| Amarjothi Spinning Mills Limited | ||||
| Rating outlook revised to 'Stable'; Rating Reaffirmed | ||||
| Rating Action | ||||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed rationale Crisil Ratings has revised its outlook on the long-term bank facilities of Amarjothi Spinning Mills Ltd (ASML) to ‘Stable’ from ‘Negative’ while reaffirming the rating at ‘Crisil BBB+’
The revision in the outlook factors in the revival of ASML’s business risk profile reflected in healthy topline of around Rs 173 crore till December 2024 in fiscal 2025, against the Crisil Ratings projection of around Rs 180 crore for the full fiscal. The company achieved revenue of around Rs 258 crore in fiscal 2022 and saw a decline in fiscal 2023 and the first half of fiscal 2024 due to slowdown in the textile industry. The business revived from the fourth quarter of fiscal 2024 resulting in an improved topline. The operating margin was relatively stable at 13-14% over the last two fiscals and at 12.59% for the first nine months of fiscal 2025, primarily due to healthy, albeit lower, gross margins. The outlook revision also factors in the comfortable financial risk profile and liquidity of ASML. The networth is estimated at Rs 200 crore as on March 31, 2025, with gearing and total outside liabilities to tangible networth (TOLTNW) ratio of less than 0.5 time each.
The rating continues to reflect ASML's established market position in the mélange yarn segment, supported by the extensive experience of its promoters and their established customer relationships, and the company’s above-average financial risk profile. These strengths are partially offset by large working capital requirement, modest scale of operations and susceptibility of operating performance to volatility in raw material prices. |
Analytical approach For arriving at its rating, Crisil Ratings has combined the business and financial risk profiles of ASML and its subsidiaries. This is because all the entities, collectively referred to as the Amarjothi group, have a common management and have business and financial linkages.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key rating drivers & detailed description Strengths:
Weaknesses:
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Liquidity: Adequate Bank limit utilisation was low at 10.78% on average for the 13 months through November 2024. Annual cash accrual is expected at Rs 17-20 crore against yearly term debt obligation of Rs 1-2 crore over the medium term, and will cushion liquidity. The current ratio was healthy at 2.59 times on March 31, 2024. The promoters are likely to extend support in the form of equity and unsecured loans to meet working capital requirement and debt obligations. |
Outlook: Stable Crisil Ratings believes ASML will continue to benefit from its promoters' extensive experience and established relationships with customers. |
Rating sensitivity factors Upward factors:
Downward factors:
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About the company ASML is managed by its chairman, Mr N Rajan. The group manufactures value-added mélange yarn. Its manufacturing unit is in Tiruppur, Tamil Nadu. |
Key financial indicators
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Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||
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Criteria Details
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