Rating Rationale

Brickwork Ratings has assigned a long-term rating of BWR A-/Stable and a short-term rating of BWR A2 to the bank loan facilities of Mahima Fibres Private Limited.

The rating factors in the directors’ extensive industry experience, growth in the scale of operations, and a moderate financial risk profile characterized by a strong net worth base and moderate leverage levels. However, the rating is constrained by intense industry competition and volatility in cotton raw material prices. Going forward, the company’s ability to improve its scale of operations, enhance profitability, and strengthen its liquidity position and overall credit profile will remain key rating sensitivities.

The rating outlook has been assigned as "Stable" as BWR believes that Mahima Fibres Private Limited's business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case the revenue and profitability margins show sustained improvement. The rating outlook may be revised to 'Negative' if the financial risk profile goes down.

The terms of sanction include covenants normaly stipulated for such facilities.

• Moderate Financials Risk Profile :

  Robust Scale and Profitability Growth: The company demonstrated a strong operational performance in FY2026, with operating income expanding significantly by 26.69% to Rs. 758.93 Cr, compared to the previous fiscal year. This top-line expansion was accompanied by enhanced profitability; net profit nearly doubled, rising from Rs. 15.54 Cr in FY2025 to Rs. 27.70 Cr in FY2026. Furthermore, the net profit margin improved from 2.59% in FY2025 to 3.65% in FY2026, highlighting the company’s improving operational efficiencies. 

  Moderate Leverage and Strong Capital Structure: The financial risk profile is underpinned by a robust net worth of Rs. 400.50 Cr in FY2026, which has been primarily strengthened through healthy internal cash accruals. The company maintains a conservative leverage profile, with the Total Debt to Tangible Net Worth (TNW) ratio improving marginally to 0.55x (from 0.57x in FY2025) and the Total Outside Liabilities to Tangible Net Worth (TOL/TNW) ratio improving to 0.68x (from 0.73x). These prudent leverage metrics provide substantial financial flexibility, ensuring healthy long-term financial sustainability. 

  Strong Debt-Servicing Comfort and Liquidity Profile:The Net cash accruals increased significantly to Rs. 42.02 Cr in FY2026, providing a robust cushion against the CPLTD of Rs. 16.45 Cr and highlighting strong internal debt-servicing comfort compared to the previous year. This is further substantiated by a healthy Current Ratio of 3.09x, reflecting a strong short-term liquidity position. The company's ISCR improved to 10.01x  in FY2026 from 2.60x in FY2025, and the DSCR improved from 1.57x in FY2025 to 2.22x in FY2026, indicating strong debt-servicing capacity to meet debt obligations.

• Substantial Government Subsidies and Financial Incentives :

  Mahima Fibers Private Limited is underpinned by robust government backing through a comprehensive financial assistance package of Rs. 70.69 Cr under the Madhya Pradesh Investment Promotion Scheme-2014, disbursed across a 7-year horizon ending March 31, 2030. This structured direct cash support averages Rs.10.09 Cr annually. Along with a 5% discount on interest for a substantial loan of Rs.161.13 Cr, the company can manage its financial resources more effectively. Additionally, the exemption from electricity tax for seven years and a Rs.1.00 per unit discount on electricity bills will significantly reduce operational costs. Moreover, the government's commitment to invest Rs.13,000 for each local worker trained, up to Rs.1.00 Cr, not only fosters local employment but also enhances workforce skill development. Overall, these advantages position the company for robust growth while promoting community engagement and sustainable practices.

• Improvement in working capital management :

  As per FY2026 Audited financials, the total cash conversion cycle compressed significantly to 125 days, reflecting tighter operational controls and streamlined processes. This improvement was driven by a sharp decline in inventory holding days—from 82 days in FY2025 to 64 days in FY2026—alongside optimized receivable collections (reduced to 72 days in FY2026). This improvement reflects enhanced execution capabilities that successfully unlock operating cash flow and strengthen the company's overall balance sheet health.

• Raw Material Availability and Prices :

  India’s textile industry is heavily dependent on cotton, making it particularly sensitive to fluctuations in domestic cotton production. Factors such as erratic monsoons, droughts, and pest infestations (e.g., pink bollworm attacks) can significantly impact yield, leading to supply shortages and price volatility. This dependency poses a consistent risk to the stability of raw material costs. The prices of key raw materials, including cotton, polyester, and dyes, are subject to considerable fluctuation due to global market dynamics. Factors such as geopolitical tensions, changes in crude oil prices (which affect synthetic fibers), and shifts in international demand and supply can cause unpredictable spikes or drops in input costs, thereby impacting overall production costs.

• Skilled labor shortage :

  India’s textile industry, while labor-intensive and a major employment generator, faces several labor-related challenges. There is a shortage of skilled workers, especially in technical and specialized roles like machine operation, dyeing, and quality control, which affects productivity and product quality. At the same time, rising minimum wages and increasing labor costs are putting pressure on profit margins, particularly in labor-intensive segments like garment manufacturing, where cost competitiveness is crucial for exports.

• Competition Risk :

  MFPL operates within a highly competitive and fragmented textile industry, comprising numerous organized and unorganized players engaged in the manufacturing and trading of various textile products. Furthermore, the presence of reputable customers within the sector intensifies the existing market competition, exposing the company to significant rivalry from both domestic competitors and established overseas players. Additionally, MFPL remains vulnerable to the inherent cyclicality of the textile industry, which is heavily influenced by shifting consumer consumption patterns and periodic economic downturns

Going forward, the ability of the company to improve its revenue and financial risk profile would remain the key rating sensitivities.

Positive:

• Improvement in top-line revenue with a major focus on manufacturing activity, leading to an improvement in the operating margin to around 8% with an improvement in net cash accruals.
• Improvement in the DSCR above 2.50x. 

Negative:

• A decline of 20% in revenue, with EBITDA margin dropping below 6%, and a substantial reduction in cash accruals.
• Weakening debt protection metrics, particularly a DSCR falling below 1.25x.

Liquidity is marked by strong accruals against negligible repayment obligations and liquid investments to the tune of Rs. 17.81 Crore. With a gearing of 0.55 times as of March 31, 2026, the issuer has sufficient gearing headroom to raise additional debt for its capex. Its unutilized bank lines are more than adequate to meet its incremental working capital needs over the next one year. 

The company had net cash accruals of Rs. 42.02 Cr as against a CPLTD of Rs. 16.45 Cr in FY2025. The Current ratio of the company stood at 3.09x in FY2026, reflecting the adequate short-term position of the company. The company has a tangible net worth of  Rs. 400.50 Cr in FY2026, with the Total Debt/TNW ratio and the TOL/TNW ratio standing at 0.55x and 0.68x, respectively. These ratios reflect a moderate leverage profile supported by a strong net worth, ensuring healthy long-term financial sustainability. The company's ISCR improved to 10.01x  in FY2026 from 2.60x in FY2025, and the DSCR improved from 1.57x in FY2025 to 2.22x in FY2026, reflecting the adequate debt-servicing capacity of the company.

The company exhibits an adequate ESG (Environmental, Social, and Governance) profile based on its practices in these areas.

Environmental: The company faces environmental risks due to high water usage, waste generation, and reliance on energy-intensive processes. Therefore, it is particularly important to disclose information about water consumption, waste management practices, the share of renewable energy used, and emissions levels.

Social: Social factors are influenced by compliance with labor laws, accident prevention frameworks, and the development of human capital. Metrics such as the workforce composition (percentage of male and female employees), safety performance, and training initiatives provide insights into operational resilience.

Governance: The governance assessment focuses on board independence, the effectiveness of committees, and the strength of compliance systems. This assessment is supported by readily available disclosures regarding the board structure, audit mechanisms, and risk management practices.

Mahima Fibres Private Limited was incorporated in 1998, having its registered office located at Indore, Madhya Pradesh - 452001. Mr. Ashok Kumar Doshi and Mr. Rohit Doshi are the directors of the company. The company is engaged in the manufacturing of cotton yarn and knitted fabrics. It also trades in ginned cotton and cotton yarn. The Company operates its spinning facilities in Khargone District, Madhya Pradesh, through Unit I and Unit II at Kasrawad. 

Manufacturing Infrastructure & Installed Capacity:

Mahima Fibres has a diversified spinning infrastructure comprising Ring Spinning and Open-End Spinning facilities, providing the Company with flexibility to cater to different yarn requirements and customer segments.

Ring Spinning Division:

• Installed capacity: 82,752 spindles
• Yarn count range: 10s to 60s

The Ring Spinning division represents the Company's principal manufacturing platform and has the capability to manufacture a wide range of yarn counts, including fine and higher-count yarns.

Open-End Spinning Division:

• Installed capacity: 2,208 rotors
• Yarn count range: 10s to 20s

The Open-End facility complements the Ring Spinning operations and enables the Company to cater to additional yarn requirements across different customer segments.

The Complexity Indicator refers to the ease with which the returns associated with the rated instrument could be estimated. It does not indicate the risk related to the timely payments on the instrument, which is rather indicated by the instrument's credit rating. It also does not indicate the complexity associated with analysing an entity's financial, business, industry risks or complexity related to the structural,transactional or legal aspects. Details on the complexity levels of the instruments are available on BWR's website Complexity Levels.

Not Applicable

BWR Board of Directors have no influence over rating decisions, nor do they sit on the rating committee or review, discuss or evaluate any credit rating during the Board meetings.

Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI]. BWR is the 5th agency to get a credit rating registration in India in 2009 and its corporate office in Bengaluru. It has a country-wide presence with representatives in 150+ locations. Canara bank is an institutional investor in Brickwork.

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