| Amarjothi Spinning Mills Limited | ||||
| Rating reaffirmed at 'Crisil BBB+ / Stable' | ||||
| 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 reaffirmed its ‘Crisil BBB+/Stable’ rating on the long-term bank facilities of Amarjothi Spinning Mills Limited (ASML).
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 Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key rating drivers - Strengths Established market position in the mélange yarn segment supported by the extensive experience of the promoters and their established customer relationships: The group benefits from the experience of nearly three decades of N Rajan, R Premchander and R Jaichander in the mélange yarn segment. Supported by the extensive experience of the promoters, the group has established its position in the mélange yarn segment and built strong relationships with customers and suppliers. Crisil Ratings believes ASML shall continue to benefit from its established market position.
Above-average financial risk profile: Networth and total outside liabilities to tangible networth (TOLTNW) ratio were comfortable at Rs 192.06 crore and 0.44 time, respectively, as on March 31, 2025. The networth was around Rs 200 crore as on September 31, 2025, and expected to increase further in the medium term. The gearing is expected to remain comfortable over the medium term, aided by the absence of major debt-funded capital expenditure (capex). Interest coverage and net cash accrual to total debt ratio were healthy at 3.92 times and 0.34 time, respectively, for fiscal 2025 and are expected to be similar for this fiscal and in the medium term. |
Key rating drivers - Weaknesses Large working capital requirement: Operations are working capital intensive, as indicated by gross current assets (GCAs) of 230 days as on March 31, 2025, driven by sizeable inventory and receivables of around 165 days and 56 days, respectively. The company's extensive product portfolio, comprising approximately 1,000 shades of mélange yarn, contributes to high inventory levels at times. Additionally, the company builds up raw material inventory during seasonal periods. Currently, in response to global uncertainties, the company has stockpiled cotton sufficient for the full calendar year, and dyes required for the next three months, as dye costs have been increasing due to rising raw material prices, which are derivatives of crude oil. The company’s large working capital requirement is supported by its cash and liquid assets.
Modest scale of operations and susceptibility to volatility in input prices: The yarn industry is highly fragmented, comprising numerous small, unorganised players and a few large players. The Amarjothi group operates at a modest scale, with an operating income of Rs 230.48 crore in fiscal 2025 and revenue of around Rs 118 crore in the first nine months of fiscal 2026. The key raw material, cotton, is a seasonal commodity, and input costs for spinners typically adjust to variations in cotton yarn realisation with a significant time lag, rendering profitability vulnerable to volatility in input costs. Furthermore, the company requires dyes, which are currently experiencing an upward price trend due to the increase in crude oil prices. The company has indicated that it intends to pass on any increases in raw material costs to the end customers, given that it manufactures mélange yarn, a specialised product. The company's ability to effectively pass on these costs will be monitorable. |
Liquidity Adequate Bank limit utilisation was low at 4.45% on average for the 12 months through January 2026. 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 adequate at 6.38 times as on March 31, 2025. The promoters are likely to extend equity and unsecured loans to meet the working capital requirement and debt obligations. |
Outlook Stable Crisil Ratings believes ASML will continue to benefit from the 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, N Rajan. The group manufactures value-added mélange yarn. Its manufacturing unit is in Tiruppur, Tamil Nadu. |
Key financial indicators Consolidated numbers
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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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Annexure: List of instruments and names of regulators of the instruments As required by SEBI CRA Circular dated Feb 10, 2026, a list of activities or instruments falling under the purview of various FSRs, along with the names of respective FSRs, is being disclosed below:
* Includes securitisation transactions involving assignee payout, acquirer's payout. ~ The rated instrument may involve issuance of different instruments such as debt securities (listed or otherwise), bank loans, commercial paper (listed or otherwise), etc. The regulator of the instrument may accordingly be SEBI, RBI or MCA and can only be determined upon issuance. In PRs subsequent to issuance(s), Crisil Ratings Limited shall separately capture the rated quantum details along with names of respective regulators. ^ Includes bank facilities such as liquidity facility, second loss facility that are part of securitisation transactions. # There is no instrument being rated and hence, Regulator of the Instrument is not applicable. The rating scale and definitions are being followed as stipulated in SEBI Master Circular for CRAs. @ These ratings were assigned during regulatory regime prior to introduction of SEBI CRA Circular dated Feb 10, 2026 and the investor side regulators have accordingly been included.
Note: Kindly note that for activities or instruments falling under the purview of FSRs other than SEBI, the grievance/dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available. |
Criteria Details
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