Unitec Fibres’ debt-equity ratio rose to 1.19 in FY2026

Unitec Fibres Limited’s debt-equity ratio rose to 1.19 at March 31, 2026 from 0.32 at March 31, 2024, as total debt increased to Rs 77.1922 crore from Rs 15.7212 crore. The increase coincided with Rs 44.9254 crore of capital work-in-progress and a decline in the current ratio to 1.08.

Why did Unitec Fibres’ debt-equity ratio rise to 1.19?

Unitec Fibres’ debt-equity ratio increased because total debt grew faster than equity during FY2024 to FY2026. The company defines debt-equity as total debt divided by equity. The ratio rose from 0.32 in FY2024 to 0.64 in FY2025 and 1.19 in FY2026, while shareholders’ funds increased from Rs 49.1804 crore to Rs 64.9956 crore over the two-year period.

The increase came from both long-term and short-term borrowings. Long-term borrowings rose from Rs 3.5844 crore at March 31, 2024 to Rs 22.0767 crore at March 31, 2025 and Rs 37.5818 crore at March 31, 2026. Short-term borrowings rose from Rs 12.1368 crore to Rs 14.5616 crore and then Rs 39.6104 crore across the same dates, taking total debt to 4.91 times the FY2024 level.

The composition of debt also changed as the FY2026 capitalisation statement reported Rs 30.7372 crore of short-term debt and Rs 46.455 crore of long-term debt. Under that statement’s definitions, short-term debt is payable within 12 months but excludes term-loan instalments due within 12 months, while long-term debt includes those current instalments. This definition differs from the balance-sheet split of long-term and short-term borrowings, but both disclosures report total debt of Rs 77.1922 crore at March 31, 2026.

What borrowing facilities and security supported the FY2026 debt?

Unitec Fibres had Rs 63.1792 crore of secured borrowings and Rs 14.013 crore of unsecured borrowings at March 31, 2026. Secured debt represented 81.9% of the Rs 77.1922 crore total. Kotak Mahindra Bank was the principal disclosed secured lender, with Rs 44.566 crore outstanding under a 72-month term loan and Rs 16.7242 crore under an on-demand cash-credit facility.

The larger Kotak Mahindra Bank term loan carried interest at the repo rate plus 2.75%, while the cash-credit facility was priced at the repo rate plus 2.70%. The term loan and cash-credit facilities were secured by exclusive charges over existing and future movable fixed assets, stock and book debts, as well as specified industrial properties in Maharashtra and Gujarat. Personal guarantees for these facilities were provided by Vijay Omjagdish Behl, Virander Behl, Rajiv Behl and Devina Virander Behl.

Unsecured borrowings of Rs 14.013 crore were repayable on demand at March 31, 2026. The disclosed lenders included U nitec Inc, described as the proprietary firm of Virander Behl, with Rs 4.50 crore; Uni Eco Beacon Private Limited with Rs 4.505 crore; Bhartia Yarns Pvt Ltd with Rs 3.575 crore; Roha with Rs 1 crore; and Vijay Omjagdish Behl with Rs 0.433 crore. The repayment terms mean the timing of repayment can affect the company’s near-term funding needs.

How did capital expenditure and working capital coincide with higher debt?

Unitec Fibres’ debt expansion coincided with a rise in capital work-in-progress, or CWIP, which records expenditure on assets not yet ready for their intended use. CWIP increased from Rs 8.5034 crore at March 31, 2025 to Rs 44.9254 crore at March 31, 2026. Total property, plant and equipment, intangible assets, CWIP and intangible assets under development reached Rs 89.6427 crore, compared with Rs 53.3007 crore a year earlier.

The company reported FY2026 additions of Rs 36.422 crore to CWIP, Rs 2.4055 crore to plant and machinery, Rs 0.4568 crore to land and Rs 0.2585 crore to vehicles. These additions were partly offset by depreciation and amortisation of Rs 3.4947 crore. Unitec Fibres also disclosed that it had acquired about 47,494 square metres of land in Valsad, Gujarat, and was setting up an additional recycled polyester staple fibre, or RPSF, production line designated as Unit 3.

The existing two operational units had combined installed RPSF capacity of up to 27,984 metric tonnes per annum. Management attributed the increase in long-term borrowings from Rs 3.5844 crore in FY2024 to Rs 37.5818 crore in FY2026 to fresh bank loans supporting operational funding requirements. The persistence of higher debt therefore depends in part on the completion and funding requirements of the additional production line.

Working-capital balances also changed in FY2026. Current assets increased to Rs 70.9179 crore from Rs 66.2427 crore in FY2025, including short-term loans and advances of Rs 13.0347 crore, compared with Rs 5.8162 crore. Within those advances, balances with revenue authorities rose to Rs 10.3409 crore from Rs 1.6348 crore, while inventory was broadly stable at Rs 40.9684 crore against Rs 40.8393 crore.

What changed in Unitec Fibres’ liquidity and returns?

Unitec Fibres’ current ratio fell to 1.08 in FY2026 from 1.56 in FY2025 and 1.58 in FY2024. The current ratio is current assets divided by current liabilities. Current liabilities rose by Rs 23.3369 crore year on year to Rs 65.8842 crore at March 31, 2026, while current assets increased by Rs 4.6752 crore.

Short-term borrowings reached Rs 39.6104 crore in FY2026, compared with Rs 14.5616 crore in FY2025. Trade payables, in contrast, declined to Rs 19.9324 crore from Rs 21.0852 crore, and trade receivables declined to Rs 13.9343 crore from Rs 17.0516 crore. The company also reported differences between bank working-capital statements and book balances: March 2026 trade payables were Rs 12.8533 crore in the stock statement and Rs 19.9324 crore in the balance sheet.

The filing attributed the trade-payable difference to the bank sanction letter, which required reporting only vendors for raw materials, chemicals, coal and packing materials, whereas the books included capital-goods and other vendors. For inventory, the March 2026 stock statement reported Rs 39.0369 crore against Rs 40.9684 crore in the balance sheet, with management’s judgement cited for the difference. These disclosures matter because current assets were the primary security for bank and financial-institution working-capital borrowings.

Returns declined alongside the higher debt and investment balances. Return on net worth, calculated as restated profit after tax divided by year-end net worth, fell to 11.69% in FY2026 from 14.32% in FY2025 and 15.09% in FY2024. Revenue from operations fell 0.96% to Rs 224.2448 crore in FY2026, while restated profit after tax declined 7.56% to Rs 7.5967 crore from Rs 8.2184 crore.

Conclusion

Unitec Fibres reported a debt-equity ratio of 1.19 at March 31, 2026 after total debt rose to Rs 77.1922 crore from Rs 15.7212 crore two years earlier. The change combined secured bank facilities, Rs 14.013 crore of on-demand unsecured borrowings, higher CWIP and a reduction in the current ratio from 1.58 to 1.08.

The next disclosed items to watch are the planned initial public offering approved by the board on May 7, 2026 and by shareholders on May 12, 2026, and progress on Unit 3 in Valsad. The March 31, 2026 capitalisation statement said post-issue debt and equity figures were not determinable at that stage, leaving the eventual capital structure unresolved.