Press Release

Press Release

October 23, 2025

SREE AYYANAR SPINNING AND WEAVING MILLS PRIVATE LIMITED
Rating Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	69.00	ACUITE B+ \| Stable \| Reaffirmed	-
Bank Loan Ratings	15.00	-	ACUITE A4 \| Reaffirmed
Total Outstanding	84.00	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

Acuité has reaffirmed the long-term rating of ‘ACUITE B+’ (read as ACUITE B plus) and short-term rating of 'ACUITE A4' (read as ACUITE A four) on Rs. 84.00 Cr. bank facilities of Sree Ayyanar Spinning and Weaving Mills Private Limited (SAM). The outlook is ‘Stable’.

Rationale for rating
The rating reaffirmation reflects the modest scale of operations of the company on account of volatility in the cotton industry, below average financial risk profile, intensive working capital operations and stretched liquidity position of the company. The rating is also constrained by susceptibility of operating margins to fluctuations in the raw material prices and highly competitive industry. However, the rating continues to draw comfort from the strong parentage of the company reflected by timely fund infusion along with corporate guarantees extended by three of its group companies and promoters.

About the Company

Established in 1962, Sree Ayyanar Spinning and Weaving Mills Private Limited (SAM) is engaged in spinning of cotton bales into cotton yarn of varied count pattern ranging from 40s to 100s. The company has two manufacturing units located at Virudhunagar and Madurai with an installed capacity of 67,744 spindles and 480 rotors. The present directors of the company are Mr. Krishnamoorthy Sathiavan, Mr. Sankaralingam Maheswaran, Mr. Ashok Aruna, Mr. Balakrishnan Prabaharan, Mr. Maheswaran Pradeep Sankar and Mr. Annamalai Sankaralingam.

Unsupported Rating

Not Applicable

Analytical Approach

Acuité has considered a standalone approach of business and financial risk profile of SAM to arrive at the rating.

Key Rating Drivers

Strengths

Strong parentage
The company is part of the Pioneer group, which operates across diverse sectors including renewable energy, textiles, printing, real estate, and more. The group companies namely, M/s. Boopathy Investments Private Limited, M/s. Niranjan Sankar Enterprises Private Limited & M/s. Pradeep Sankar Enterprises Private Limited have extended their corporate guarantees to SAM along with personal guarantees of the promoters. Further, promoters of the company have long standing experience in the textile industry. Therefore, being in the business for more than six decades, the company has long track record of operations leading to healthy relationships with the suppliers and customers that have enabled the company to sustain its operations even during industry downturns.
Acuité believes that SAM's longstanding presence and experienced management is expected to support in sustaining the operations and business risk profile over the medium term.

Weaknesses

Modest scale of operations
The company witnessed a decline in its scale of operations marked by operating income of Rs. 74.10 Cr. in FY25 (Rs. 89.55 Cr. in FY24) primarily due to subdued product demand which resulted in lower production levels. However, the operating margin of the company stood improved to 8.33 percent in FY25 compared to 0.81 percent in FY24, on account of decrease in input costs. Furthermore, the company has clocked a revenue of Rs. 33.39 Cr. till August 2025 (Rs. 28.55 Cr. till August 2024).

Below average financial risk profile
The net worth of the company stood low at Rs. 14.19 Cr. as on March 31, 2025 (includes unsecured loans of Rs. 34.51 Cr. as on March 31, 2025 considered as quasi-capital). The total debt of the company stood at Rs. 56.90 Cr. in FY25 majorly consisting of working capital borrowings and hence, the gearing (debt-equity) of the company stood high at 4.01 times as on March 31, 2025. Moreover, the debt protection metrics of the company are weak marked by debt service coverage ratio remaining below unity at 0.66 times in FY25 (0.26 times in FY24) and interest coverage ratio at 1.21 times in FY25 (0.13 times in FY24).

Intensive working capital operations
The working capital operations of the company remains intensive marked by gross current assets (GCA) of 228 days in FY25 (193 days in FY24) that are majorly driven by inventory levels that stood increased at 171 days in FY25 (118 days in FY24). The average debtor days remain in the range of 50-55 days over the past two years. Therefore, the average fund-based bank limit utilisation stood high at ~94 percent for the last six months ended August’ 2025 on account of capital-intensive nature of operations.

Susceptibility to fluctuations in raw material prices and highly competitive industry
SAM’s profitability margins are susceptible to fluctuations in the prices of raw material i.e., cotton bales. Further, cotton being a seasonal crop, the production of the same is highly dependent upon the monsoon and the climatic conditions. Furthermore, any abrupt change in cotton prices due to demand supply scenario or government regulations of changes in minimum support price can lead to distortion of prices and affect the profitability of the company across the cotton value chain. Also, the company is operating in a fragmented textile industry and is exposed to intense competition from several players operating in the industry.

Rating Sensitivities

Growth in operating performance at stable margins
Any further deterioration in financial risk profile
Elongation in the working capital operations
Continued support from the promoter group

Liquidity Position

Stretched

The company’s liquidity position is stretched marked by insufficient net cash accruals of Rs. 2.38 Cr. in FY25 as against maturing debt repayment obligations of Rs. 8.68 Cr. for the same period. Therefore, the debt obligations were managed through the monetisation of fixed assets and infusion of funds by promoters. Going forward also continuous support of the promoter and group companies is expected to meet the debt obligations. Further, the average bank limit utilisation for the fund-based limits stood high at ~94 per cent for last six months ended August’ 2025. The current ratio stood low at 0.75 times as on March 31, 2025 and the company maintained low cash and bank balances at Rs. 0.03 Cr. as on March 31, 2025.

Outlook: Stable

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 25 (Actual)	FY 24 (Actual)
Operating Income	Rs. Cr.	74.10	89.55
PAT	Rs. Cr.	(0.83)	(9.89)
PAT Margin	(%)	(1.12)	(11.05)
Total Debt/Tangible Net Worth	Times	4.01	(4.89)
PBDIT/Interest	Times	1.21	0.13

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
25 Jul 2024	Letter of Credit	Short Term	12.00	ACUITE A4 (Downgraded from ACUITE A4+)
	FBN/FBP/FBD/PSFC/FBE	Short Term	7.00	ACUITE A4 (Downgraded from ACUITE A4+)
	Term Loan	Long Term	5.67	ACUITE B+ \| Stable (Downgraded from ACUITE BB- \| Stable)
	Proposed Term Loan	Long Term	5.19	ACUITE B+ \| Stable (Downgraded from ACUITE BB- \| Stable)
	Term Loan	Long Term	2.32	ACUITE B+ \| Stable (Downgraded from ACUITE BB- \| Stable)
	Term Loan	Long Term	1.09	ACUITE B+ \| Stable (Downgraded from ACUITE BB- \| Stable)
	Term Loan	Long Term	4.50	ACUITE B+ \| Stable (Downgraded from ACUITE BB- \| Stable)
	Term Loan	Long Term	0.80	ACUITE B+ \| Stable (Downgraded from ACUITE BB- \| Stable)
	Term Loan	Long Term	5.00	ACUITE B+ \| Stable (Downgraded from ACUITE BB- \| Stable)
	Term Loan	Long Term	2.78	ACUITE B+ \| Stable (Downgraded from ACUITE BB- \| Stable)
	Covid Emergency Line.	Long Term	1.32	ACUITE B+ \| Stable (Downgraded from ACUITE BB- \| Stable)
	Cash Credit	Long Term	25.10	ACUITE B+ \| Stable (Downgraded from ACUITE BB- \| Stable)
	Cash Credit	Long Term	10.90	ACUITE B+ \| Stable (Downgraded from ACUITE BB- \| Stable)
	Term Loan	Long Term	0.33	ACUITE B+ \| Stable (Downgraded from ACUITE BB- \| Stable)
27 Apr 2023	Letter of Credit	Short Term	12.00	ACUITE A4+ (Reaffirmed)
	FBN/FBP/FBD/PSFC/FBE	Short Term	7.00	ACUITE A4+ (Assigned)
	Proposed Term Loan	Long Term	0.95	ACUITE BB- \| Stable (Assigned)
	Cash Credit	Long Term	20.90	ACUITE BB- \| Stable (Reaffirmed)
	Cash Credit	Long Term	9.10	ACUITE BB- \| Stable (Reaffirmed)
	Term Loan	Long Term	2.81	ACUITE BB- \| Stable (Reaffirmed)
	Term Loan	Long Term	0.66	ACUITE BB- \| Stable (Reaffirmed)
	Cash Credit	Long Term	4.20	ACUITE BB- \| Stable (Assigned)
	Term Loan	Long Term	13.25	ACUITE BB- \| Stable (Reaffirmed)
	Cash Credit	Long Term	1.80	ACUITE BB- \| Stable (Assigned)
	Term Loan	Long Term	6.68	ACUITE BB- \| Stable (Reaffirmed)
	Term Loan	Long Term	1.05	ACUITE BB- \| Stable (Assigned)
	Term Loan	Long Term	2.10	ACUITE BB- \| Stable (Reaffirmed)
	Term Loan	Long Term	1.50	ACUITE BB- \| Stable (Reaffirmed)
03 Feb 2022	Letter of Credit	Short Term	12.00	ACUITE A4+ (Reaffirmed)
	Letter of Credit	Short Term	3.00	ACUITE A4+ (Reaffirmed)
	Cash Credit	Long Term	20.90	ACUITE BB- \| Stable (Reaffirmed)
	Term Loan	Long Term	0.36	ACUITE BB- \| Stable (Reaffirmed)
	Cash Credit	Long Term	9.10	ACUITE BB- \| Stable (Reaffirmed)
	Term Loan	Long Term	2.81	ACUITE BB- \| Stable (Reaffirmed)
	Term Loan	Long Term	0.66	ACUITE BB- \| Stable (Reaffirmed)
	Term Loan	Long Term	0.13	ACUITE BB- \| Stable (Reaffirmed)
	Term Loan	Long Term	3.00	ACUITE BB- \| Stable (Reaffirmed)
	Term Loan	Long Term	9.00	ACUITE BB- \| Stable (Reaffirmed)
	Term Loan	Long Term	4.65	ACUITE BB- \| Stable (Reaffirmed)
	Term Loan	Long Term	2.10	ACUITE BB- \| Stable (Reaffirmed)
	Proposed Long Term Bank Facility	Long Term	1.29	ACUITE BB- \| 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
Indian Bank	Not avl. / Not appl.	Cash Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	25.10	Simple	ACUITE B+ \| Stable \| Reaffirmed
INDIAN OVERSEAS BANK	Not avl. / Not appl.	Cash Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	10.90	Simple	ACUITE B+ \| Stable \| Reaffirmed
INDIAN OVERSEAS BANK	Not avl. / Not appl.	Covid Emergency Line.	Not avl. / Not appl.	Not avl. / Not appl.	01 Sep 2026	0.62	Simple	ACUITE B+ \| Stable \| Reaffirmed
Indian Bank	Not avl. / Not appl.	FBN/FBP/FBD/PSFC/FBE	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	3.00	Simple	ACUITE A4 \| Reaffirmed
Indian Bank	Not avl. / Not appl.	Letter of Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	12.00	Simple	ACUITE A4 \| Reaffirmed
Not Applicable	Not avl. / Not appl.	Proposed Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	19.23	Simple	ACUITE B+ \| Stable \| Reaffirmed
City Union Bank Ltd	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	28 Sep 2029	2.04	Simple	ACUITE B+ \| Stable \| Reaffirmed
Indian Bank	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	30 Jun 2026	0.54	Simple	ACUITE B+ \| Stable \| Reaffirmed
Indian Bank	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	31 Oct 2028	4.51	Simple	ACUITE B+ \| Stable \| Reaffirmed
Indian Bank	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	30 Apr 2027	1.48	Simple	ACUITE B+ \| Stable \| Reaffirmed
INDIAN OVERSEAS BANK	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	30 Nov 2029	4.25	Simple	ACUITE B+ \| Stable \| Reaffirmed
INDIAN OVERSEAS BANK	Not avl. / Not appl.	Term Loan	28 Oct 2018	Not avl. / Not appl.	31 Oct 2024	0.33	Simple	ACUITE B+ \| Stable \| Reaffirmed

Contacts

Mohit Jain
Chief Analytical Officer - Rating Operations

Akshit Agrawal
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.

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