Press Release

Press Release

June 27, 2025

NETWORK CLOTHING COMPANY PRIVATE LIMITED
Rating Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	47.50	ACUITE BBB \| Negative \| Reaffirmed \| Stable to Negative	-
Bank Loan Ratings	40.50	-	ACUITE A3+ \| Reaffirmed
Total Outstanding	88.00	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

Acuité has reaffirmed its long-term rating of ‘ACUITE BBB’ (read as ACUITE Triple B) and short-term rating of ‘ACUITE A3+’ (read as ACUITE A Three Plus) on the Rs. 88.00 Cr. bank facilities of Network Clothing Company Private Limited. The outlook is revised from ‘Stable’ to ‘Negative’.

Rationale for rating
The revision in outlook from ‘Stable’ to ‘Negative’ is on account of expected deterioration in profitability on account of increased overhead costs in FY2025 as compared to previous years.

Further, the rating reaffirmation considers NCCPL’s sustained growth in operating income over the years ending FY2025E, extensive industry experience of the company’s management along with its moderate financial risk profile. However, the rating remains constrained on account of working capital-intensive nature of operations and susceptibility of the margins to raw material price fluctuations.

Going ahead, the ability of the company to sustain growth in its scale of operations while improving profitability levels will remain a key monitorable.

About the Company

Tamil Nadu-based, Network Clothing Company Private Limited (NCCPL) is incorporated in the year 1999. NCCPL is engaged in manufacturing of knitted garments for kids, men, and women. It exports around 50% of its total production to countries like Sweden, France, UK, Ireland, Australia, and UAE. NCCPL manufactures women’s hosiery products under the brand name of “Twin Birds.” The company operates from eight units in Tamil Nadu, seven of these units are located in Tiruppur and one unit is located in Erode.

Unsupported Rating

Not Applicable

Analytical Approach

Acuite has considered the standalone business and financial risk profiles of Network Clothing Company Private Limited to arrive at this rating.

Key Rating Drivers

Strengths

Experienced management and established track record of operation
NCCPL was incorporated in the year 1999. The current directors of the company are Mr. Ravi Arvind and Mr. Murugasamy Ravi. The top management is ably supported by a well-qualified and experienced team of the second line of management. Its customer base is wide, with no significant revenue concentration.
Acuité believes that NCCPL will continue to benefit from the promoter’s established presence in the industry and its improving business risk profile over the medium term.

Improvement in the operating income albeit estimated deterioration in operating profitability in FY2025
In FY2024, the company’s revenue increased to Rs. 284.63 Cr, marking ~13.00 % increase compared to Rs. 252.13 Cr. in FY2023. Furthermore, it is expected to increase to Rs. 312.14 Cr. in FY2025 due to increase in demand for the products in both the domestic and international market. However, the operating profit margin of the company is estimated to decline to 4.80% in FY2025 from 9.53% in FY2024 and 9.60% in FY2023.
Acuité believes that the ability of the company to improve its profitability while sustaining growth in revenues will remain a key monitorable.

Moderate financial risk profile
The financial risk profile of the company is moderate marked by improving net worth, moderate gearing and debt-protection metrics. The tangible net worth improved and stood at Rs. 75.24 Cr. as on 31 March 2024 as against Rs. 63.19 Cr. as on 31 March 2023 due to accretion of profits to reserves. The gearing level marginally improved and stood at 0.79 times as on 31 March 2024 as against 0.97 times as on 31 March 2023. Total outside liabilities to Tangible net worth (TOL/ TNW) stood at 1.05 times as on 31 March 2024 as against 1.29 times as on 31 March 2023. The debt protection metrics are moderate where interest coverage ratio (ICR) stood at 4.05 times in FY2024 as against 3.73 times in FY2023. Debt service coverage ratio (DSCR) stood at 3.37 times in FY2024 as against 3.19 times in FY2023. Net Cash accruals / total debt (NCA/TD) ratio stood at 0.28 times in FY2024 as against 0.23 times in FY2023. Further, the company is setting up a new facility within its existing factory premises to enhance in-house production capacity for export operations. The estimated project cost is ~Rs. 7–8 Cr. which will be funded through internal accruals.
Acuité believes that the financial risk profile of the company will continue to be moderate in near to medium term.

Weaknesses

Intensive Working Capital Operations
The working capital management of the company is intensive in nature marked by Gross Current Assets (GCA) of 131 days in FY2024 as compared to 139 days in FY2023. The inventory days stood at 58 days in FY2024 as compared to 63 days in FY2023. The debtor days stood at 41 days in FY2024 as against 38 days in FY2023. Further, the creditor days stood at 45 days in FY2024 as compared to 49 days in FY2023. The average utilization of working capital limits remained high with average utilisation of fund-based limits at ~ 97.96% over the last six months ending May 2025.
Acuité believes that the working capital operations of the company will remain at similar levels given the nature of the industry over the medium term.

Highly fragmented and competitive industry
The knitted garment 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. The shifts in consumption patterns can also have an adverse impact on the operations of the company.

Susceptibility of margins to raw material price fluctuation risk
The profitability of the company is susceptible to fluctuations in the prices of raw materials - cotton yarn and other consumables. The prices of cotton are highly dependent on agro-climatic conditions. The company’s ability to avoid any significant deterioration in profitability levels amid volatility in prices of its key inputs will remain a key rating sensitivity in medium term.

Rating Sensitivities

Ability to improve profitability while sustaining growth in operating revenue.
Any elongation of the working capital cycle leading to deterioration in financial risk profile.

Liquidity Position

Adequate

The company’s liquidity position is adequate marked by generation of sufficient net cash accruals of Rs. 16.38 Cr. in FY2024 as against nil repayment obligations during the same tenure. In addition, it is expected to generate cash accrual in the range of Rs. 8.11 – Rs. 11.88 Cr. as against maturing repayment obligations in the range of Rs. 1.38 Cr- Rs. 2.40 Cr. over the medium term. The cash and bank balances of the company stood at Rs. 4.43 Cr. as on March 31, 2024. The current ratio stood comfortable at 1.55 times as on March 31, 2024. The working capital management of the company is intensive in nature marked by Gross Current Assets (GCA) of 131 days as on 31st March 2024, further, the reliance on working capital limits remained high with average utilisation of fund-based limits at ~ 97.96% over the last six months ending May 2025. Going ahead, liquidity position of the company is expected to remain adequate on account of steady accruals against its repayment obligation.

Outlook: Negative

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 24 (Actual)	FY 23 (Actual)
Operating Income	Rs. Cr.	284.63	252.13
PAT	Rs. Cr.	12.03	10.20
PAT Margin	(%)	4.23	4.05
Total Debt/Tangible Net Worth	Times	0.79	0.97
PBDIT/Interest	Times	4.05	3.73

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
29 Mar 2024	PC/PCFC	Short Term	26.00	ACUITE A3+ (Upgraded from ACUITE A3)
	PC/PCFC	Short Term	16.50	ACUITE A3+ (Upgraded from ACUITE A3)
	Bank Guarantee (BLR)	Short Term	0.50	ACUITE A3+ (Upgraded from ACUITE A3)
	Cash Credit	Long Term	13.00	ACUITE BBB \| Stable (Upgraded from ACUITE BBB- \| Stable)
	Proposed Long Term Bank Facility	Long Term	24.20	ACUITE BBB \| Stable (Upgraded from ACUITE BBB- \| Stable)
	Term Loan	Long Term	7.80	ACUITE BBB \| Stable (Upgraded from ACUITE BBB- \| Stable)
20 Jan 2023	PC/PCFC	Short Term	29.00	ACUITE A3 (Reaffirmed)
	PC/PCFC	Short Term	16.50	ACUITE A3 (Reaffirmed)
	Bank Guarantee (BLR)	Short Term	0.50	ACUITE A3 (Reaffirmed)
	Letter of Credit	Short Term	3.50	ACUITE A3 (Reaffirmed)
	Cash Credit	Long Term	15.00	ACUITE BBB- \| Stable (Reaffirmed)
	Proposed Long Term Bank Facility	Long Term	12.50	ACUITE BBB- \| Stable (Reaffirmed)
	Term Loan	Long Term	11.00	ACUITE BBB- \| Stable (Reaffirmed)

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
Union Bank of India	Not avl. / Not appl.	Bank Guarantee (BLR)	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	0.50	Simple	ACUITE A3+ \| Reaffirmed
Union Bank of India	Not avl. / Not appl.	Cash Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	13.00	Simple	ACUITE BBB \| Negative \| Reaffirmed \| Stable to Negative
South Indian Bank	Not avl. / Not appl.	FBN/FBP/FBD/PSFC/FBE	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	5.00	Simple	ACUITE A3+ \| Reaffirmed
Union Bank of India	Not avl. / Not appl.	PC/PCFC	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	25.00	Simple	ACUITE A3+ \| Reaffirmed
South Indian Bank	Not avl. / Not appl.	PC/PCFC	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	9.00	Simple	ACUITE A3+ \| Reaffirmed
Union Bank of India	Not avl. / Not appl.	Post Shipment Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	1.00	Simple	ACUITE A3+ \| Reaffirmed
Not Applicable	Not avl. / Not appl.	Proposed Long Term Bank Facility	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	27.61	Simple	ACUITE BBB \| Negative \| Reaffirmed \| Stable to Negative
Union Bank of India	Not avl. / Not appl.	Term Loan	29 Sep 2022	Not avl. / Not appl.	25 Oct 2029	6.89	Simple	ACUITE BBB \| Negative \| Reaffirmed \| Stable to Negative

Contacts

Mohit Jain
Chief Analytical Officer - Rating Operations

Kirti Berlia
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.

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