Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
Rating Rationale
Acuité has reaffirmed its long-term rating of ‘ACUITE BBB-’ (read as ACUITE triple B minus) and its short-term rating of ‘ACUITE A3+’(read as ACUITE A three plus) on the Rs. 228.62 crore bank facilities of Baba Spinners Limited (BSL) (Erstwhile M R Weaving Mills Private Limited). The outlook is ‘Stable’.
Rationale for rating reaffirmation The rating reaffirmation considers steady improvement in revenues albeit moderation in profitability and moderate financial risk profile marked by moderation in coverage indicators. The rating derives comfort from extensive operational experience of the promoters and their established track record in the textile industry and location advantage associated with its presence in the Bhilwara textile cluster. The rating, however, remains constrained by the company’s moderately intensive working capital operations, susceptibility of profitability to volatility in raw material prices, and the inherently competitive and cyclical nature of the textile industry.
About the Company
Baba Spinners Limited (BSL) (Erstwhile M R Weaving Mills Private Limited) was incorporated in January, 1997 and is promoted by members of Agarwal family i.e. Mr. Mahesh Kumar Agarwal, Mr. Deepak Kumar Agarwal and Mr. Sharad Kumar Agarwal. BSL began by focusing on the production of several types of synthetic materials for men's clothes. However, in 2016, BSL took a step toward backward integration by taking on a project to set up a spinning plant in Bhilwara with a capacity of 21056 MT to produce synthetic yarn with counts of 8 and 60. BSL has 20 distributors and 2 agents, covers 29 states, and sells fabric under the 'Baba Collection' brand and yarn under the 'Baba Spinners' brand. Furthermore, the company has 4 MW solar power plant for its captive consumption to reduce power cost and ensure consistent power supply.
Unsupported Rating
Not Applicable
Analytical Approach
Acuité has considered the standalone business and financial risk profiles of Baba Spinners Limited to arrive at the rating.
Key Rating Drivers
Strengths
Long-standing experience of the promoters and established operational track record
BSL is operating in this business for over close to three decades, thus established its presence in textile industry. The directors of BSL are Mr. Mahesh Kumar Agarwal, Mr. Deepak Kumar Agarwal, and Mr. Sharad Kumar Agarwal. Mr. Mahesh Kumar Agarwal, who has over three decades of experience in the industry, is responsible for the overall management and strategic decision-making of the company. Owing to its longstanding presence in the textile sector and its location in the Bhilwara textile cluster, the company has developed strong relationships with its customers and suppliers, as reflected in its position in a highly competitive market. Acuité derives comfort from the extensive experience of the management and believes that it will continue to benefit the company going forward, supporting steady growth in its scale of operations.
Location advantage and entitlement to various incentives from the state government.
The units of the company are located at Bhilwara (Rajasthan) which is one of the largest textile clusters in India. BSPL’s presence in the textile manufacturing region results in benefits derived from low transportation and storage cost as well as easy availability of large number of customer base. The textile projects in India are incentivized by schemes launched by the central government and state governments.
Steady growth in revenues, albeit moderation in profitability margins
Baba Spinners Limited (BSL) reported marginal growth in its operating income to Rs. 328.20 crore in FY26 (Prov.) from Rs. 315.47 crore in FY25. The increase in the company's topline was driven by better capacity utilisation in FY26 (Prov.) compared to the previous year, supported by improved sales realisations. However, the EBITDA margin declined to 12.06 per cent in FY26 (Prov.) from 13.15 per cent in FY25 and 23.20 per cent in FY24 due to higher raw material costs and increased selling expenses. The PAT margin improved and stood at 3.29 per cent in FY26 (Prov.) as compared to 2.10 per cent in FY25. The improvement in PAT margin was primarily driven by lower finance cost as compared to previous year. . The company achieved a turnover of Rs. 85.86 crore in Q1 FY27, with an EBITDA margin of 12.39 per cent, as compared to a turnover of Rs. 81.17 crore in Q1 FY26. Acuité believes that the company's established market position and stable operating performance will continue to support its scale of operations over the medium term, however maintaining profitability margins would remain a key monitorable.
Weaknesses
Moderate financial risk profile
The financial risk profile of the company remained moderate, marked by a modest net worth, gearing, and low debt protection metrics. The tangible net worth stood at Rs. 110.80 crore in FY26 (Prov.) as against 104.82 crore in FY25. The increase in net worth is on account of profit accretion to reserves. The net worth also includes Rs. 23.50 crore of USL, which is subordinated to bank debt and will remain infused in the business for the duration of the bank facilities. The total debt of the company stood at Rs. 173.27 crore in FY26 (prov.) as against Rs. 198.36 crore in FY25. The total debt comprises of long-term debt of Rs. 110.29 crore, short-term debt of Rs. 42.04 crore, and maturing debt repayment obligations of Rs. 19.19 crore. The capital structure is moderate but improving, with gearing (Debt to Equity) stood at 1.56 times in FY26 (Prov.) compared to 1.89 times in FY25. While Interest Coverage Ratio (ICR) stood comfortable at 2.70 times in FY26 (Prov.) against 2.03 times in FY25. However, Debt Service Coverage Ratio (DSCR) stood low at 1.02 times in FY26 (Prov.) compared to 1.11 times in FY25. The DEBT/EBITDA stood high at 4.22 times as on March 31, 2026 (prov.) as compared to 4.66 times as on March 31, 2025. TOL/TNW improved and stood at 1.74 times as on March 31, 2026 (prov.) as compared to 2.00 times as on March 31, 2025.
Acuité believes that the financial risk profile would remain moderate over the medium term due to the absence of major debt funded capex plans.
Moderately intensive working capital management
The working capital operations of the company remained moderately intensive, as reflected by gross current asset (GCA) of 136 days as on 31st March 2026 (Prov.) compared to 138 days as on 31st March 2025. The marginal improvement in the GCA is primarily due to lower inventory days compared to previous years. Further, inventory days stood at 93 days in FY26 (Prov.) against 97 days in FY25. Further, debtor days stood at 29 days in FY26 (Prov.) compared to 27 days in FY25. The average credit period allowed to customers is around 45 days. On the other hand, creditor days stood at 24 days in FY26 (Prov.) as compared to 11 days in FY25 with the average credit period allowed by suppliers being around 15-25 days. Further, the average utilisation of working capital facilities stood at moderate at ~ 72.82 per cent for the six months ended June 2026. Acuité believes that the working capital operations of the company will remain moderately intensive over the near to medium term.
Susceptibility of operating margins to volatility in raw material prices
Polyester, viscose and cotton are the company's main raw materials. Since these raw materials are either derivatives of crude oil or agriculture-based product, their prices are highly volatile, and that they are constantly influenced by changes in crude oil prices as well as other factors such as government policies and agro climatic conditions. Acuité believes that BSL’s EBITDA margins would remain susceptible to raw material price volatility and high inventory holding levels over the medium term.
Rating Sensitivities
Potential triggers (individual or collective) for an upward rating action:
Significant growth in scale of operations along with improvement in profitability margins, with NCAs above Rs. 35 Cr consistently
Improvement in the financial risk profile.
Improvement in working capital management
Potential triggers (individual or collective) for a downward rating action:
Significant decline in revenues or profitability margins, leading to weakening cash accruals.
Deterioration in the financial risk profile due to debt-funded capex or higher working capital requirements with DSCR below 1.10 times consistently.
Elongation in the working capital cycle
Liquidity Position
Adequate
The liquidity position of the company remained adequate, marked by sufficient net cash accruals against its maturing debt repayment obligations. The company generated net cash accruals of Rs. 25.79 crore in FY26 (Prov.) against maturing debt obligations of Rs. 25.15 crore during the same period. The company is expected to generate NCA of Rs. 31.61 crore in FY27 against repayment obligation of Rs. 19.19 crore and in FY28 it is expected to be around Rs. 34.29 crore against obligations of Rs. 20.04 Cr during the same tenure. The company’s cash and bank balance stood at Rs. 0.04 crore in FY26 (Prov.).The working capital management of the company is moderately intensive, as indicated by GCA days of 136 days in FY26 (Prov.) compared to 138 days in FY25. The average utilisation of working capital facilities stood moderate at ~ 72.82 per cent for the six months ended June 2026. The current ratio of the company stood at 1.53 times as on 31 March 2026 (Prov.), compared to 1.51 times as on 31 March 2025. Acuité expects the company's liquidity position to remain adequate, supported by steady cash accruals and moderate utilisation of working capital limits.
Outlook: Stable
Other Factors affecting Rating
None
Particulars
Unit
FY 26 (Provisional)
FY 25 (Actual)
Operating Income
Rs. Cr.
328.20
315.47
PAT
Rs. Cr.
10.79
6.63
PAT Margin
(%)
3.29
2.10
Total Debt/Tangible Net Worth
Times
1.56
1.89
PBDIT/Interest
Times
2.70
2.03
Status of non-cooperation with previous CRA (if applicable)
Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
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