JAYA VELU SPINNING MILLS PRIVATE LIMITED

Brickwork Ratings assigns the long-term rating of "BWR BBB-/Stable" for the Bank Loan Facilities of Rs. 70.12 Crs. of JAYA VELU SPINNING MILLS PRIVATE LIMITED

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	70.12	Long Term	BWR BBB - /Stable Assignment
Grand Total	70.12	(Rupees Seventy Crores and Twelve lakhs Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure RATING ACTION / OUTLOOK

Brickwork Ratings has assigned the long-term rating of “BWR BBB-/Stable” for the bank loan facilities of Rs. 70.12 Cr.

The Rating has factored, inter alia, Extensive experience of promoters, Long-Standing Market Presence, Healthy Capital Structure, Comfortable profit margins and debt protection metrics. The rating is constrained by Moderate scale of operations, albeit improvement in FY2026 (P), Vulnerability of Profit Margins to fluctuations in raw material prices, Intense Market competition and cyclical nature of industry.

Going forward, the ability of the company to improve its scale of operations, liquidity profile, maintain efficient working capital management and satisfactory gearing levels will remain the key rating sensitivities. The rating outlook has been assigned as "Stable" as BWR believes that Jaya Velu Spinning Mills Private Limited, business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case the revenue and profitability margins show sustained improvement. The rating outlook may be revised to 'Negative' if the financial risk profile goes down.

KEY RATING DRIVERS

Credit Strengths:

• Extensive experience of promoters and Long-Standing Market Presence :

  The company is managed by experience and qualified management team, who has decades of experience in cotton yarn manufacturing business catering. Extensive experience, coupled with a professional management setup, enhances the competitive position of the company in the industry, which has also helped the company in building strong customer and supplier base, also achieving financial and operational success overtime. Despite this change in ownership structure, the company continues to benefit from an experienced management team (Mr. G. Ravi and Mr. Gopalsamy Rajagopal), ensuring uninterrupted manufacturing operations, streamlined raw material procurement, and the consistent production of quality yarn.

• Comfortable profit margins and debt protection metrics :

  The company has better operating profit margin compared to other industrial players, mainly supported by inhouse solar captive plant of 16.4 MW, of which 10.4 MW is utilized for captive consumption. It has maintained Operating profit margin above 10% in the last few years and net margin has improved in FY2026(P) to above 3%. It has also maintained comfortable debt protection metrics with an ISCR of 3.78x and DSCR of 1.22x in FY2026 (P), improving from ISCR of 3.29x and DSCR of 0.96x in FY2025.

• Healthy Capital Structure :

  The company has maintained a healthy capital structure, reflected by total debt/TNW of 1.16x and TOL/TNW of 1.42x in FY2026 (P) marginal improvement from 1.24x and 1.50x in FY2025. As of date the company has nil CAPEX plans and does not intend to avail any fresh borrowings in the coming years.

Credit Risks:

• Moderate scale of operations, albeit improvement in FY2026 (P) :

  The operating income of the company has improved significantly from Rs. 111.38 Cr. in FY2025 to Rs. 163.80 Cr. in FY2026 (P), This expansion was primarily driven by the strategic commencement of cotton bale trading with group companies. The company continues to operate with the current installed capacity of 38400 Spindles for the conversion of cotton into quality yarn. However, growth in the scale of operations from manufacturing activity remains key monitorable.

• Vulnerability of Profit Margins to fluctuations in raw material prices :

  The profitability of the company is highly vulnerable to the volatile raw material prices. Cotton is a highly seasonal crop, harvested and procured primarily between October and March. Cotton yarn is treated as a commodity. When global or domestic raw cotton prices spike, spinning mills cannot instantly pass these higher costs onto downstream weavers and apparel makers, who may reduce production or shift to synthetic alternatives. This lag or inability to hike yarn prices narrows the spread, leading to a direct contraction in the Operating Profit Margin.

• Intense Market competition and cyclical nature of industry :

  The textile manufacturing industry in India faces significant competition from large, well-established players that dominate the market with their vast distribution networks and strong brand presence. The industry is highly cyclical, experiencing sharp boom-and-bust waves dictated by agricultural yields, monsoon patterns, and global consumer retail demand. A mill's profitability is entirely dependent on the volatile cotton-yarn spread, which compresses drastically when raw material costs spike faster than yarn realizations. During economic downturns, global demand compression traps these mills with high fixed overhead overheads and severe inventory gluts. This cyclicality often leads to a repeating industry pattern where periods of high cash accruals spark aggressive, debt-funded capacity expansions, which inevitably culminate in market oversupply and widespread credit downgrades.

ANALYTICAL APPROACH - Standalone

For arriving at these ratings, BWR has considered the standalone performance of Jaya Velu Spinning Mills Private Limited. BWR has applied its rating methodology as detailed in the Rating Criteria (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

The company’s ability to improve its scale of operations, maintaining stable profit margins, improving liquidity profile, and maintain satisfactory gearing levels will remain the key rating sensitivities.

Upward:

• Company achieving projected revenue of FY2027 while maintaining operating profit margin at 15% and above.
• Current ratio above 1.30x, DSCR above 1.20x and ISCR above 2.50x
• TOL/TNW to be remained below 1.40x and total debt/TNW below 1.00x.
• Cash Conversion Cycle to be remained below or at the same levels as of FY2026.

Downward:

• Revenue from operations and profitability going below 15% as reported in the actuals of previous years financials.
• Deterioration in the liquidity profile, with current ratio going below 1.10x.
• DSCR falling below projected levels.

LIQUIDITY INDICATORS - Adequate

The company has adequately covered its interest and CPLTD obligations through sufficient EBITDA and Net Cash Accruals in recent years. It has maintained comfortable debt protection metrics, with an ISCR of 3.78x and DSCR of 1.22x in FY2026 (P), improving from ISCR of 3.29x and DSCR of 0.96x in FY2025. It has marked current ratio of 1.43x in FY2026 and recorded a conversion cycle of 70 days in FY2026. Working capital limit utilization remained below 55% over the past few months. Going further in FY2027, the company projects an EBITDA of Rs. 20.24 Cr. and Net cash accruals of Rs. 12.47 Cr., which are expected to comfortably cover interest costs of Rs. 5.82 Cr. and CPLTD obligations of Rs. 11.41 Cr. Considering all these factors, the company's liquidity position is assessed as "Adequate".

ABOUT THE ENTITY

Incorporated on January 24, 1994, Jaya Velu Spinning Mills Private Limited (JVSMPL) is engaged in cotton spinning and the manufacturing of premium quality cotton yarn for both domestic and export markets. The company's manufacturing unit is situated on Tuticorin Highway Road near Mettilpatti Village, Tuticorin, Tamil Nadu, spanning an area of over 52.20 acres with an installed capacity of 38,400 spindles for converting cotton into yarn. The directors of the company are Mr. G. Ravi and Mr. Gopalsamy Rajagopal.

ESG Profile

NA

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 23 - 24 (Audited)	FY 24 - 25 (Audited)	FY 25 - 26 (Provisional - Annual)
Operating Revenue	Rs.Crs.	104.51	111.38	163.80
EBITDA	Rs.Crs.	15.87	19.41	18.26
PAT	Rs.Crs.	0.79	1.87	6.07
Tangible Net Worth	Rs.Crs.	49.70	51.57	57.64
Total Debt / Tangible Net Worth	Times	1.16	1.24	1.16
Current Ratio	Times	0.77	1.09	1.43

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction of the rated facilities include standard covenants normally stipulated for such facilities. Some of these are mentioned below:

• CSB Bank Financial Covenants: TOL/TNW (below 4:1), current ratio (above 1.10:1), ISCR (above 2:1) and Debt/Equity Ratio: Must be maintained below 4:1.
• Bank of Baroda Financial Covenants: The company must maintain its Current Ratio and Debt Equity Ratio (TOL/ATNW) as estimated/projected. Any adverse variations in key financial ratios of more than 10% must be reported to the sanctioning authority. The company must retain its entire Net Profit after Tax, as estimated or projected.
• Audited financials should not vary by more than 10% from the provisional financials for key parameters like Sales, Net worth, and Profit. If there is a variation of above 10%, the bank will carry out rerating and repricing, and the borrower must raise an equivalent amount of deficit by way of capital or long-term funds to match the accounting ratios
• The company cannot declare or pay any dividends for any year unless all due obligations and required provisions for that year are met and cannot pay dividends if their accounts are in arrears.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

ANY OTHER INFORMATION

None

RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating  (2026)			2025		2024		2023
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	70.12	BWR BBB-/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		70.12	(Rupees Seventy Crores and Twelve lakhs Only)

Hyperlink/Reference to applicable Criteria

• General Criteria
• Approach to Financial Ratios
• Trading Entities
• Manufacturing Company

Analytical Contacts
Mohammed Farzan Rating Analyst mohammed.f@brickworkratings.com	Suryanarayan N Associate Director - Ratings suryanarayan.n@brickworkratings.com
Media Contact | media@brickworkratings.com	Client Support | clientsupport@brickworkratings.com

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)	Complexity of the Instrument
1	Bank of Baroda	Term Loan - Out-standing	13.71	_	13.71	Simple##
2	Canara Bank	Term Loan - Out-standing	3.17	_	3.17	Simple##
3	Canara Bank	Term Loan - Out-standing	3.11	_	3.11	Simple##
4	Canara Bank	OCC/ODBD - Sanctioned	10.00	_	10.00	Simple##
5	CSB Bank (Formerly known as Catolic Syrian Bank Ltd)	Term Loan - Out-standing	2.21	_	2.21	Simple##
6	CSB Bank (Formerly known as Catolic Syrian Bank Ltd)	Term Loan - Out-standing	22.28	_	22.28	Simple##
7	CSB Bank (Formerly known as Catolic Syrian Bank Ltd)	Cash Credit - Sanctioned	15.00	_	15.00	Simple##
8	CSB Bank (Formerly known as Catolic Syrian Bank Ltd)	GECL - Out-standing	0.64	_	0.64	Simple##
Total			70.12	0.00	70.12
TOTAL (Rupees Seventy Crores and Twelve lakhs Only)

## BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.