Press Release March 31, 2026 V P N TEXTILES Rating Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	45.51	ACUITE BB+ | Stable | Reaffirmed	-
Total Outstanding	45.51	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

­Acuité has reaffirmed its long-term rating of ‘ACUITE BB+’ (read as ACUITE Double B plus) on the Rs. 45.51 Cr. bank facilities of V P N Textiles (VPNT). The outlook is 'Stable'. Rationale for rating The rating reaffirmation considers stable levels of operating and profitability margins albeit muted growth in revenue. The rating continues to factor the experienced management of the firm. However, these strengths are partially offset by moderate financial risk profile, high reliance on working capital limits and susceptibility to changes in the raw material prices. Going ahead, the ability of the firm to improve its scale of operations along with stability in the margins without further elongation in working capital operations will remain a key rating monitorable.

About the Company

Established in 2014, V P N Textiles is Coimbatore based firm engaged in manufacturing of cotton yarn having an installed manufacturing capacity of 50,544 spindles, manufacturing 46’s counts of yarn. The firm is promoted by Mr. Premanand and Mrs. Sripriya Anand. The main raw material is cotton bales which the firm majorly procures from Maharashtra directly through the ginners.

Unsupported Rating

­Not applicable.

Analytical Approach

­­­Acuité has considered the standalone business and financial risk profiles of V P N Textiles to arrive at this rating.

Key Rating Drivers

Strengths

­Experienced management  The managing partners of VPNT; Mr. Premanand and Mrs. Sripriya Anand have over a decade of experience and expertise in textile industry. Hence, the extensive experience, coupled with a long track record of operations, has enabled the firm to forge healthy relationships with customers and suppliers. Acuité believes that the experience of the management in the industry is likely to benefit the firm over the medium term. Stable level of margins; albeit moderate revenue growth The revenue of VPNT in FY25 remained on similar lines at Rs.151.67 Cr. as compared to Rs.146.31 Cr. in FY24. This is on account of muted growth in volumes and realisations of cotton yarn. Also, the volumes growth was marginal due to higher input costs and inability to pass the same in the realisations. However, despite increase in raw material prices, the operating and profitability margins stood stable with EBITDA margin of 13.74% in FY25 (13.68% in FY24) and PAT margin of 0.40% in FY25 (0.10% in FY24). This was due to the lowering of power cost on account of solar panels installed for captive use. The solar was operational from FY25 onwards.  Further, the firm recorded top line of ~Rs.130 Cr. till February 2026 with marginal degrowth in realisations and raw material prices. Going ahead, the ability of the firm to improve its scale of operations while sustenance in profitability will remain a key monitorable.

Weaknesses

­Moderate financial risk profile The financial risk profile of VPNT stood moderate marked by moderate net worth, high gearing and moderate debt protection metrics. The tangible net worth stood moderate at Rs.25.16 Cr. as on 31st March 2025 (Rs.24.77 Cr. as on 31st March 2024), along with susceptibility to the risk of any excess withdrawal of partner's capital limiting the growth in net worth. Further, while debt reduced, the gearing (debt-equity) improved, however remained high at 2.53 times as on 31st March 2025 (2.92 times as on 31st March 2024). The debt protection metrics also stood moderate with interest coverage ratio of 2.82 times in FY25 (2.71 times for FY24) and debt service coverage ratio of 1.23 times in FY25 (1.16 times for FY24). Going ahead, the financial risk profile of the firm is expected to improve on account of steady accruals and no major debt funded capex plans in the near to medium term. Moderately intensive working capital operations The working capital operations of VPNT remain moderately intensive as evident from gross current asset (GCA) of 105 days as on 31st March 2025 (108 days as on 31st March 2024). The inventory levels stood at 88 days in FY25 (90 days for FY24). The general inventory holding period is ~3 months for cotton bales. The debtor days stand comfortable at 6 days in FY25. However, the creditor days also reduced to 9 days in FY25 (25 days in FY24). Further, the average utilization for the fund-based facilities remained highly utilized at ~98% for the last 6 months ended February 2026. Going ahead, any further elongations in working capital operations will be a key monitorable. Susceptibility to fluctuations in raw material prices and highly competitive industry VPNT’s profitability margins are susceptible to fluctuations in the prices of raw material i.e., cotton bales. Cotton being a seasonal crop, the production of the same is highly dependent upon the monsoon and the climatic conditions. Furthermore, any abrupt change in cotton prices due to supply demand scenario or change in government regulations w.r.t. minimum support price can lead to distortion of prices, affecting the profitability of the firm. Additionally, the firm operates in a fragmented textile industry and is exposed to intense competition from several other players as well.

Rating Sensitivities

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

­Growth in the scale of operations with improving EBITDA margins above 14%. Improvement in financial risk profile.

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

­Decline in the scale of operations with EBITDA margin falling below 10%. Any significant increase in debt profile affecting the financial risk profile.

Liquidity Position

Adequate

Liquidity position of the firm is adequate as reflected from sufficient Net cash accruals (NCA) against the maturing debt repayment obligations. The firm has registered NCA of Rs.13.78 Cr. in FY25 sufficient against the maturing debt obligations of Rs.9.82 Cr. The firm has unencumbered cash and bank balances of Rs.0.01 Cr. as on 31st March 2025 and the current ratio stood at 1.10 times as on 31st March 2025 (0.98 times as on 31st March 2024). Going forward, firm is expected to generate cash accruals in the range of Rs.12.00-14.00 Cr. over the medium term, while repayment obligations are expected to be in the range of Rs.9.00-10.00 Cr. for the same period. However, the firm's reliance on the working capital limits is high as reflected by average utilization which stood at ~98% for the last 6 months ended February 2026.

Outlook: Stable

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Other Factors affecting Rating

­None.

Key Financials

Particulars	Unit	FY 25 (Actual)	FY 24 (Actual)
Operating Income	Rs. Cr.	151.67	146.31
PAT	Rs. Cr.	0.61	0.15
PAT Margin	(%)	0.40	0.10
Total Debt/Tangible Net Worth	Times	2.53	2.92
PBDIT/Interest	Times	2.82	2.71

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 • 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 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 2024 Term Loan Long Term 3.64 ACUITE BB+ | Stable (Reaffirmed) Term Loan Long Term 2.57 ACUITE BB+ | Stable (Reaffirmed) Term Loan Long Term 2.92 ACUITE BB+ | Stable (Reaffirmed) Cash Credit Long Term 25.00 ACUITE BB+ | Stable (Reaffirmed) Term Loan Long Term 8.22 ACUITE BB+ | Stable (Reaffirmed) Proposed Long Term Bank Facility Long Term 3.16 ACUITE BB+ | Stable (Reaffirmed) 04 Oct 2023 Term Loan Long Term 4.00 ACUITE BB+ | Stable (Reaffirmed) Cash Credit Long Term 19.00 ACUITE BB+ | Stable (Reaffirmed) Term Loan Long Term 11.34 ACUITE BB+ | Stable (Reaffirmed) Term Loan Long Term 4.11 ACUITE BB+ | Stable (Reaffirmed) Term Loan Long Term 7.06 ACUITE BB+ | Stable (Reaffirmed)

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Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating Canara Bank Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 25.00 Simple ACUITE BB+ | Stable | Reaffirmed Not Applicable Not avl. / Not appl. Proposed Long Term Bank Facility Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 0.24 Simple ACUITE BB+ | Stable | Reaffirmed Canara Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 22 Mar 2033 5.23 Simple ACUITE BB+ | Stable | Reaffirmed Canara Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 27 Nov 2027 1.80 Simple ACUITE BB+ | Stable | Reaffirmed Canara Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 13 Oct 2030 8.09 Simple ACUITE BB+ | Stable | Reaffirmed Canara Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 15 Dec 2028 2.02 Simple ACUITE BB+ | Stable | Reaffirmed Canara Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 27 Jun 2029 3.13 Simple ACUITE BB+ | Stable | Reaffirmed

Contacts

Mohit Jain Chief Analytical Officer - Rating Operations Dhruvi Chauhan 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. Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating. Note: None of the Directors on the Board of Acuité Ratings & Research Limited are members of any rating committee and therefore do not participate in discussions regarding the rating of any entity.