. These operational enhancements, coupled with improved purchasing terms (7-15 day cash payments yielding 5-7% advantage), are critical drivers behind the improved margins and efficiency. The company has also restructured its workforce, retaining 60-65 experienced personnel and hiring new talent, bringing the total executive staff to over 200 and contract labor to over 2,000.