Rating Rationale
March 31, 2025 | Mumbai
Theni Guru Krishna Textile Mills Private Limited
Suspension Revoked; 'Crisil BB+/Stable/Crisil A4+' assigned to Bank Debt
 
Rating Action
Total Bank Loan Facilities RatedRs.334 Crore
Long Term RatingCrisil BB+/Stable (Assigned; Suspension Revoked)
Short Term RatingCrisil A4+ (Assigned; Suspension Revoked)
Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

Crisil Ratings has revoked the suspension of its ratings on the bank facilities of Theni Guru Krishna Textile Mills Pvt Ltd (TGKTMPL) and has assigned its ‘Crisil BB+/Stable/Crisil A4+’ ratings to the bank facilities of TGKTMPL.
 

Crisil Ratings suspended the ratings on July 3, 2014, on account of non-cooperation by the company with the efforts of Crisil Ratings to undertake a view of the ratings. TGKTMPL has now shared the requisite information enabling Crisil Ratings to assign its ratings.

 

The ratings reflect the extensive experience of the promoters in the textiles industry and TGKTMPL's integrated operations and comfortable financial profile. These strengths are partially offset by susceptibility to volatility in raw material (cotton) prices, vulnerability of the operating margin to fluctuations in foreign exchange (forex) rates and working capital-intensive operations.

Analytical Approach

Crisil Ratings has evaluated the standalone business and financial risk profiles of TGKTMPL.

Key Rating Drivers & Detailed Description

Strengths:

  • Extensive industry experience of the promoters: TGKTMPL was established in 2005 after taking over two partnership concerns - Theni Krishna Exports and Theni Guru Krishna Mills. TGKTMPL is a part of the ATK group which was promoted by Mr A T Krishnaswamy. The group is currently managed by Mr T K Ramasamy, Mr T K Srinivasan, Mr T K Ponraj and Mr S Rajasekar. The company exports readymade garments and made ups such as spreadsheets, blankets, towels and pillow covers manufactured from cotton and polyester. The company has an integrated unit having in-house spinning, weaving and bleaching facilities. It has made use of backward integration, allowing it to penetrate deep into the value chain. Their extensive experience has helped the promoters to have a strong understanding of the market dynamics and enabled them to establish healthy relationships with suppliers and customers.

 

  • Comfortable financial profile: TGKTMPL’s capital structure has been moderate because of limited reliance on external funds yielding gearing of 1.48 times and total outside liabilities to adjusted networth (TOLANW) ratio of 2.03 times as on March 31, 2024. These metrics are expected at 1.44 times and 2.01 times, respectively, as on March 31, 2025. TGKTMPL’s debt protection metrics have also been moderate, despite leverage, due to moderate profitability. The interest coverage and net cash accrual to total debt (NCATD) ratios were 1.59 times and 0.05 time, respectively, for fiscal 2024; these metrics are estimated at 2.41 times and 0.12 time, respectively, for fiscal 2025. The debt protection metrics are expected to improve, over the medium term, owing to better profitability.

 

Weaknesses:

  • Susceptibility to volatility in raw material (cotton) prices and vulnerability of operating margin to fluctuations in forex rates: The textile spinning industry has several unorganised players with small capacities. The entry barriers to the industry are low due to limited capital and technology requirements and little differentiation in end products. These factors will continue to exert pressure on pricing over the medium term. Moreover, revenue and profitability will remain susceptible to volatility in the price of cotton as reflected by fluctuating margin over the five fiscals through 2024. Since 70-80% of revenue comes from the international market, any sharp fluctuation in forex rates affects realisation and accrual. This exposes the operating margin to fluctuations in forex rates.

 

  • Working capital-intensive operations: Gross current assets (GCAs) were 160-180 days over the three fiscals ended March 31, 2024; and 183 days as on March 31, 2024. GCAs are estimated to improve to over 178 days as on March 31, 2025. Large working capital requirement is driven by high inventory levels and stretched creditors. Also, it is required to extend long credit period to its customers. Furthermore, due to business need it holds large inventory.

Liquidity: Adequate

Bank limit utilisation was high at 95.38% on average for the 12 months ended January 31, 2025. Cash accrual is expected to be Rs 33-45 crore which will be sufficient against term debt obligation of Rs 15-33 crore over the medium term. Although the company's net cash inflows were closely matched with its debt obligation, loan repayments were made on schedule, as verified by the bankers and evident in the bank statements. Furthermore, the promoters are expected to provide financial support through equity infusions and unsecured loans to ensure the working capital requirement and debt repayment are met.

 

The current ratio was low at 0.97 time as on March 31, 2024, and is estimated to be at similar levels in fiscal 2025 as well due to moderately high debt obligation.

Outlook: Stable

Crisil Ratings believes TGKTMPL will continue to benefit from the extensive experience of its promoters and established relationships with clients.

Rating sensitivity factors

Upward factors:

  • Increase in revenue and higher operating margin at 10.5-11.5% leading to higher-than-expected cash accrual
  • Efficient working capital management leading to better liquidity and financial risk profiles.
     

Downward factors:

  • Decline in revenue or operating profitability leading to lower-than-expected net cash accrual to below Rs 36 crore
  • Stretched working capital cycle or large, debt-funded capital expenditure, weakening the financial and liquidity risk profiles

About the Company

TGKTMPL was incorporated in 2005 after taking over two partnership concerns - Theni Krishna Exports and Theni Guru Krishna Mills. Theni Guru is a part of the ATK group which was promoted by Mr A T Krishnaswamy. The company currently exports readymade bed sheets and blankets manufactured from cotton and polyester. TGKTMPL’s manufacturing facility is in Theni, Tamil Nadu. It also operates a 7.25-megawatt (MW) windmill and 7 MW solar power for captive use.

 

TGKTMPL is owned and managed by Mr T.K. Ramasamy, Mr T.K. Srinivasan, Mr T.K. Ponraj and Mr S. Rajasekar.

Key Financial Indicators

As on / for the period ended March 31

Unit

2024

2023

Operating income

Rs crore

534.43

547.71

Reported profit after tax (PAT)

Rs crore

-9.23

7.10

PAT margin

%

-1.73

1.30

Adjusted debt/adjusted networth

Times

1.48

1.35

Interest coverage

Times

1.57

2.53

Any other information: Not Applicable

Note on complexity levels of the rated instrument:
Crisil Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

Crisil Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the Crisil Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name Of Instrument Date Of Allotment Coupon Rate (%) Maturity Date Issue Size (Rs.Crore) Complexity Levels Rating Outstanding with Outlook
NA Cash Credit NA NA NA 4.00 NA Crisil BB+/Stable
NA Export Packing Credit NA NA NA 16.00 NA Crisil A4+
NA Letter of Credit NA NA NA 25.00 NA Crisil A4+
NA Packing Credit NA NA NA 112.00 NA Crisil A4+
NA Standby Letter of Credit NA NA NA 10.00 NA Crisil A4+
NA Working Capital Demand Loan NA NA NA 6.00 NA Crisil A4+
NA Working Capital Facility NA NA NA 1.25 NA Crisil A4+
NA Working Capital Loan NA NA NA 30.00 NA Crisil BB+/Stable
NA Proposed Term Loan NA NA NA 24.23 NA Crisil BB+/Stable
NA Term Loan NA NA 31-Dec-30 48.68 NA Crisil BB+/Stable
NA Term Loan NA NA 31-Mar-26 0.56 NA Crisil BB+/Stable
NA Term Loan NA NA 31-Dec-27 5.00 NA Crisil BB+/Stable
NA Term Loan NA NA 31-Mar-27 5.72 NA Crisil BB+/Stable
NA Term Loan NA NA 31-Mar-28 11.37 NA Crisil BB+/Stable
NA Term Loan NA NA 31-Mar-28 12.41 NA Crisil BB+/Stable
NA Term Loan NA NA 31-Mar-26 1.11 NA Crisil BB+/Stable
NA Working Capital Term Loan NA NA 31-Mar-28 11.66 NA Crisil BB+/Stable
NA Working Capital Term Loan NA NA 31-Dec-27 3.47 NA Crisil BB+/Stable
NA Working Capital Term Loan NA NA 31-Dec-26 1.48 NA Crisil BB+/Stable
NA Working Capital Term Loan NA NA 31-Mar-27 4.06 NA Crisil BB+/Stable
Annexure - Rating History for last 3 Years
  Current 2025 (History) 2024  2023  2022  Start of 2022
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities ST/LT 299.0 Crisil A4+ / Crisil BB+/Stable   --   --   --   -- Suspended
Non-Fund Based Facilities ST 35.0 Crisil A4+   --   --   --   -- Suspended
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Cash Credit 4 The South Indian Bank Limited Crisil BB+/Stable
Export Packing Credit 16 State Bank of India Crisil A4+
Letter of Credit 25 State Bank of India Crisil A4+
Packing Credit 80 State Bank of India Crisil A4+
Packing Credit 32 IDBI Bank Limited Crisil A4+
Proposed Term Loan 24.23 Not Applicable Crisil BB+/Stable
Standby Letter of Credit 10 State Bank of India Crisil A4+
Term Loan 48.68 State Bank of India Crisil BB+/Stable
Term Loan 12.41 Axis Bank Limited Crisil BB+/Stable
Term Loan 0.56 The South Indian Bank Limited Crisil BB+/Stable
Term Loan 5 ICICI Bank Limited Crisil BB+/Stable
Term Loan 5.72 HDFC Bank Limited Crisil BB+/Stable
Term Loan 11.37 The Karur Vysya Bank Limited Crisil BB+/Stable
Term Loan 1.11 Tamilnad Mercantile Bank Limited Crisil BB+/Stable
Working Capital Demand Loan 6 The South Indian Bank Limited Crisil A4+
Working Capital Facility 1.25 Axis Bank Limited Crisil A4+
Working Capital Loan 30 State Bank of India Crisil BB+/Stable
Working Capital Term Loan 3.47 IDBI Bank Limited Crisil BB+/Stable
Working Capital Term Loan 11.66 State Bank of India Crisil BB+/Stable
Working Capital Term Loan 1.48 The South Indian Bank Limited Crisil BB+/Stable
Working Capital Term Loan 4.06 The Karur Vysya Bank Limited Crisil BB+/Stable
Criteria Details
Links to related criteria
Basics of Ratings (including default recognition, assessing information adequacy)
Criteria for manufacturing, trading and corporate services sector (including approach for financial ratios)

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