­Vellingiri Andavar Textiles Private Limited was incorporated in 1989. The company is engaged in manufacturing, purchase and sale of cotton, yarn and cloth and generation of wind power energy. Mr. Venkatasamy Sampathkumar and Mr. Venkatasamy Ramamoorthy are the directors of the company. The registered office is in Coimbatore

­Siva subramania textiles private Limited (SST), Vellingiri andavar textiles (VAT) and CNV textiles are the group companies managed by two brothers C.V. Ramamoorty and C.V Sampath Kumar. The promoter of the group C.N Venkataswami during 1985 incorporated CNV textiles as a ginning factory. Later, diluted into Siva subramania textiles and Vellingiri andavar Textiles and started Yarn manufacturing. The group produces yarn of 20s to 80s counts and compact yarn .Currently the group has the production capacity of 100,000 spindles and 10 rotors. The group has its own wind mills which can produce 10 M.W of electricity. Apart from these the group also have solar electricity system (Including ground mounted and rooftop)which can produce around 18 M.W electricity these contribute around 90% of the power usage of the group.

• Sustainable improvement in revenue while improving operational and profitability margins.

• Further decline in operating and profitability margins.

• Any plans of large debt funded capex  leading to deterioration of financial risk profile.

­Liquidity position of the group is adequate as the group has sufficient Net cash accrual (NCA’s) against its debt repayment. The group has generated NCA’s of Rs.21.90 ending FY22 against the debt repayments of Rs.3.25Cr for the same period. The Current ratio of the company has improved to 2.16 times as on March 31, 2022 against 1.96 times as on previous year. The company has unencumbered cash and bank balances of Rs.0.08Cr as on March 31, 2022. The bank Limits utilization stood moderately at 36.5 percent in the past 12 months ending January 31, 2023.The group’s liquidity position is likely to remain adequate in the medium term with NCA’s estimated to be in the range of Rs.16Cr to Rs.21Cr against debt repayments estimated to be in the range of Rs.6.5Cr to 10Cr for the same period. The current ratio is estimated to be in the range of 2.5-2.75 times in the medium term.

Acuité believes that group will continue to benefit over the medium term due to its experienced management and established relation with its suppliers and customers. The outlook may be revised to 'Positive', in case of continued traction in total operating income and sustainable profitability given the limited capacity available with improvement in working capital management. Conversely, the outlook may be revised to 'Negative' in case of any significant stretch in its working capital management or larger-than-expected debt-funded capital expenditure leads to deterioration of its financial risk profile and liquidity

­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