Rating Rationale

Brickwork Ratings  reaffirms the  long-term and short-term  rating at BWR BB/Negative and BWR A4  for the bank loan facilities of Laxminarayan Spintex LLP.

The firm continues to derive strength from its improving operational track record and the extensive experience of the promoters, who have been managing the entity for over a decade. The rating also factors in the growing scale of operations, and a moderate financial risk profile. The assessment is based on the audited financial statements for FY2025 and provisional financials for FY2026.

The rating outlook has been revised from ‘Stable’ to ‘Negative’ due to volatility in cotton prices, which has impacted the company’s operating margins, coupled with its inability to achieve the previous year’s rating sensitivity parameters. While the company benefits from experienced promoters and established customer and supplier relationships, sustained improvement in business performance and operating margins remains important.

The terms of sanction of the rated facilities include standard covenants normally stipulated for such facilities. Along with the following conditions are included:

1. As per the bank loan covenant, the DSRA account, i.e., one quarter's interest and instalments, has to be maintained.
2. The capital invested in the business by the partner should not be withdrawn during the currency of our advance.
3. The form undertakes that the unsecured loan to extent envisaged in the Credit Monitoring Arrangements shall be maintained in the business and should not be withdrawn and further no interest to be paid on such loan.

All other covenants remain in line with the terms sanctioned by the bank.

• Location advantage :

  The Location of the Project is situated at the most suitable location to communicate with the supplier and the customers. The same is well-connected by Road, Rail & with all the parts of India. Cotton Yarn is mainly marketed through dealers or agencies. M/s. Laxminarayan Spintex LLP has arranged its marketing with a reputable dealer network of existing businesses. Other produce, i.e., Cotton Waste, which is purchased by paper mills & Open Hand Textile Mills in nearby areas.

• Promotors Experience :

  All partners of the unit possess 25 years of experience Cotton Ginning & trading business, namely Laxminarayan Cotton Industries & Indian Cotton Industries at Tankara. All the promoters belong to a pure agricultural background & have business of agri produce Sale, Cotton Cultivation, Cotton Ginning, and Pressing.

• Group Support :

  All partners of the unit possess 25 years of experience Cotton Ginning & trading business, namely Laxminarayan Cotton Industries & Indian Cotton Industries at Tankara. Thus, the present Project will receive the raw material from the group concerns & nearby other Ginning units.

• Competition in the Industry :

  Entry barriers in the industry are low on account of limited capital and technology requirements, and also low differentiation in the end product, leading to intense competition and limiting the pricing power, resulting in low profitability

• Constitution(For Proprietorships and Partnership cases) :

  Withdrawal of capital by the Partners for any personal contingency would adversely affect the capital structure of the firm

• Agro-based Company :

  The company mainly depends on agricultural produce for raw material procurement. Hence, in case of any seasonal disaster, it is very difficult for the firm to maintain the raw materials in adequate quantity. The firm has not undertaken hedging to address the suppiler side price volitatiy as stipulated by the banker.

Positive:

• Increase in TOI and improvement in operating margin from the current level.
• Improvement in gearing ratio (Total Debt/TNW) to below 1.50x, leading to improvement in the overall capital structure.

Negative:

• Decline in TOI and operating margin from the current level, which may weaken cash generation.
• Increase in gearing ratio (Total Debt/TNW) above 1.50x, leading to a weaker capital structure and higher financial risk.

The firm has a cash and bank balance of Rs. 1.64 crore as on FY26. The current ratio stood at 1.02x in FY26 compared with 0.42x in FY25. The average utilisation of the cash credit facility was around 80% during the last six months. Net cash accruals stood at Rs. 9.50 crore in FY26 against CPLTD of Rs. 6.84 crore. The ISCR and DSCR stood at 2.28x and 1.23x, respectively, in FY26 (provisional). Considering the above factors, the liquidity position of the firm is assessed as adequate.

The company demonstrates a Adequate ESG profile based on its environmental, social, and governance practices.

Environmental: The company’s environmental risks are primarily associated with electricity-intensive spinning operations, cotton waste generation, water usage and emissions arising from manufacturing activities. The company generates cotton waste during the spinning process, which is sold to paper mills and nearby textile units, supporting effective utilisation of waste.

Social: The company’s social profile is driven by employee safety, compliance with applicable labour laws, working conditions and human-capital management. As a manufacturing unit, appropriate workplace safety measures, employee welfare practices and compliance with labour regulations are important for maintaining operational continuity. The promoters’ established presence of around 25 years in the cotton value chain, including cotton cultivation, ginning, pressing and trading, provides operational experience and familiarity with the industry. 

Governance: The company is constituted as an LLP with 17 partners, including two key partners, providing a broad management base. The promoters have extensive experience in the cotton value chain, which supports operational oversight and decision-making. Governance assessment considers the partnership structure, regulatory compliance, financial controls and risk-management practices. The company’s governance profile is considered adequate.

Laxminarayan Spintex LLP, which was established at Hirapar Village, Tankara Taluk, Morbi Dist, on 02 Dec 2021, by 17 Partners and 2 Key partners as a Limited Liability Partnership Firm. The firm is into the Manufacturing & trading of cotton yarn. All partners of the firm possess 25 years of experience Cotton Ginning & trading business, namely Laxminarayan Cotton Industries & Indian Cotton Industries at Tankara taluk. All the promoters belong to a pure agricultural background & have business of agri produce Sale, Cotton Cultivation, cotton Ginning, and pressing. 

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.

Creadit Rating Agency	Status and Reason for Non-Cooparation	Date of Press Release
CARE	In the absence of adequate information from the company and a lack of management cooperation, the CARE ratings have reaffirmed the Bank Loan Ratings and migrated to the Issuer Not Cooperating category.	18Jun2026

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.

Brickwork offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitisation Products, Municipal Bonds, etc. BWR has also rated NGOs, Educational Institutions, Hospitals, Urban Local Bodies and Municipal Corporations.

Nature of Ratings & Information: BWR ratings are opinions on the relative ability of an entity/instrument to meet its financial obligations and are based on information obtained from issuers and other sources believed to be reliable. BWR does not conduct audits, due diligence, or independent verification of such information and does not guarantee its accuracy, adequacy, or completeness.Ratings are current only as of the date of publication and may be revised based on new or unavailable information.

No Advice or Recommendation: Ratings, reports, and related communications are not investment advice and do not constitute recommendations to buy, sell, or hold securities, or to sanction, renew, or disburse credit facilities. They do not represent offers or solicitations for any transaction. Users must rely on their own independent judgment and professional advice. Access to or use of these materials does not create any client relationship with BWR.

Liability, Usage & Regulatory Framework: This content is published for the purpose of dissemination of information as required under applicable laws and regulations. BWR holds exclusive copyright over the content. It may be used with appropriate credit to BWR, provided that the content is not altered or modified in any way that could change its meaning or intent. BWR retains the exclusive right to distribute or share its rating rationales, directly or indirectly, through any print, digital, or electronic media. All reports are provided on an "as is" basis without warranties of any kind, express or implied, including but not limited to merchantability, fitness for a particular purpose, or non-infringement. BWR and its affiliates shall not be liable for any direct, indirect, incidental, or consequential losses or damages arising from the use of these reports. Ratings are subject to continuous surveillance and may be revised, suspended, or withdrawn at any time without notice. These reports are intended for use within India only. BWR operates under SEBI Regulations and Code of Conduct.

For more information on policies and ratings, please visit our www.brickworkratings.com