💰 Financial Performance

Revenue Growth by Segment

Total Operating Income (TOI) grew by 9% YoY to INR 1,051.83 Cr in FY25 from INR 964.81 Cr in FY24. The yarn and fabric segments saw improved capacity utilization, while the garment segment faced continued losses due to sluggish overseas demand. Historically, the company has maintained a 5-year CAGR of 13.5% in TOI.

Geographic Revenue Split

Exports contributed 45% of total revenue in FY24, amounting to INR 431.53 Cr. Key markets include Bangladesh (9.97% of TOI), Vietnam, Germany, Kenya, Southeast Asia, Europe, and North America. Domestic sales account for the remaining 55% of the revenue mix.

Profitability Margins

Profitability has been under severe pressure; PBILDT margin declined from 4.35% in FY24 to 2.63% in FY25. The company reported a net loss of INR 24.20 Cr in FY25, widening from a net loss of INR 9.76 Cr in FY24. Net loss in 9MFY25 was INR 23.97 Cr, driven by high depreciation and weak yarn realizations.

EBITDA Margin

PBILDT margin stood at 2.63% in FY25, a significant drop from 4.35% in FY24. This 172 bps decline was primarily caused by oversupply in the grey yarn market and softening international cotton prices, which squeezed margins despite higher volumes.

Capital Expenditure

The company is planning to set up a biomass plant with a total investment of INR 25 Cr. This project will be funded through a term loan of INR 16 Cr and INR 9 Cr from internal accruals. Additionally, the Melange plant was recently completed to boost topline growth.

Credit Rating & Borrowing

Long-term bank facilities of INR 155.04 Cr are rated CARE BB+; Stable (reaffirmed in Nov 2025). Short-term facilities of INR 217.53 Cr are rated CARE A4+. Ratings were previously downgraded in Feb 2025 from CARE BBB- due to weak operational performance and sub-unity interest coverage of 0.75x.

⚙️ Operational Drivers

Raw Materials

Cotton is the primary raw material, representing the largest portion of the cost structure. Volatility in cotton prices directly impacts yarn realizations and overall PBILDT margins.

Import Sources

Raw materials are primarily sourced domestically in India, with high-quality cotton typically procured between October and April. Some raw materials are imported to provide a natural hedge against foreign exchange fluctuations.

Capacity Expansion

Current garment capacity is 100 lac pieces per annum. Recent expansion includes the completion of a Melange plant. A new biomass plant (INR 25 Cr) is planned to improve energy efficiency and reduce utility costs.

Raw Material Costs

Raw material costs are highly sensitive to international cotton price corrections. In FY24, lower realizations for yarn and fabric were driven by a correction in cotton prices, leading to a 6.3% decline in TOI that year.

Manufacturing Efficiency

The company operates an integrated setup from spinning to garmenting, which provides better quality control. Capacity utilization improved in FY25 across yarn and fabric segments, supporting a 9% TOI growth.

Logistics & Distribution

Export-oriented logistics are critical as 45% of revenue is derived from global markets. Distribution costs are impacted by volatile geopolitical conditions and global shipping stability.

📈 Strategic Growth

Expected Growth Rate

13.50%

Growth Strategy

Growth will be driven by the stabilization of realizations in the yarn segment and increased revenue contributions from the new Melange plant. The company is also targeting a recovery in the garment segment through anticipated orders from global brands and a potential shift of business from Bangladesh to India due to regional unrest.

Products & Services

The company sells cotton yarn (including Melange and grey yarn), processed fabric, and readymade garments (100 lac pieces per annum capacity).

Brand Portfolio

The company does not list owned consumer brands but has established marketing tie-ups with leading global apparel brands.

New Products/Services

New revenue streams are expected from the Melange plant and the upcoming biomass plant, which aims to improve the bottom line through cost reduction rather than just top-line growth.

Market Expansion

The company is focusing on expanding its presence in the garment segment by leveraging its integrated manufacturing facilities in Noida (U.P.) and Khargone (M.P.) to attract global apparel brands.

Strategic Alliances

MOL is part of the LNJ Bhilwara Group, providing strong parentage and financial support, including a recent INR 10 Cr infusion by promoters in Q3FY25.

🌍 External Factors

Industry Trends

The textile industry is seeing a shift toward integrated players who can control quality from yarn to finished garments. There is a trend of redirecting export capacity to the domestic Indian market due to global slowdowns, increasing local competition.

Competitive Landscape

Faces intense competition from China and Bangladesh in the garment segment. Domestic competition is also rising as international brands enter India and exporters pivot to the domestic market.

Competitive Moat

The moat is derived from its strong parentage (LNJ Bhilwara Group) and its long-standing (20+ years) relationships with global apparel agents. Sustainability is challenged by high leverage (4.16x gearing) and intense competition from low-cost countries.

Macro Economic Sensitivity

Highly sensitive to global demand for apparel and fluctuations in international cotton prices. Sluggish overseas markets were a primary reason for the garment segment's consistent losses.

Consumer Behavior

Demand is driven by global apparel consumption trends; recent sluggishness in Western markets has directly led to underutilization and losses in the garment division.

Geopolitical Risks

Political instability in Bangladesh is a major risk, impacting nearly 10% of TOI. However, management expects some export business to shift to India if unrest continues, potentially benefiting the company in the long term.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to textile manufacturing standards and export-import regulations. The company must adhere to SEBI Listing Obligations (LODR) for financial reporting and independent director appointments.

Environmental Compliance

The investment in a INR 25 Cr biomass plant indicates a strategic move toward sustainable energy and compliance with evolving environmental standards for manufacturing.

Legal Contingencies

The company continues to service debt under Corporate Debt Restructuring (CDR) terms approved in 2009. No specific pending court cases or values were disclosed.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the timeline for a demand recovery in the garment segment and the stabilization of the political situation in Bangladesh, which could impact 10% of revenue.

Geographic Concentration Risk

45% of revenue is concentrated in export markets, making the company vulnerable to global trade barriers and geopolitical shifts in Southeast Asia and Europe.

Third Party Dependencies

Dependency on global apparel brands for garment orders is high; the loss of key marketing tie-ups would significantly impact the 100 lac piece garment capacity.

Technology Obsolescence Risk

The company is addressing technology risks by investing in a Melange plant and a biomass plant to maintain manufacturing competitiveness.

Credit & Counterparty Risk

Receivables are managed with a 42-day collection period; export payments are often received in advance or on a days-at-sight basis, mitigating counterparty risk.