Mahalaxmi Rubtech Ltd

National Company Law Tribunal (NCLT) vide its order dated March 04, 2024 , approved the scheme of arrangement for the demerger of the two business divisions of MRT into separate group companies. The scheme of arrangement provides for the demerger of traditional textiles processing and wind power divisions of MRT (the demerged company), in cluding related assets and liabilities of these divisions, MRT’s existing investment in its wholly owned subsidiary company, Mahalaxmi Exports Priva te

Jeetmal Parekh, Chairman and promoter of MRT has more than four decades of experience in the textile industry. He is closely involved in strategic decision making for the company. MRT’s operations are managed by his sons, Rahul Parekh, and Anand Parekh. Rahul Parekh is associated with MRT since 1992 and looks after the technical textile division. Anand Parekh, associated with MRT since 1995 [director since 2008], looks after processing and exports division. The top management is further assisted

MRT has a track record of over two decades in the textile industry and has well-established relationships with its customers and suppliers. MRT has a presence across many segments of the textile value chain, with business divisions such as fabric weaving, processing, trading, and manufacturing technical textile products. In FY23, it derived 35% of its revenue from the technical textiles and weaving divisions and remaining 65% together from the traditional textile and trading divisions.

In its technical textile division, MRT produces rubber-coated fabric used in applications including offset printing machines. Since the last few years, revenue from the technical textile division has been increasing y-o-y considering increased demand and acceptance from domestic customers. In FY23, TOI for technical textile stood at ₹69.44 crore (PY: ₹44.85 crore). Further, TOI for the division stood at ₹55.68 crore in 9MFY24 (₹50.29 crore in 9MFY23). This also translated into better profitabili

MRL’s capital structure continues to remain comfortable with overall gearing of 0.54x as on March 31, 2023, improved from 0.68x as on March 31, 2022. Net worth of the company stood moderate at ₹81.47 crore at FY23 end (₹74.65 crore at FY22-end). Debt coverage indicators of MRL continued to remain moderate, marked by total debt to gross cash accruals (TD/GCA) of 3.22x (PY: 3.76x) and profit before interest, lease rentals, depreciation, and tax es (PBILDT) interest coverage of 3.46x (PY: 4.17x) as

MR’s scale of operations and profitability have remained moderate over three-years ended FY23. In FY23, TOI improved by 18% y-o-y but stood moderate at ₹200.53 crore (PY: ₹170.26 crore). Furthermore, in 9MFY24, company registered sales of ₹152.72 crore (₹148.50 crore in 9MFY23). Operating margin of the company moderated to 7.53% in FY23 (PY:9.21%). This was due to higher input costs (raw materials, coal, and chemical), which largely depleted operating profitability of the processing division.

The textile weaving and processing industry is highly fragmented with the presence of several unorganised players. Smaller processing units are more vulnerable to intense competition and have limited pricing flexibility, which constrains their prof itability as compared to larger integrated textile companies who have better operational and financial efficiencie s. Furthermore, limited value-addition and low technology intensity (consequently translating into thin profit margins), limits their ba

Textile industry is cyclical and closely follows macro -economic business cycles. Raw material and finished goods prices are determined by global demand-supply scenario. Hence, shift in the macro-economic environment globally would have an impact on the domestic textile industry. Furthermore, textile processing requires compliance to stringent norms set by pollution control authorities and violation in compliance to these norms or adverse change in norms would adversely impact MRT’s operations.