Press Release

Press Release

April 07, 2026

TIRUPPUR CITY MUNICIPAL CORPORATION
Rating Assigned

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
BOND	100.00	ACUITE AA- \| Stable \| Assigned \| Provisional To Final	-
Total Outstanding	100.00	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

Acuité has converted the provisional rating on the Rs.100.00 Cr. bond of Tiruppur City Municipal Corporation to final and assigned the long-term rating of ‘ACUITE AA-’ (read as ACUITE double A minus). The outlook is ‘Stable’.

The final rating has been assigned on account of receipt of the following documents:
1. Placement Memorandum (Term Sheet)
2. Debenture Trustee Deed
3. Escrow agreement
4. Deed of Hypothecation (executed as per the placement memorandum)
5. Tripartite Agreements with NSDL and CDSL (executed as per the placement memorandum)
6. Document related to the establishment of Project Sustainability Grant Fund (PSGF) as security

The conversion of the final rating of the bonds of Rs.100.00 Cr. derives its strength from the establishment of the Debt Service Reserve Account (DSRA) and structured payment mechanism along with the Project Sustainability Grant Fund.

Rationale for Rating
The rating takes into consideration the consistent support from the government towards the development of the city, reflected by the stable revenue and grants received. Further, the city is also known as the Knitwear capital of India and has been considered a textile manufacturing hub. In addition, the timely receipts of grants and state government schemes for improving the urban infrastructure are followed by the improved standard of living, sewerage network, etc. The rating further draws comfort from the structured payment mechanism, which will be backed by an interest payment account (IPA) and a sinking fund account (SFA). The IPA shall be funded with the required amount in a debt service reserve account (DSRA) ~ equivalent to three half-year interest installments prior to the pay-in date, to be maintained during the tenor of the bonds. Acuite expects that TCMC would be able to receive adequate property tax collection to service the debt obligations. However, the rating is constrained by the elevated level of receivables of TCMC.

About the Company

Tiruppur City Municipal Corporation is a civic body that governs Tiruppur, Tamil Nadu, India. It was established under The Tiruppur City Municipal Corporation Act, 2008. The corporation consists of 60 wards each represented by a councillor. Tiruppur City Municipal Corporation covers an area of 159.35 square km and had a population of 8.79 lakh as per the 2011 census. The municipal corporation provides essential services like water supply, sewerage, Street lighting, waste management, residential colonies roads, drains, markets, maternity services. Large number of hospitals with best facilities and latest equipments are located in the city. The municipal corporation is led by Corporation commissioner Mr. Thiru. S. Ramamoorthy, and Deputy commissioners Mr. M. Sundararajan, Mr. A. Sulthana. Mr. Thiru. N. Dineshkumar (Mayor) and Mr. Thiru.R. Balasubramaniam (Deputy Mayor) are public representatives of the municipal corporation. Its registered office is at Mangalam Road, Tiruppur.

Unsupported Rating

ACUITE A-/Stable

Analytical Approach

Acuité has considered the standalone business and financial risk profiles of Tiruppur City Municipal Corporation to arrive at the rating.

Key Rating Drivers

Strengths

Benefits derived by Tiruppur being Textile and Manufacturing hub
Tiruppur City is known as the Knitwear Capital of India due to its cotton knitwear export. TCMC in Tamil Nadu is known for its efficient urban administration and rapid growth. One of its key strengths lies in its robust infrastructure, particularly in the textile industry, which drives the city’s economy. The municipality has made notable progress in waste management, sanitation, and water supply systems, improving the quality of life for its residents. Additionally, Tiruppur has been successful in implementing various developmental projects, including road improvements and modernizing public transport, contributing to its increasing urbanization and industrial development. It focuses on sustainability and community welfare, further strengthening its position as a progressive municipality.

Scale of Operations
The revenue profile of the TCMC includes various tax revenues, fees and user charges, rental income from municipal properties, sales and hire charges, grants and subsidies of revenue nature and non-tax income. The corporation achieved a turnover of Rs.360.18 Crore in FY2025 against Rs.312.47 Crore in FY2024. Moreover, the corporation has achieved a turnover of Rs.292.15 Crore till H1 FY2026. The EBITDA margin stood at 18.54% in FY2025 against 15.11% in FY2024. Despite the increase in operating profitability, the PAT margin stood at (10.31)% in FY2025 against (3.50)% in FY2024 on account of higher depreciation costs. Acuite expects that the revenue of the corporation will improve over the medium term on the back of healthy revenue collection and improvements in economic activities.

Healthy Financial Risk Profile
The financial risk profile of the corporation is marked by strong net worth, low gearing, and healthy debt protection metrics. The net worth stood at Rs.3429.05 Crore as on 31st March 2025 against Rs.3168.55 Crore as on 31st March 2024. The net worth also includes grants and contributions for specific purposes. The total debt stood at Rs.239.78 Crore as on 31st March 2025 against Rs.252.27 Crore as on 31st March 2024. These loans are from State Government, Government bodies and banks. Further, the gearing stood at 0.07 times as on March 31, 2025 as against 0.08 times as on 31st March 31, 2024. The interest coverage ratio and debt service coverage ratio stood at 5.31 times and 6.27 times respectively as on 31st March, 2025. Acuite expects TCMC's financial risk profile to remain healthy, backed by adequate support from the Government in the form of grants, timely receipt of tax collection, and growth potential of the Tiruppur city.

Structured Payment Mechanism
TCMC has access to various income sources out of which property tax and fees and user charges shall be deposited every month in a separate, no-lien escrow account for debt servicing of the bonds. The funds should be first utilized to accumulate the minimum balance in the escrow account, which entails maintenance of a Debt Service Reserve Account (DSRA), Sinking Fund Account (SFA) and Interest Payment Account (IPA). The minimum balance shall not be used for any purpose other than transfer to the DSRA, IPA, and SFA.

Terms and Conditions of the Bonds
For ensuring maintenance of the Required DSRA Amount, the Interest Payment Account shall be funded 1 (one) day prior to the Pay-In Date with an amount equal to the 3 (three) succeeding half-yearly coupon payments (i.e. one year and six-month interest obligation) required to be paid by the Issuer in respect of the bond.

The funds (owned revenue) received in the escrow account will be transferred to IPA and SFA on a monthly basis as per the terms of the bond. As regards the interest payments (half-yearly), the IPA will be funded on a monthly basis. Further, SFA shall also be funded monthly with an equivalent amount, as per the terms of bond issuances.

IPA (Interest Payment Account)
The Debenture Trustee shall check the amount lying to the credit of the Interest Payment Account (which is over and above the Required DSRA Amount) at 25 days (T-25) prior to the coupon payment date. In case of any shortfall, the Debenture Trustee shall intimate the Issuer, and the Issuer shall make good the shortfall in the Interest Payment Account prior to the date falling 15 days (T-15) prior to the coupon payment date. Further, the amounts lying or credited in the escrow account shall flow into the interest payment account for funding the shortfall and shall not be transferred by the Issuer to the general fund account(s) till the time the shortfall is funded. In case of a shortfall at 14 days (T-14) prior to the coupon payment date, the debenture trustee shall trigger the payment mechanism and shall instruct the bank to utilize the PSGF amount to the extent of the shortfall on or prior to the date falling 10 days (T-10) prior to the interest payment date. Further, immediately after the PSGF Amount utilization, the amounts lying or credited in the escrow account shall flow for the PSGF Amount replenishment and shall not be transferred by the issuer to the general fund account(s) till the time the required PSGF Amount is replenished. In case of a shortfall at 9 days (T-9) prior to the Coupon Payment Date, the Debenture Trustee shall trigger the payment mechanism and shall instruct the Bank to utilize the DSRA Amount to the extent of the shortfall on or prior to the date falling 5 days (T-5) prior to the Interest Payment Date. The Coupon shall be paid by the Issuer on the Coupon Payment Date (T).

In case the DSRA Amount (or part thereof) is utilized to fund the shortfall in the amount required to make payment of the coupon in respect of any Coupon Payment Date, immediately after the Debenture Trustee has instructed the Bank to utilize the DSRA Amount as above and in any event prior to 4 days (T-4) prior to the relevant Coupon Payment Date, the Debenture Trustee would issue a final notice in writing to the Issuer. On the issuance of such notice, the Issuer shall make good the DSRA Amount Shortfall within the next 15 days (T+11).

Further, immediately after the DSRA utilization, the amounts lying or credited in the escrow account shall flow into the interest payment account for DSRA replenishment and shall not be transferred by the Issuer to the general fund account(s) till the time the required DSRA amount is replenished. Further, in the event of any utilization from the PSGF amount, the Debenture Trustee would issue a notice in writing to the Issuer to replenish the same within a period of 90 days from the date of utilization. This arrangement shall continue till the bonds are paid in full to the bondholders.

SFA (Sinking Fund Account)
The Debenture Trustee shall check the amount lying to the credit of the Sinking Fund Account at 25 days (T-25) prior to the end of each 12-month block. In case of any sinking fund mismatch, the debenture trustee shall intimate the issuer of the shortfall, and the issuer shall make good the sinking fund mismatch 15 days (T-15) prior to the end of each 12-month block. Further, in case of a shortfall on T-25 days, the amounts lying or credited in the escrow account shall flow into the sinking fund account for funding the shortfall and shall not be transferred by the Issuer to the general fund account(s) till the time the shortfall is funded. In case a shortfall still persists in the Sinking Fund Account at 14 days (T-14) prior to the end of each 12-month block, the Debenture Trustee shall trigger the payment mechanism and shall instruct the Escrow Bank to utilize the PSGF Amount to the extent of the shortfall in the Sinking Fund Account on or prior to the date falling 10 days (T-10) prior to the end of each 12-month block. Further, immediately after the PSGF Amount utilization, the amounts lying or credited in the escrow account shall flow for the PSGF Amount replenishment and shall not be transferred by the issuer to the general fund account(s) till the time the required PSGF Amount is replenished. In case a shortfall still persists in the sinking fund account at 9 days (T-9) prior to the end of each 12-month block, the debenture trustee shall issue a final notice to the issuer. On the issuance of such notice, the issuer shall remit the funds to fund the shortfall into the sinking fund account prior to the end of each 12-month block (T).

Further, in the event of any utilization from the PSGF amount, the Debenture Trustee would issue a notice in writing to the Issuer to replenish the same within a period of 90 days from the date of utilization. This arrangement shall continue till the bonds are paid in full to the bondholders.

Weaknesses

Significant build-ups of receivables
The receivables of the corporation remained high, wherein the debtor days stood at 236 days as on 31st March, 2025 as against 248 days as on 31st March, 2024. The trade receivables include property tax, professional tax, company tax, etc., which are unpaid by the consumers. Acuité believes that any significant build-up in receivables beyond existing levels will remain a key rating sensitivity factor.

Assessment of Adequacy of Credit Enhancement under various scenarios including stress scenarios (applicable for ratings factoring specified support considerations with or without the “CE” suffix)

Project Sustainability Grant Fund (PSGF)
Project Sustainability Grant Fund (PSGF), a grant fund of the Government of Tamil Nadu and managed by Tamil Nadu Urban Infrastructure Financial Services Limited (TNUIFSL) shall create a term deposit in the name of PSGF equivalent to Rs.10.40 crore with the Trustee Banker / Escrow Banker of the municipal bond issue of the Corporation as a Credit Enhancement Facility under the World Bank-assisted Tamil Nadu Resilient Urban Development Program (TNCRUDP) and funds available in PSGF under the Credit Enhancement Facility. The proceeds of the bond issue should be used for the implementation of the Underground Sewerage Scheme / Project of the Issuer.

The said term deposit shall be kept as cash collateral in the form of security for bondholders for servicing of the bonds during the entire tenor of the bonds & lien marked with the Bond/Debenture Trustee. The escrow banker (on the instructions of the Bond/Debenture Trustee) will utilize the PSGF amount:
(i) In the case of insufficient funds in the Escrow Account / Interest Payment Account / Sinking Fund Account as per timelines indicated under the "Structured Payment Mechanism" provided as above
(ii) In case of the occurrence of payment default or event of default, the PSGF Amount shall be utilized for meeting all the outstanding interest and principal obligations to the bondholders.

Stress Scenario
Acuite sensitized that the property tax and fees and user charges, which is expected to be collected, would be transferred to escrow account, even if adjusted by 50%, the corporation would be able to meet its debt obligations. Over and above this, the corporation is expected to maintain DSRA, a structured payment mechanism along with the PSGF account, which is to be replenished in a time-bound manner in case of meeting any exigency and shortfall.

ESG Factors Relevant for Rating

The ESG framework of Tiruppur City Municipal Corporation is centred on sustainable municipal operations, citizen welfare, sustainable environmental practices and transparent governance. The corporation emphasizes environmental protection through solid waste management, cleanliness drives and sanitation measures, alongside social initiatives aimed at infrastructure development, public health and community welfare, supported by transparent governance practices and regulatory compliance, underscoring its commitment to responsible urban management.

Rating Sensitivities

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

Growth in the size of corporation with revenue surplus

Potential triggers (individual or collective) for a downward rating action:

Non-adherence to the Structured Payment Mechanism (SPM).
Significant reduction in property tax collections and /(or) fees user charges resulting in the escrow account balance falling below the stipulated levels
Significant increase in debt levels, impacting the liquidity profile

All Covenants

Financial covenants, given as below:
1. The issuer shall, at all times till the debentures are outstanding, ensure that the total amount collected/routed through the escrow account in any financial year shall be at least 2 (Two) times of the annual payments account. The term 'annual payments' shall, in respect of any financial year, mean the aggregate of:
a) the coupon payable in such year (in relation to the present bond issue and any other further borrowings)
b) the portion of the principal amount of the debentures which are required to be deposited by the issuer into the sinking fund account in such financial year (in relation to the present bond issue and any further borrowings); and
c) Principal repayment amount (in relation to the further borrowings where sinking fund is not created), in terms hereof.

2. So long the eligibility conditions are met, the issuer shall be entitled to raise further financial indebtedness based on its cash flow, including the cash flows through the escrow account, provided that it is clarified that nothing in this provision should be construed to permit the creation of any encumbrance over the hypothecated property without the express prior written consent of the debenture trustee.
The term ‘eligibility conditions’ shall mean the following conditions:
a) the annual payment ratios are maintained by the issuer
b) there is no shortfall in the contribution to the escrow account, the interest payment account (including towards maintenance of the required DSRA amount), the sinking fund, which has not been made good by the issuer in terms of the transaction documents
c) No event of default has occurred.

3. Other financial covenants as defined in the Transaction Document.
The documents executed in relation to or which are relevant to the Issue including:
a) Placement Memorandum along with all annexures;
b) Deed of Hypothecation
c) Issue Agreement;
d) Registrar Agreement;
e) Debenture Trustee Agreement;
f) Escrow Agreement;
g) Debenture Trust Deed;
h) Issue Proceeds Agreement;
i) Tripartite Agreements with NSDL and CDSL
any other agreement or document designated as such by the Debenture Trustee (acting on the instructions of the Majority Debenture Holders).

Negative Covenants, given as below:
At all times until the Final Settlement Date, the Issuer shall not, without the prior written consent of the Debenture Trustee (acting upon the instructions of the Majority Debenture Holders):
a) create any encumbrance over the Hypothecated Property except as permitted under the Transaction Documents;
b) enter into any agreement or commitment of any sort, the terms of which conflicts with the provisions of the Transaction Documents;
c) Close the Collection Accounts and/or collect property tax and fees and user charges in any other account;
d) Abolish, alter or reduce the property tax levied by the Issuer.
e) undertake or enter into any transaction of merger, de-merger, consolidation, re-organization or compromise with its creditors.

Liquidity Position

Adequate

TCMC has adequate liquidity marked by healthy net cash accruals of Rs.111.01 crore for FY2025 as against Rs.100.74 crore for FY2024. The liquidity remains supported by the cash and bank balances, which stood at Rs.208.44 Cr. as of 31st March, 2025, and investments in the form of fixed deposits, which stood at Rs.103.63 Cr as on 31st March, 2025. The current ratio stood at 1.72 times for FY2025. The city requires huge investments to improve the quality of its civic services, which is supported by the Government in the form of grants and TCMC's cash buffer. Acuité believes that these funds would be significantly utilized for infrastructural development and repayment of term loan facilities in the near to medium term.

Outlook: Stable

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 25 (Actual)	FY 24 (Actual)
Operating Income	Rs. Cr.	360.18	312.47
PAT	Rs. Cr.	(37.13)	(10.94)
PAT Margin	(%)	(10.31)	(3.50)
Total Debt/Tangible Net Worth	Times	0.07	0.08
PBDIT/Interest	Times	5.31	4.45

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
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm
• Explicit Credit Enhancements: https://www.acuite.in/view-rating-criteria-49.htm
• Urban Local Bodies : https://www.acuite.in/view-rating-criteria-57.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
31 Dec 2025	Proposed Bond	Long Term	100.00	ACUITE Provisional AA- \| Stable (Reaffirmed)
18 Mar 2025	Proposed Bond	Long Term	100.00	ACUITE Provisional AA- \| Stable (Assigned)

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
Not Applicable	INE2OVI24018	Bond	09 Jan 2026	8.50	09 Jan 2036	100.00	Simple	ACUITE AA- \| Stable \| Assigned \| Provisional To Final

Contacts

Mohit Jain
Chief Analytical Officer - Rating Operations

Archita Sharma
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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