Product Quantum (Rs. Cr) Long Term Rating Short Term Rating
Bank Loan Ratings 13.09 ACUITE B+ | Reaffirmed & Withdrawn -
Bank Loan Ratings 0.91 - ACUITE A4 | Reaffirmed & Withdrawn
Total Outstanding Quantum (Rs. Cr) 0.00 - -
Total Withdrawn Quantum (Rs. Cr) 14.00 - -
 
Rating Rationale
Acuité has reaffirmed & withdrawn the long term rating of ‘ACUITE B+’ (read as ACUITE B plus) and the short term rating of ‘ACUITE A4’ (read as ACUITE A four) on the Rs.14.00 Cr bank facilities of Krishna textile process (KTP).

The withdrawal is on account of client's request and receipt of NOC from the banker. The withdrawal is in accordance with Acuité's policy on withdrawal of rating.

Ratioale for the rating reaffirmation
The rating reaffirmation continues to be supported by the moderate track record of operations, experienced management and moderate financial risk profile. The rating is, albeit, constrained by its working capital intensive operations and risks of withdrawal of capital by partners entity.

About the Firm
­Based in Tamil Nadu Krishna Textile Process (KTP), established in 2002 is a partnership firm promoted by Mr. P. Gopalakrishnan and Mr. G. Ramachandran. The firm are engaged in dyeing of polyester, cotton and viscose fabrics. KTP is a part of Sudhama Group, founded in 1978 by Mr. P. Gopalakrishnan. It is engaged in manufacturing of knitted garments and exports the same to European countries.
 
Analytical Approach
­Acuité has considered the standalone business and financial risk profile of KTP to arrive at the rating.
 

Key Rating Drivers

Strengths
> Moderate track record and experienced management
KTP established in 2002 is promoted by Mr. P. Gopalakrishnan and Mr. G. Ramachandran who collectively possess more than 38 years of experience in the textile industry. Acuité believes the moderate track record of operations and experience of management will continue to support the business risk profile over the medium term.

> ­Moderate financial risk profile
KTP has below- financial risk profile mainly marked by low net worth, low gearing and moderate debt protection matrices. The tangible net worth of the firm stood at Rs.11.92 Cr as on March 31, 2022 as against Rs.10.49 Cr as on March 31, 2021. The gearing of the firm stood at 0.87 times in as on  March 31, 2022 as against 1.06 as on March 31, 2021. The gearing has improved as a result of lower debt. The total debt as on March 31, 2022 consist of working capital limits from banks of Rs.10.36 Cr. Further, the interest coverage ratio stood at 3.94 times as on March 31, 2022 as against 2.4 times as on March 31,  2021. Debt service coverage ratio (DSCR) stood at 1.66 times as on March 31, 2022 as against 2.40 times as on 31 March,  2021. The debt to EBITDA of the firm  stood at 3.24 times as on March 31, 2022 as against 5.10 times as on March 31, 2021. However, the TOL/TNW stood to 1.53 times as on 31 March, 2022 as against 1.91 times as on March 31, 2021.
 
Weaknesses
> Working capital intensive operations
The operations of the firm is working capital intensive marked by moderate Gross Current Asset (GCA) days of 127 days as on March 31, 2022 as against 214 days as on March 31, 2021. The improvement in the GCA days is an account  of improved  in inventory days and creditor days. Inventory days stood at 17 days as on March 31, 2022 as against 68 days as on March 31, 2021. Subsequently, the payable period stood at 79 days as on March 31, 2022 as against 198 days as on  March 31, 2021 respectively. The debtor day stood at 152 days as on March 31, 2022 as against 92 days as on March 31, 2021.

> Risks of withdrawal of capital by partners
Entity, being a partnership firm, is exposed to adverse capital structure risk, where any substantial capital withdrawal could negatively impact its net worth and capital structure and the liquidity position.
Rating Sensitivities
  • Improvement in the scale of operations and profitability while maintaining the capital structure
  • Any deterioration in working capital cycle and liquidity profile of the firm.
 
Material covenants
­None
 
Liquidity Position: Adequate
­The firm’s liquidity is adequate marked by modest generation of net cash accruals in FY 2022 to its maturing debt obligations. The firm has generated cash accruals in the range of Rs.1.27-2.39 Cr during last two years ending FY2022 as against its long term debt obligations of Rs.0.56 -1.12 Cr for the same period. The current ratio stood at 1.30 times as on March 31, 2022 .The firm maintains unencumbered cash and bank balances of Rs.0.01 cr as on March 31, 2022. Acuité believes that KTP’s liquidity will remain sufficient over the medium term backed by repayment of its debt obligations and improving accruals.
 
 
Outlook:
­ Not applicable
 
Other Factors affecting Rating
­None
 

Particulars Unit FY 22 (Actual) FY 21 (Actual)
Operating Income Rs. Cr. 40.59 24.55
PAT Rs. Cr. 1.54 0.38
PAT Margin (%) 3.80 1.54
Total Debt/Tangible Net Worth Times 0.87 1.06
PBDIT/Interest Times 3.94 2.40
Status of non-cooperation with previous CRA (if applicable)
­None
 
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 level of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.
 

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook
21 Oct 2022 Proposed Bank Facility Short Term 0.91 ACUITE A4 (Reaffirmed)
Proposed Bank Facility Long Term 1.77 ACUITE B+ | Stable (Reaffirmed)
Cash Credit Long Term 7.00 ACUITE B+ | Stable (Reaffirmed)
Term Loan Long Term 4.32 ACUITE B+ | Stable (Reaffirmed)
27 Jan 2022 Cash Credit Long Term 4.50 ACUITE B+ ( Issuer not co-operating*)
Term Loan Long Term 5.44 ACUITE B+ ( Issuer not co-operating*)
Standby Line of Credit Short Term 0.40 ACUITE A4 ( Issuer not co-operating*)
Term Loan Long Term 0.42 ACUITE B+ ( Issuer not co-operating*)
Proposed Bank Facility Long Term 2.73 ACUITE B+ ( Issuer not co-operating*)
Bank Guarantee Short Term 0.51 ACUITE A4 ( Issuer not co-operating*)
29 Oct 2020 Bank Guarantee Short Term 0.51 ACUITE A4 (Downgraded and Issuer not co-operating*)
Standby Line of Credit Short Term 0.40 ACUITE A4 (Downgraded and Issuer not co-operating*)
Term Loan Long Term 5.44 ACUITE B+ (Downgraded and Issuer not co-operating*)
Term Loan Long Term 0.42 ACUITE B+ (Downgraded and Issuer not co-operating*)
Cash Credit Long Term 4.50 ACUITE B+ (Downgraded and Issuer not co-operating*)
Proposed Bank Facility Long Term 2.73 ACUITE B+ (Downgraded and Issuer not co-operating*)
­

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating
Karur Vysya Bank Not Applicable Cash Credit Not Applicable Not Applicable Not Applicable 7.00 Simple ACUITE B+ | Reaffirmed & Withdrawn
Not Applicable Not Applicable Proposed Long Term Bank Facility Not Applicable Not Applicable Not Applicable 1.77 Simple ACUITE B+ | Reaffirmed & Withdrawn
Not Applicable Not Applicable Proposed Short Term Loan Not Applicable Not Applicable Not Applicable 0.91 Simple ACUITE A4 | Reaffirmed & Withdrawn
Karur Vysya Bank Not Applicable Term Loan Not available Not available Not available 4.32 Simple ACUITE B+ | Reaffirmed & Withdrawn

Contacts
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