CRISIL has assigned its ‘BBB-/Stable/P3’ ratings to the bank facilities of Jayavarma Textiles Pvt Ltd (JTPL). The ratings reflect JTPL’s established position in the hosiery yarn segment, its promoters’ experience in the textile industry, and its above-average financial risk profile marked by moderate gearing and comfortable debt protection indicators. These strengths are partially offset by JTPL’s exposure to risks relating to revenue concentration and volatility in raw material prices.

Outlook: Stable
CRISIL believes that JTPL will continue to benefit from its moderate scale of operations and steady accruals over the medium term. The outlook may be revised to ‘Positive’ if JTPL increases its scale of operations substantially, and improves its capital structure. Conversely, the outlook may be revised to ‘Negative’ if JTPL’s financial risk profile deteriorates because of large, debt-funded capital expenditure, financial support to weaker group entities, or significant decline in capacity utilisation or operating profitability.

About the Company
Incorporated in 1997, JTPL is engaged in spinning and knitting of hosiery yarn. The company is based out of Tirupur and has capacity of 60,768 spindles; it derives 90 per cent of its turnover from spinning, and the rest from sale of grey cloth. JTPL, promoted by Mr. Palanisamy, is part of the JV group, which includes Jayavarma Knittears, JV Tapes, and JV Overseas Exports.

JTPL reported a profit after tax (PAT) of Rs.37.8 million on net sales of Rs.1.3 billion for 2008-09 (refers to financial year, April 1 to March 31), against a PAT of Rs.4.9 million on net sales of Rs.1.2 billion for 2007-08.