­Established t rack record of operations and experienced management
TGKMPL is promoted by Mr. T. K Ramasamy, Mr. T. K. Srinivasan, Mr. T. K. Ponraj and Mr, S. Rajasekar. The rating draws comfort from the long-standing experience of over 7 decades of the promoters of TGKMPL (ATK group) in textile and allied sectors, having started with cotton ginning, trading and allied business activities in 1950. The management has built a healthy relationship with suppliers over the years for procurement of raw materials at a competitive cost and good credit terms. TGKMPL exports majority of its overall sales to the USA health care sector, with the majority of sales from madeups such as surgical towels, cellular blankets Press Release THENI GURU KRISHNA TEXTILE MILLS PRIVATE LIMITED Rating Assigned and Reaffirmed and cotton bags. Acuité believes that TGKMPL will benefit from the established presence in the textile industry and experienced management over the medium term.

Moderate  Financial Risk Profile:
The financial risk profile of the company is moderate marked by moderate net worth and debt protection metrics. The net worth of the company stood at Rs.189.47cr as on March 31, 2023 (Prov.) against Rs.182.29Cr of previous year. This improvement is on account of accretion of net profit to the reserves. The gearing level of the company is healthy at 1.35 times as on March 31, 2023 (Prov.) against 1.31 times in previous year. The Debt protection metrics of the company deteriorated due to increase in long term debt for the purpose of capex for machinery and enhancement in fund based short term debt. The Interest coverage ratio has deteriorated to 2.54 times as on March 31, 2023 (Prov.) from 2.62 times as on March 31, 2022. TOL/TNW stood at 1.76 times as on march 31,2023 (Prov.). DebtEBITDA deteriorated to 5.19 times as on March 31, 2023 (prov.) from 4.97 times in FY22. Acuite believes that the financial risk profile of the company will improve in the medium term on account of improvement in EBITDA, decrease in Long term debt.

Working capital intensive operations:
The working capital management of the company is moderate over the past 3 years which is evident from gross current assets (GCA) days which are in the range 170-190 days. The GCA days in FY23 (Prov.)  stood at 172. Current ratio of the company has marginally deteriorated to 1.13 times in FY23 from 1.33 times of previous year. The company repay the suppliers within 60 days and usually gives the credit period of 60-90 days for customers which has led to high utilization of bank limits. The consolidated bank Limits at an average of 96 percent in the past 12 months ending August 2023. Acuite believes that working capital operations of the company will remain moderately intensive over the medium term.

Susceptibility to fluctuation in raw material prices:
TGKMPL profitable margins are susceptible to fluctuations in the prices of major raw material i.e. Raw cotton. Cotton being a seasonal crop, the production of the same is highly dependent upon the monsoon. Thus, inadequate rainfall affects the availability of cotton in adverse weather conditions. Furthermore any abrupt change in cotton prices due to supplydemand scenario and government regulations of changes in Minimum Support Price (MSP) can lead to distortion of prices and affect the profitability of players across the cotton value Chain. Acuité believes that TGKMPL’s business profile and financial profile can be adversely impacted on account of presence of inherent risk of susceptibility of volatility in raw cotton prices, since the industry is highly commoditized.