­Acuité has consolidated the business and financial risk profiles of Gima Manufacturing Private Limited (GMPL) & Gimatex Industries Private Limited (GIPL) together referred to as the ‘Gimatex Group’ (GG). The consolidation is in view of common management, operational & financial linkages between the entities.

­Experienced management and established track record of operations
GG promoted by the Mohota family, originally hailing from Rajasthan, is a diversified business conglomerate with presence in textile manufacturing and trading since 1898. Apart from textiles, the group also has presence in cotton ginning & pressing, cotton seed de-linting, cotton seed oil, pipe & tiles factory and mill board unit. The management of GIPL is led by Mr. Prashant Mohota & Mr. Vineet Mohota who has over two decades of experience in the industry and are the sixth generation of the Mohota family managing the business. While GMPL is promoted by its director Mrs. Premlatadevi Mohota who is also a part of the Mohota family. The group also benefits from its qualified and experienced team of senior management which has helped them established long term relations with their customers as well as suppliers. GIPL is an integrated textile manufacturer with operations in cotton ginning to finished fabrics and cotton seed oil manufacturing. It has its plants at Hinganghat, Yerla, Wani & Bela near Nagpur in Maharashtra and one in Ahmedabad, Gujarat.
Acuité believes that GG will continue to benefit from extensive experience of its management, established track record of operations and presence in the industry.

Moderate financial risk profile
Financial risk profile of GG is moderate marked by healthy net worth, moderate gearing and average debt protection metrics. The tangible net worth of the group has improved and stood healthy at Rs. 505.02 Cr. as on 31 March 2024 as against Rs. 443.01 Cr. as on 31 March 2023 due to accretion to reserves. The group operates in a capital-intensive industry which requires large capex for capacity maintenance as well as addition. The gearing therefore remains moderately high on account of the management’s moderately aggressive gearing policy and the capital-intensive nature of business. The gearing level (debt-equity) stood at 1.69 times as on 31 March 2024 as against 1.67 times as on 31 March 2023. The total debt increased and stood at Rs. 855.44 Cr. as on 31 March 2024 as against total debt of Rs. 740.95 Cr. in FY2023. The interest coverage declined and stood at 2.52 times for FY2024 as against 3.09 times for FY2023 whereas the DSCR improved marginally and stood at 1.09 times for FY2024 as against 1.04 times for FY2023.
??????Acuité believes that ability of GG to improve its financial risk profile over the medium term without any further deterioration in the debt protection metrics will remain a key rating sensitivity factor.

Improvement in scale of operations
GG reported improvement in its revenue of Rs. 1599.90 Cr. in FY2024 as against Rs.1418.68 Cr. in FY2023 reflecting a YoY growth 12.77 percent supported by the rising demand of cotton yarns and stability in cotton prices in past 12-15 months. The operating profit of the group improved in absolute terms and stood at Rs. 165.05 Cr. in FY2024 as against Rs. 149.72 Cr. in FY2023. However, the EBITDA margin stood at 10.32% in FY2024 as against 10.55 % in FY2023 due to increase in raw material cost. Whereas the PAT increased to Rs. 60.24 Cr. in FY2024 as against Rs. 43.13 Cr. in FY2023 and PAT margin improved marginally improved and stood at 3.77% in FY2024 as against 3.04% in FY2023. For the current year FY2024-25 as on September 2024, GG has achieved an overall revenue of ~Rs. 825 Cr. In addition to this, the group has completed the capex of adding 35,904 additional spindles to increase its capacity of yarn spinning and grey fabric units in GIPL as on March 2024 which is expected to support the rising demand over the medium term.
Acuite believes that ability of GG to improve its scale of operations while maintaining the profitability margins will remain a key rating sensitivity factor.

­Working capital intensive nature of operations
The operations of GG are working capital intensive marked by its Gross Current Assets (GCA) of 202 days as on 31 March 2024 which improved against 209 days as on 31 March 2023. This is due inventory cycle of the group which stood high at 124 days as on 31 March 2024 as against 136 days as on 31 March 2023. The inventory days are generally high on account of seasonal nature of the raw material availability as the group must hold high inventory levels during the harvest season for the entire year. The receivable days stood at 49 days as on 31 March 2024 as against 44 days as on 31 March 2023 and the creditor days stood at 27 days as on 31 March 2024 as against 29 days as on 31 March 2023. The average fund-based bank limit utilization for 1 year period ended August 2024 stood at ~71 percent. 
Acuité believes that ability of GG to maintain improve and maintain an efficient working capital cycle over the medium term will remain a key rating sensitivity factor.
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Susceptibility of profitability to volatility in cotton and yarn prices
The main raw material for the group is cotton, and the procurement season for the same is during November to April every year, leading to high inventory holding at the end of every financial year. Hence, it is required to maintain an inventory of four to six months, leading to high working capital requirements. The cotton crop, being an agri-commodity, is dependent on weather conditions and is susceptible to plant pests and diseases, leading to volatility in cotton prices.

Presence in highly fragmented and competitive industry
The textile industry is highly fragmented and competitive, with a presence of a large number of organised and unorganised players, thereby limiting the group's bargaining power against its customers.