Press Release

Press Release

October 15, 2024

INDACO JEANS PRIVATE LIMITED
Rating Reaffirmed and Withdrawn

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	52.92	ACUITE BB+ \| Reaffirmed & Withdrawn	-
Bank Loan Ratings	6.08	Not Applicable \| Withdrawn	-
Total Outstanding	0.00	-	-
Total Withdrawn	59.00	-	-

Rating Rationale

Acuité has reaffirmed and withdrawn the long-term rating of ‘ACUITE BB+’ (read as ACUITE Double B Plus) on the Rs 52.92 crore bank facilities of Indaco Jeans Private Limited (IJPL).
Further, Acuité has withdrawn its long-term rating of Rs 6.08 crore proposed bank facilities of Indaco Jeans Private Limited without assigning any rating as it is a proposed facility.
The withdrawal is in accordance with Acuite's policy on withdrawal of rating as applicable to the respective facility / instrument. The rating is being withdrawn on account of request received from the company, and NOC (No Objection Certificate) received from the banker.

Rationale for Rating
The rating reaffirmation considers extensive experience of the promoters in the garment manufacturing industry. Further, it factors in the average financial risk profile marked by moderate net worth, gearing, and debt protection metrics. The tangible net worth of the company stood at Rs.33.95 Cr. as on 31 March 2024(Prov.) as against Rs.26.89 Cr. as on 31 March 2023. The working capital operations remained moderate in nature marked by GCA days of 107 days in FY2024(Prov) against 89 days in FY2023. However, the operating income of the company declined to Rs.160.00 Cr. in FY2204(Prov.) from Rs.215.74 Cr. in FY2023, primarily due to lower demand levels on account of industry headwinds. Further, the rating is constrained on account of presence in a highly fragmented and competitive industry.

About the Company

Incorporated in 2007, Indaco Jeans Private Limited is engaged in manufacturing of denims. The company manufactures a variety of denims for various customers like Spykar Jeans, Arvind Fashion, Reliance Gas Lifestyle India Private Limited amongst others. The manufacturing facility of the company is located at MIDC, Boisar. The company is promoted by Mr. Prasad Pabrekar and Mr. Sudesh Vaidya who collectively have over two decades of experience in the garment manufacturing industry.

Unsupported Rating

Not Applicable

Analytical Approach

Acuite has considered the standalone business and financial risk profile of IJPL to arrive at the rating.

Key Rating Drivers

Strengths

Extensive experience of the promoters
IJPL is based out of Maharashtra and is incorporated in 2007 and is engaged in manufacturing of denims. The company is promoted by Mr. Prasad Pabrekar and Mr. Sudesh Vaidya who collectively have over two decades of experience in the garment manufacturing industry. The operations of the company are managed by a qualified and well experienced senior management team who are ably supported by a strong line of mid-level managers. The extensive experience of the promoters and the management has helped the company to establish long and healthy relationship with reputed customers and suppliers over the years. The key customers of the company include names such as Spykar Jeans, Arvind Fashion, Reliance Gas Lifestyle India Private Limited among others.
Acuité believes that IJPL will continue to benefit from the experience of the promoter and established relations with its customers and suppliers.

Moderate Nature of Working Capital Operations
The company is having a moderate working capital management as evident from the Gross Current Asset (GCA) days of 107 days as on March 31, 2024(Prov.) as against 89 days as on March 31, 2023. The inventory levels stood at 54 days in FY2024(Prov.) when compared against 46 days in FY2023. The debtor days stood at 55 days in FY2024(Prov.) as compared against 41 days in FY2023. The creditor days stood at 57 days in FY2024(Prov.) as against 48 days in FY2023.

Weaknesses

Average Financial Risk Profile
The financial risk profile of the company is average marked by moderate net worth, gearing, and moderate debt protection metrics. The tangible net worth of the company stood at Rs.33.95 Cr. as on 31 March 2024(Prov.) as against Rs.26.89 Cr. as on 31 March 2023. The net worth has improved on account of accretion of profits to reserves. The gearing level of the company stood at 1.47 times as on 31 March 2024(Prov.) as against 2.08 times as on 31 March 2023. The total debt of the company stood at Rs.49.97 Cr. as on March 31, 2024(Prov.). Interest Coverage Ratio (ICR) stood at 4.10 times for FY2024(Prov.) against 3.83 times for FY2023. Debt Service Coverage Ratio (DSCR) stood at 1.07 times for FY2024(Prov.) against 1.30 times for FY2023. The total outside liabilities to tangible net worth (TOL/TNW) of the company stood at 2.07 times as of March 31, 2024(Prov.) as against 2.99 times as of March 31,2023. The Debt/EBITDA levels stood at 2.38 times as of March 31, 2024(Prov.) as against 2.72 times as of March 31,2023.

Highly Fragmented and Competitive Industry
The denim manufacturing industry in India is highly fragmented and competitive marked by the presence of a large number of organised and unorganised players. The company is exposed to intense competition from both domestic players as well as the established players in the overseas market leading to intense margin pressures.

Rating Sensitivities

Not Applicable

Liquidity Position

Adequate

The company has an adequate liquidity position marked by sufficient net cash accruals against its maturing debt obligations. The company generated cash accruals of Rs.12.99 Cr. in FY2024(Prov.) compared against Rs.11.80 Cr. maturing debt obligation over the same period. The company maintains unencumbered cash and bank balances of Rs.0.10 Cr. as on March 31, 2024(Prov.). The current ratio stood at 1.47 times as on March 31, 2024(Prov.).

Outlook: Not Applicable

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 24 (Provisional)	FY 23 (Actual)
Operating Income	Rs. Cr.	160.00	215.74
PAT	Rs. Cr.	7.06	6.76
PAT Margin	(%)	4.41	3.13
Total Debt/Tangible Net Worth	Times	1.47	2.08
PBDIT/Interest	Times	4.10	3.83

Status of non-cooperation with previous CRA (if applicable)

Not Applicable

Any other information

None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm
• Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm

Note on complexity levels of the rated instrument

In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History

Date	Name of Instruments/Facilities	Term	Amount (Rs. Cr)	Rating/Outlook
24 Jul 2023	Cash Credit	Long Term	23.00	ACUITE BB+ \| Stable (Assigned)
	Term Loan	Long Term	2.51	ACUITE BB+ \| Stable (Assigned)
	Term Loan	Long Term	1.96	ACUITE BB+ \| Stable (Assigned)
	Term Loan	Long Term	2.13	ACUITE BB+ \| Stable (Assigned)
	Term Loan	Long Term	0.76	ACUITE BB+ \| Stable (Assigned)
	Term Loan	Long Term	1.60	ACUITE BB+ \| Stable (Assigned)
	Term Loan	Long Term	3.14	ACUITE BB+ \| Stable (Assigned)
	Term Loan	Long Term	8.52	ACUITE BB+ \| Stable (Assigned)
	Covid Emergency Line.	Long Term	9.30	ACUITE BB+ \| Stable (Assigned)
	Proposed Long Term Bank Facility	Long Term	6.08	ACUITE BB+ \| Stable (Assigned)

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
Bank of Baroda	Not avl. / Not appl.	Cash Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	23.00	Simple	ACUITE BB+ \| Reaffirmed & Withdrawn
Bank of Baroda	Not avl. / Not appl.	Covid Emergency Line.	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	9.30	Simple	ACUITE BB+ \| Reaffirmed & Withdrawn
Not Applicable	Not avl. / Not appl.	Proposed Long Term Bank Facility	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	6.08	Simple	Not Applicable\|Withdrawn
Bank of Baroda	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	01 Oct 2027	2.51	Simple	ACUITE BB+ \| Reaffirmed & Withdrawn
Bank of Baroda	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	01 Dec 2025	1.96	Simple	ACUITE BB+ \| Reaffirmed & Withdrawn
Bank of Baroda	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	01 Oct 2024	2.13	Simple	ACUITE BB+ \| Reaffirmed & Withdrawn
Bank of Baroda	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	01 Mar 2026	0.76	Simple	ACUITE BB+ \| Reaffirmed & Withdrawn
Bank of Baroda	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	01 May 2025	1.60	Simple	ACUITE BB+ \| Reaffirmed & Withdrawn
Bank of Baroda	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	01 Sep 2026	3.14	Simple	ACUITE BB+ \| Reaffirmed & Withdrawn
Bank of Baroda	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	01 Jan 2029	8.52	Simple	ACUITE BB+ \| Reaffirmed & Withdrawn

Contacts

Mohit Jain
Senior Vice President - Rating Operations

Sanidhya Jain
Associate Analyst - Rating Operations

Contact details exclusively for investors and lenders

Mob: +91 8591310146
Email ID: analyticalsupport@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai.

Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating.