Acuite has consolidated the business and financial risk profiles of TRK Textile India Private Limited, SS Cotex and SS Corporation. Herein after referred as TRK group. The consolidation is due to common management, operational linkages resulting in integrated operations.

­Extensive experience of promoters.
TRK group is owned and managed by Mr. Saravanan S with around two decades of experience in the textile industry. Mrs. Sathya Saravanan Kandasamy is the other key Director. The extensive experience has enabled the company to establish healthy relationships with customers and suppliers, to ensure a steady raw material supply. Acuité believes that the promoter’s extensive experience in the textile industry and healthy relationship with customers and suppliers is expected to support its business risk profile over the medium term.

Augmentation of business risk profile:
The TRK group registered revenue of Rs.208.55 Cr. in FY2025 against Rs.131.52 Cr. This growth in revenue was due to augmentation of operations through establishment of two new firms which have reported trading revenue since it was there initial year of operations. These additions, aligned with forward and horizontal integration strategies, contributed significantly to the group’s revenue growth. During Q1FY2026, the group registered revenue of Rs.48.74 Cr. and expected to close the year with the revenue of Rs.230-240 Cr. The operating profit margin of the group remained stable at 7.40 percent in FY2025 as against 7.38 percent in FY2024. Consequently, the PAT margins of the group improved to 1.65 percent in FY2025 from -0.37 percent in FY2024. Acuite believes, the group’s revenue will improve over the medium term on account of scaling up of group's operations while profitability is expected to show marginal improvement due to expected reduction of trading activities.

Moderate financial risk profile
The group’s financial risk profile remained moderate, with moderate net worth, high gearing level and improved debt protection metrics. The group’s networth stood at Rs.32.75 Cr. as on March 31, 2025 against Rs. 26.19 Cr. as on March 31, 2024. The improvement in networth is due to infusion of Rs.3.89 Cr. capital by promoters. The total debt of the group (comprises long-term debt of Rs.14.21 Cr. short-term debt of Rs.59.22 Cr. and unsecured loans of Rs.11.12 Cr.) stood at Rs.84.54 Cr. as on March 31, 2025 against Rs.71.24 Cr. as on March 31, 2024. Despite the increase in debt levels, the gearing level improved marginally to 2.58 times as of March 31, 2025 from 2.72 times as of March 31, 2024. due to improvement in networth.  Total Outside Liabilities/ Tangible Net Worth (TOL/TNW) remained at 3.07 times as on March 31, 2025 against 3.02 times as on March 31, 2024. Debt protection metrics improved in FY2025 with Interest coverage ratio (ICR) and debt service coverage ratio (DSCR) stood at 2.43 times and 1.15 times respectively as on March 31, 2025 from 1.39 times and 0.66 times respectively as of March 31, 2024. Debt to EBITDA has improved to 5.48 times as of March 31, 2025 from 7.34 times as on March 31, 2024 due to improvement in EBITDA. Acuite believes, the gearing and debt protection metrics are expected to improve on account of improving profitability and no plans of major debt-funded capex.

Working capital intensive nature of operations:
The working capital operations of the group are remained intensive, as reflected in Gross current asset (GCA) of 198 days in FY2025 as against 227 days in FY2024. Elongation in GCA days is due to elongated debtor days which remained at 137 days over the last two years. Due to the intense competition in the industry, the group extended its credit policy with customers to 120 days, resulted in pileup of debtors during the last quarter of FY2025. Additionally, the group maintains an inventory policy of 45 days for raw materials and 75 days for finished goods, which further taking the GCA days to elongated levels. The company makes advance payments to suppliers or enjoys a credit period of 7–24 days from their suppliers. The current ratio remained at 1.52 times as on March 31, 2025. The intensive working capital operations led to higher reliance on the fund based working capital operations, which were utilized at an average of 95 percent over the past 6 months ending June 2025.
Acuite believes that, the working capital operations will remain working capital intensive over the medium term due to elongated debtor days.

Susceptibility of profitability to the fluctuations in raw material prices
The profitability of the yarn manufacturing companies remains highly susceptible to the fluctuations in raw material prices, particularly cotton. Given the raw material constitutes a significant portion of the overall production cost, any sharp increase in prices can impact margins, especially in competitive market where passing on costs to customers is limited.

Inherent risk of capital withdrawals in partnership & sole proprietorship firms
TRK group remains exposed to the inherent risk of capital withdrawals by partners, given constitution of its group entities as a partnership and a sole proprietorship firm. Any substantial withdrawals from partners capital will have a negative impact on the firm's financial risk profile and can constrain the firm's ability to maintain adequate liquidity.