­Acuité has consolidated the business and financial risk profiles of Sustainable Spinning and Commodities Private Limited (SSCPL), Milan Ginning Pressing Limited (MGPL) and K R Solvent LLP (KRSLLP) together known as the ‘Milan Group’ (MG), to arrive at this rating. The consolidation is on account of common management, similar line of business, high level of integration and strong operational linkages.

Experienced management and established track record of operations
The promoters have over three decades of experience in the textile industry, coupled with a long track record of operations, which has enabled the company to establish strong relationships with its stakeholders. Over the years, the management has developed long-term associations with reputed players in the textile industry. The company exports its products to various countries such as Bangladesh, China, Europe, and Egypt, catering to international clients  and is one of the leading ginning and pressing companies in India. Acuite believes that the extensive experience of the management is likely to positively impact the business risk profile of the company over the near to medium term.

Stable operating scale with growth exhibited in FY2026 albeit moderation in profitability
The group’s revenue moderated to Rs. 862.14 crore in FY25 as compared to Rs. 896.10 crore in FY24, primarily due to reduced demand in export markets during the year. With lower exports, the company shifted sales towards the domestic market, where realizations and profitability are comparatively lower, thereby impacting overall revenue and margins. However, the group reported revenue of Rs. 927.82 crore in FY26 (Est.), with improvement driven by better domestic demand and improved price realizations. The operating profit margin moderated to 4.22 per cent in FY25 from 4.54 per cent in FY24, mainly due to higher raw material costs. However, the PAT margin improved marginally to 1.51 per cent in FY25 from 1.37 per cent in FY24, supported by lower depreciation and interest costs. Acuite believes that the group’s ability to improve revenues while sustaining profitability margins will remain a key monitorable.

Moderate Financial Risk Profile
The group has a moderate financial risk profile, characterized by a modest net worth, moderate gearing, and adequate debt protection metrics. The net worth improved to Rs. 131.20 crore in FY25 from Rs. 108.02 crore in FY24, supported by profit retention and equity infusion during the year. Further, the net worth is expected to improve over the near term on account of IPO (Milan Ginning Pressing Limited) proceeds being added to reserves, which will strengthen the capital base and support overall financial risk profile of the group. The gearing ratio improved marginally to 1.00 times as of March 31, 2025, compared to 1.05 times as on March 31, 2024. Total debt increased to Rs. 131.48 crore from Rs. 113.14 crore, comprising Rs. 47.18 crore of long-term debt, Rs. 50.64 crore of short-term debt, Rs. 20.43 crore unsecured loans from promoters/directors, and Rs. 13.23 crore of maturing debt repayment obligations. The TOL/TNW ratio stood at 2.31 times as of March 31, 2025. The Interest Coverage Ratio (ICR) improved to 3.32 times in FY25 from 3.23 times in FY24, while the Debt Service Coverage Ratio (DSCR) improved to 1.36 times in FY25 from 1.27 times in FY24. This improvement is mainly due to better operating profitability and relatively lower interest costs during the year. Acuite believes that the group’s financial risk profile is expected to improve over the near to medium term on the back of proposed IPO in the group.

Moderately intensive working capital operations
The group’s working capital operations are moderately intensive marked by an average gross current asset (GCA) at 126 days from FY23 to FY25. The GCA days improved slightly to 122 days in FY25 from 130 days in FY2024, primarily due to a reduction in the receivables period and inventory holding during the year. The group improved its inventory days to 28 days in FY2025 from 32 days in FY2024, reflecting marginal improvement in inventory management. The average inventory holding period of the group is around 30 days. However, debtor days remained rangebound at 74 days in FY2025 from 75 days in FY2024. The average credit period extended to its customers is around 60- 90 days. Furthermore, the creditor days stood at 62 days in FY2025 from 96 days in FY2024. The average credit period allowed by suppliers is around 60-90 days.
Acuité believes the group's ability to improve its working capital cycle over the medium term will remain a key rating monitorable.

Susceptibility of profitability to volatility in raw material prices in an intensely competitive and fragmented textile industry
The group operates in a highly competitive textile industry, characterised by the presence of several organised and unorganised players, which limits pricing power and bargaining ability. The group remains exposed to volatility in cotton prices in both domestic and international markets. Acuite believes the group’s ability to pass on increases in raw material costs to customers will be critical for sustaining its margins and overall credit profile. Further, fluctuations in cotton prices due to global demand–supply imbalances may exert pressure on profitability over the near to medium term.

• Significant growth in revenues above Rs. 1000 crore along with improvement in operating margins on a sustained basis
• Improvement in working capital management with GCA below 100 days
• Strengthening of capital structure of the group post IPO

• Significant decline in revenues and profitability
• Elongation in working capital cycle exerting pressure on liquidity
• Deterioration in financial risk profile due to higher-than-expected addition of debt with DSCR below 1.20 times consistently