**Shiva Mills Limited (SML)** is a Coimbatore-based textile manufacturer and a key entity within the **Bannari Amman Group (BAG)**. The company operates a specialized cotton spinning business characterized by a conservative debt profile and a high degree of energy self-sufficiency. While currently navigating a period of industry-wide margin compression, SML is positioned as a lean, vertically integrated player in the South Indian textile corridor. --- ### Asset Base and Manufacturing Infrastructure SML operates a focused manufacturing footprint near **Dindigul, Tamil Nadu**, specializing in high-quality cotton yarn production. * **Installed Capacity:** The company maintains **39,072 spindles** as of **March 31, 2025**. * **Product Portfolio:** * **Cotton Hosiery Yarn:** Primary counts ranging from **25s to 40s**. * **Warp Yarn:** Specialized **60s count** yarn produced for weaving applications to improve realizations. * **Raw Material Strategy:** Procurement focuses on **S-6** and **Bunny cotton** sourced from **Gujarat** and **Northern India**. * **Asset Utilization:** Despite market headwinds, the company achieved a capacity utilization of **89%** in **FY25**, a significant recovery from **73%** in **FY24**. ### Operational Performance Trends The company has maintained steady production volumes, successfully scaling output in the most recent fiscal year to offset pricing pressures. | Metric | FY 2024-25 | FY 2023-24 | FY 2022-23 | | :--- | :--- | :--- | :--- | | **Cotton Yarn Produced** | **5,722.69 tonnes** | **5,594.27 tonnes** | **4,370.28 tonnes** | | **Cotton Yarn Sold** | **5,646.28 tonnes** | **5,384.89 tonnes** | **4,392.33 tonnes** | | **Waste Cotton Produced** | **1,865.58 tonnes** | **1,701.21 tonnes** | **1,403.11 tonnes** | | **Waste Cotton Sold** | **1,938.17 tonnes** | **1,571.59 tonnes** | **1,463.74 tonnes** | --- ### Energy Integration and Sustainability Model A core competitive advantage for SML is its captive renewable energy infrastructure, which insulates the company from volatile grid power tariffs and contributes to its ESG profile. SML meets approximately **75%** of its total power requirements through these sources. * **Wind Energy:** Operates **22 windmills** with an aggregate capacity of **10.65 MW**. * In **FY25**, these generated **1.6 crore units**, all of which were consumed captively. * In **FY24**, generation reached **1.82 crore units**, allowing for a surplus sale of **18.63 lakh units** to TANGEDCO. * **Solar Energy:** Utilizes a group captive arrangement for **2 MW** of solar power, contributing **27.84 lakh units** in **FY25**. * **Efficiency Initiatives:** The company has invested in **spinning compact inverters**, ultra-high-efficiency fans for humidification, and optimized compressor settings to reduce the energy intensity of its spinning operations. --- ### Financial Position and Capital Structure SML maintains a highly conservative balance sheet with a focus on low leverage, providing a buffer against recent net losses. * **Debt Profile:** The company reported **nil term loan obligations** as of **March 31, 2025**. * **Leverage Ratios:** * **Overall Gearing:** Maintained at a very low **0.11x**. * **Current Ratio:** Robust at **2.30x**. * **Working Capital Management:** * Average utilization of working capital limits stood at **37.27%** (year ended May 2025). * **Inventory Cycle:** **60-70 days**. * **Credit Terms:** **20-30 days** for buyers; **10-15 days** for suppliers. * **Shareholding Pattern:** The **Promoter Group** maintains a strong majority stake of **74.937%**, with the **Indian Public** holding **24.11%**. --- ### Profitability Challenges and Credit Outlook The textile industry has faced a downturn characterized by high raw material costs and subdued global demand, impacting SML’s bottom line. | Metric | FY25 | FY24 | FY23 | | :--- | :--- | :--- | :--- | | **Operating Income** | **₹169.31 Cr** | **₹158.47 Cr** | - | | **Net Profit / (Loss)** | **(₹3.81 Cr)** | **(₹3.22 Cr)** | (Loss) | | **PBILDT Margin** | **1.26%** | **2.04%** | - | **Credit Rating Status (as of July 2025):** Due to sustained net losses and compressed margins (down from **14.25% in FY22**), **CARE Ratings** downgraded SML’s facilities: * **Long-term Bank Facilities (₹27.50 Cr):** **CARE BBB; Stable** (from BBB+; Negative). * **Short-term Bank Facilities (₹12.50 Cr):** **CARE A3+** (from A2). --- ### Strategic Growth Drivers and Market Outlook SML’s strategy focuses on operational stability and organic scaling rather than aggressive, debt-funded expansion. * **Revenue Targets:** The company aims to scale operating income toward **₹300 crore** with a target **PBILDT margin above 10%**. * **Export Opportunities:** India is projected to see a **9-11% rise** in yarn exports. SML is positioned to benefit from the "China Plus One" strategy and US tariffs on competing nations. * **Downstream Demand:** Growth of **6-8%** in the **Home Textiles** and **Readymade Garments (RMG)** sectors is expected to bolster domestic yarn off-take. * **Financial Discipline:** Management has set a strict threshold to keep **Total Debt / Gross Cash Accruals (TD/GCA)** below **1.5x** and **Gearing** below **1.0x**. --- ### Risk Matrix and Mitigation | Risk Category | Description | Mitigation Strategy | | :--- | :--- | :--- | | **Raw Material** | Cotton prices (S-6/Bunny) fluctuated between **₹170–₹220/kg**. | Strategic procurement and inventory management (**60-70 days**). | | **Market Concentration** | Top 10 customers account for **41.76%** of sales. | Diversifying product mix into **60s count warp yarn**. | | **Currency Risk** | Exposure to **USD, EUR, and GBP** fluctuations. | Use of **natural hedges** and foreign currency borrowings. | | **Interest Rate** | Floating-rate debt sensitivity (**₹10.26L–₹12.58L** impact per 1% move). | Maintaining low overall debt and high internal accrual funding. | | **Regulatory** | New **Labour Codes** notified in **Nov 2025**. | Assessment indicates no material incremental liability expected. | | **Liquidity** | Potential stretch due to consecutive losses. | High current ratio (**2.30x**) and low bank limit utilization (**~37%**). | ### Investor Relations Note Effective **December 2023**, the company’s Registrar and Share Transfer Agent, **SKDC Consultants Limited**, merged into **Link Intime India Private Limited**. All securities are now issued exclusively in **dematerialized form** in compliance with **SEBI** mandates.