Product Quantum (Rs. Cr) (SEBI) Quantum (Rs. Cr) (Other FSR) Long Term Rating Short Term Rating Regulated By
Bank Loan Ratings 0.00 50.00 ACUITE BBB | Stable | Reaffirmed - RBI
Total Outstanding 0.00 50.00 - - -
Total Withdrawn 0.00 0.00 - - -
Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
 
Rating Rationale

­Acuité has reaffirmed the long-term rating of ‘ACUITE BBB’ (read as ACUITE triple B) on the Rs. 50.00 crore bank facilities of Nachimuthu Industrial Association (NIA). The outlook is ‘Stable’.

Rational for rating
The rating reaffirmation factors in the sustained improvement in NIA’s operating performance, reflected in growth in revenue and profitability margins, supported by higher sanctioned intake capacity and improved occupancy levels. The rating also derives strength from NIA’s healthy financial risk profile, marked by a strong net worth, low gearing and comfortable debt protection metrics. Further, the adequate liquidity position supported by healthy net cash accruals, modest repayment obligations and sufficient unencumbered cash balances adds comfort to the rating. The rating continues to benefit from the established presence and long operating track record of the association in the education sector. Going forward, the ability of the trust to sustain improvement in revenue growth and profitability margins, will remain a key rating monitorable.

About the Company

Nachimuthu Industrial Association (NIA), established in 1956, is part of the Sakthi Group of Companies based in Coimbatore, Tamil Nadu. The association is promoted by Shri P. Nachimuthu and his family. Currently, NIA operates six schools, three colleges, and one learning institute under its umbrella, offering undergraduate and postgraduate programmes across diverse streams including engineering, polytechnic, agriculture, as well as primary and secondary education.
 
Unsupported Rating

­Not Applicable
 
Analytical Approach

­Acuité has considered the standalone business and financial risk profile of NIA to arrive at the rating.
 
Key Rating Drivers

Strengths

Experienced management and established track record of operations
NIA was founded by Shri P. Nachimuthu in 1956 and has an established brand presence in Tamil Nadu, with over six decades of operating experience in the education sector. The association offers a diversified portfolio of courses through nine institutions, ranging from pre-primary education to master’s degree programmes across multiple disciplines, including engineering, polytechnic, and agriculture.

Acuité believes that the long-standing presence of the association in the education sector, supported by an established brand image of NIA, continues to aid steady enrolment levels across its schools and colleges.

Improving operating performance
NIA reported an in revenue of Rs. 93.06 crore for FY25, compared to Rs. 80.98 crore in FY24, reflecting a y-oy growth of around 15 per cent. This growth was primarily driven by an increase in the intake of students in comparison to sanctioned seats, rising to ~88.21 per cent in AY25 from ~86.85 per cent in AY24, across all of its institutes. Therefore, the total fee receipts grew to Rs. 50.27 crore in AY25 from Rs. 44.38 crore in AY24. The revenue growth also reflects the increased accommodation of students in hostel facilities during the year, resulting in higher collections of related fees in the 2024-25 academic year compared to 2023-24. Further, the revenue from other allied activities like mess collection receipts, medical services and sale of products also improved in FY25. In FY26, NIA reported fee receipts of Rs. 54.57 crore and revenue from other fees and allied income of Rs. 49.63 crore, totalling to Rs. 104.20 crore. NIA’s operating margins also improved and stood at 21.99 per cent in FY25, compared to 16.28 per cent in FY24, primarily on account of lower employee costs and decreased administrative expenses incurred during FY25. Further, the net profit margins improved significantly to 17.25 per cent in FY25 from 5.98 per cent in FY24, mainly driven by subsequent decrease in the operating expenses and higher other non-operating income.

Healthy financial risk profile
The financial risk profile of NIA is healthy, marked by a strong net worth, low gearing, and comfortable debt protection metrics. The company’s net worth improved and stood at Rs. 207.13 crore as of 31 March 2025, compared to Rs. 191.09 crore as of 31 March 2024, on account of the accretion of profits to reserves. The gearing (debt-equity) ratio stood marginally increased and yet remained below unity at 0.12 times as of 31 March 2025, compared to 0.05 times as of 31 March 2024, due to increase in the company’s overall debt to Rs. 24.58 crore in FY25 from Rs. 9.00 crore in FY24. Further, the interest coverage ratio (ICR) and debt service coverage ratio (DSCR) improved and remained healthy at 18.91 times and 11.93 times for FY25, compared to 13.11 times and 8.46 times for FY24.

Acuite believes that NIA’s strong net worth, low gearing and comfortable debt protection metrics will support its financial risk profile over the near to medium term.??


Weaknesses

Moderate working capital management
NIA has a moderate working capital management marked by gross current assets (GCA) of 90 days for FY2025. It is majorly driven by other current assets which primarily consists of loans and advances extended to group companies and balances with government authorities. Further, In order to address its working capital requirements, NIA utilizes the overdraft facility and the average utilization of the limits stood at ~83.27 per cent for the six months ending March 2026.

Highly regulated education sector
Education sector is highly regulated with the government deciding on the maximum student intake, fees, mandatory facilities, faculty strength. Any adverse change in government regulations may impact NIA's ability to generate sustained revenue growth and accruals. The institutions run by NIA faces stiff competition from other reputed institutions in the nearby vicinity, which may inhibit the company's ability to attract fresh students.

Rating Sensitivities

Potential triggers (individual or collective) for an upward rating action:

  • Continued improvement in operating performance driven by higher student intake and significant improvement in occupancy levels leading to revenues growing above Rs. 130 crore

Potential triggers (individual or collective) for a downward rating action:
  • Decline in financial risk profile due to any debt-funded capex
  • De-growth in scale of operations with revenues falling below Rs. 80 Crore
  • Elongation in working capital cycle

 

Liquidity Position
Adequate

Liquidity is adequately supported by its net cash accruals, which stood at Rs. 30.60 crore as of March 31, 2025 as against repayment obligation of Rs 1.00 crore. Going ahead, net cash accruals are expected to range from Rs. 30 crore to Rs. 42 crore for FY2026-FY2028, while repayment obligations are projected to be around Rs. 1.00 crore for the same period. NIA’s unencumbered cash and bank balance was Rs. 6.97 crore as of March 31, 2025. The current ratio stood comfortable at 1.19 times in FY25. The average utilization of fund-based bank limits stood at ~83.27 per cent for the six months ending March 2026.

Acuite believes that the liquidity of the company is likely to remain adequate over the medium term on account of healthy cash accruals against its maturing debt obligations.
 
Outlook: Stable
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Other Factors affecting Rating

None
 

Particulars Unit FY 25 (Actual) FY 24 (Actual)
Operating Income Rs. Cr. 93.06 80.98
PAT Rs. Cr. 16.05 4.84
PAT Margin (%) 17.25 5.98
Total Debt/Tangible Net Worth Times 0.12 0.05
PBDIT/Interest Times 18.91 13.11
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
• Service Sector: https://www.acuite.in/view-rating-criteria-50.htm
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm
Note on complexity levels of the rated instrument

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook
28 Jan 2025 Secured Overdraft Long Term 15.00 ACUITE BBB | Stable (Reaffirmed)
Term Loan Long Term 10.00 ACUITE BBB | Stable (Reaffirmed)
Proposed Long Term Bank Facility Long Term 25.00 ACUITE BBB | Stable (Reaffirmed)
31 Oct 2023 Secured Overdraft Long Term 15.00 ACUITE BBB | Stable (Reaffirmed)
Term Loan Long Term 10.00 ACUITE BBB | Stable (Reaffirmed)
Proposed Long Term Bank Facility Long Term 25.00 ACUITE BBB | Stable (Reaffirmed)
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Lender’s Name ISIN Facilities Listing Status Regulated By Date Of Issuance Coupon Rate Maturity Date Quantum
(Rs. Cr.)		 Complexity Level Rating
Not Applicable Not avl. / Not appl. Proposed Long Term Bank Facility Unlisted RBI Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 28.00 Simple ACUITE BBB | Stable | Reaffirmed
THE KARUR VYSYA BANK LIMITED Not avl. / Not appl. Secured Overdraft Unlisted RBI Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 15.00 Simple ACUITE BBB | Stable | Reaffirmed
THE KARUR VYSYA BANK LIMITED Not avl. / Not appl. Term Loan Unlisted RBI Not avl. / Not appl. Not avl. / Not appl. 30 Nov 2032 7.00 Simple ACUITE BBB | Stable | Reaffirmed
Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
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Contacts

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