­Mothi Spinners Private Limited incorporated in 2000 is engaged in manufacturing of Viscose yarn. Besides regular viscose yarn, the company also manufactures viscose-flax yarn, viscose polyester, viscose cotton blend and various other types of yarn. The manufacturing facilities are located at Pallipalayam (Erode). The company is currently promoted by Mr. G. Rajamanickam, Mr. M. Chandrasekarran, Mr. G. Doraisamy, Mr. K. P. Balakrishnan, and Mr. V. Srinivasan. Currently, the company has a spindle capacity of 118560 Spindles and 68 Vortex machines. The company also has 27.45 MW of windmill capacity which is used for captive consumption and 10MW of solar power.

­Significant revenue growth with improvement in profitability margin
Timely completion of ongoing capex plan
Any deterioration in the financial risk profile and stretch in the liquidity position

­Not available

The company has a stretched liquidity position marked by low net cash accruals against its maturing debt obligations. The company generated cash accruals of Rs.56.88 crore in FY23 compared against maturing debt obligations of Rs.59.40 crore over the same period. The cash accruals of the company are estimated to remain in the range of Rs.96.55-106.50 crore during 2024-25 period while its maturing debt obligations is estimated to be in the range of Rs. 93.91-98.24 crore during the same period. The average utilization of the CC limits of the company is utilized ~95 percent in last six months ended Sept’23. The company maintains unencumbered cash and bank balances of Rs.0.85 crore as on March 31, 2023. The current ratio stood at 1.18 times as on March 31, 2023. Acuite believes that the ability of the company to accrue the benefits of the capex to improve the net cash accruals in order the service the high maturing debt obligations will remain key monitorable in medium term.

­Acuité believes that the outlook on the MSPL will remain 'Stable' over the medium term on account of the established presence and extensive experience of the promoters in the textile industry. The outlook may be revised to 'Positive' in case the company registers significant revenue growth along with improvement in their profitability margins and leverage ratios. Conversely, the outlook may be revised to 'Negative' in case of stretched working capital cycle or deterioration in its financial risk profile due to higher-than-expected addition in the debt and further stretch in the liquidity position.

­None

­­­In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.