Since its inception, MIL has encountered technical challenges leading to a significant rate of rejection during manufacturing. To assist MIL in overcoming resultant liquidity issues and ensuring sustainable operations, financial institutions have provided relief through interest deferments and rescheduling of principal repayments. Despite these concessions, MIL's performance did not notably improve, and it continued to suffer losses. Following audited results for April 1991, a reference was made to the Board for Industrial and Financial Reconstruction (BIFR), leading to its registration with the BIFR. However, a subsequent reference based on audited accounts for the period ending October 1992, showing a positive net worth, resulted in the deregistration of the case.
In October 1995, MIL initiated a rights issue to execute a capacity expansion project from 5000 tons per annum to 6000 tons per annum. The company received recognition from CAPEXIL with a certificate of merit for outstanding export performance for the year 1997-98.
In 2017, the Board for Industrial & Financial Reconstruction (BIFR) approved the Scheme of Amalgamation of Modern Terry Towels Limited (MTTL) with MIL, effective September 15, 2016. MIL issued 25,400,400 equity shares to eligible shareholders of erstwhile Modern Terry Towels Limited through the amalgamation scheme. Additionally, MIL sold its investments in its subsidiary, M/s Motile Power Trade Private Limited, thereby ceasing to be its subsidiary during the 2016-17 fiscal year.
In 2017-18, the Scheme of Arrangement between MIL and Modern Polytex Limited (MPL) for the demerger of MIL's Yarn Division into MPL was executed, effective from April 1, 2011. Pursuant to the scheme, MPL issued one equity share for every two equity shares held by MIL shareholders, totaling 10,871,750 equity shares of Rs. 10 each, fully paid up. Furthermore, Modern Metal High-Tech Components Private Limited ceased to be a wholly owned subsidiary company effective from June 19, 2023.