RATING RATIONALE

12Mar2026

Avon Cottex Pvt. Ltd.

Brickwork Ratings reaffirmed the rating at BWR BB+/Stable and simultaneously withdrawn the ratings for the Bank Loan Facilities of Rs. 25.82 Crs. of Avon Cottex Pvt. Ltd.

Particulars

Facilities/Instruments**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities/Instruments**	Previous	Present	Tenure	Previous (17 Apr 2025)	Present
Fund Based	25.13	24.97	Long Term	BWR BB+ /Stable removal from ISSUER NOT COOPERATING* category/Upgraded	BWR BB + /Stable Reaffirmation/Withdrawal
Non Fund Based	0.85	0.85	Long Term	BWR BB+ /Stable Assignment	BWR BB + /Stable Reaffirmation/Withdrawal
Non Fund Based	(0.50)	(0.50)	Long Term	BWR BB+ /Stable Assignment	BWR BB + /Stable Reaffirmation/Withdrawal
Grand Total	25.98	25.82	(Rupees Twenty Five Crores and Eighty Two lakhs Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Complete details of Bank facilities / NCDs is provided in Annexure-I
RATING ACTION / OUTLOOK / WITHDRAWAL

Brickwork Rating has reaffirmed the ratings for bank loan facilities of Avon Cottex Pvt. Ltd. at BWR BB+/Stable and simultaneously withdrawn the rating based on the withdrawal request by the company and NOC certificate from its lender.

The company has requested the withdrawal of ratings by submitting NOC from its lenders and the latest operational and financial information required for the review of ratings. The rating reaffirmation is reflected by the extensive Experience of the promoters, healthy financial profile, and adequate liquidity position. However, the ratings are constrained by the susceptibility of profitability to raw material price volatility and the presence in a highly fragmented and competitive textile industry.

The outlook has been retained as stable, as BWR believes that the business risk profile of the Company will be maintained over the medium term. The Stable outlook indicates a low likelihood of a rating change over the medium term.

For assigning the rating, BWR has relied upon the last 3 years of audited financials till FY26, projected financials, and publicly available information, and clarification provided by management.

Withdrawal is in conformity with the BWR withdrawal policy, and relevant documents are held on record.

KEY COVENANTS OF THE INSTRUMENT / FACILITY RATED

The terms of sanction include standard covenants normally stipulated for bank loan facilities.

KEY RATING DRIVERS

Credit Strengths:

Extensive Experience of the Directors :
The company has a long operational track record and market reputation in Ludhiana region. There is strong and professional management in place. The company is led by its promoters Mr. Satnam Singh, Mr. Taranjit Singh, and Mr. Gaganjot Singh. The Managing Director of the company has over four decades of experience in the textile industry like Yarn , Fabrics, Knitting & Dyeing, Sampling & Production Planning, Garments etc.
Healthy Financial Risk Profile :
Avon Cottex Pvt. Ltd. maintains a healthy financial risk profile, demonstrating revenue growth and stable debt protection metrics. In FY25, the company reported a total operating income (TOI) of Rs.67.12 crores with EBIDTA margin of 12.98% in FY25 and Net Margin of 4.40%. Debt servicing capacity remains adequate, with an ISCR of 5.83 times and DSCR of 1.30 times in FY25. Moderate net worth of Rs 30.58 crores in FY25 (Audited).

Credit Risks:

Susceptibility of profitability to raw material price volatility :
Avon Cottex Pvt. Ltd. is highly susceptible to volatility in cotton yarn price, polyester price, driven by the inherent cyclicality of the textile industry and fluctuating raw material costs. The company remains vulnerable to changes in government policies, such as Minimum Support Price (MSP), import-export duties, and market regulations, which can impact procurement costs and overall margins. Any adverse policy changes or price fluctuations could strain profitability, affecting cost competitiveness and working capital management.
Presence in a highly fragmented and competitive textile industry :
The Indian garments and textile manufacturing industry is highly fragmented, with numerous small-scale units leading to intense competition. Due to a fragmented market structure, Avon Cottex Pvt. Ltd. has limited ability to pass on fluctuations in raw material prices to end customers, often experiencing a time lag before price adjustments can be implemented. This exposes the company to margin pressures, especially during periods of rising cotton prices. Additionally, the intense competition from both domestic and international players constrains its bargaining power, making it essential for the company to focus on operational efficiencies, cost optimization, and strategic customer relationships to sustain profitability and growth in a highly competitive environment.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA - Standalone

For arriving at its ratings, BWR has considered the standalone performance of Avon Cottex Pvt. Ltd. BWR has applied its rating methodology as detailed in the Rating Criteria (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Rating sensitivities have not been captured as the rated instruments are being withdrawn.

LIQUIDITY INDICATORS - Adequate

The company’s liquidity profile remains adequate, supported by moderate internal cash accruals. The net cash accrual for FY25 stood at about Rs.6.77 crore against CPLTD of around Rs.5.22 crore, indicating adequate coverage of scheduled term loan repayments. The company is expected to generate cash accruals of around Rs.7.78 crore in FY26, which is sufficient to cover the projected CPLTD of about Rs.5.18 crore, reflecting satisfactory debt servicing capability. The current ratio remained moderate at 1.36 times in FY25. The average working capital utilization of around 82%.

COMPANY's / FIRM's PROFILE

Macro Economic Indicator	Sector	Industry	Basic Industry
Consumer Discretionary	Textiles	Textiles & Apparels	Other Textile Products

Avon Cottex Private Limited was incorporated in 2011 by Mr. Gaganjot Singh and Mr. Taranjit Singh. The Company is into manufacturing of fabrics and readymade garments besides doing fabrication on job work basis of Fabric Knitting, Dyeing, Printing, Mercerising and other fabric processing. Fabrics includes 100% Cotton, Polyester/Cotton Blends, 100% Polyester, 100% Viscose, 100% Modal and other various fabrics.The unit is located in Ludhiana (Punjab). The constructed area of the factory is 150000 sq. ft. Further, the Effluent treatment plant has been setup as per the norms set by the Punjab Pollution Control Board.The current utilization capacity is around 80%.

ESG Profile

The company demonstrates a Evolving ESG profile based on its environmental, social, and governance practices.

Environmental: Environmental risks are driven by high water usage, waste generation, and reliance on energy-intensive processes, making disclosures on water consumption, waste-management practices, renewable energy share, and emissions levels particularly important. (If applicable or available)

Social: Social factors hinge on adherence to labour laws, accident prevention frameworks, and human-capital development, with metrics such as workforce mix, safety performance , and training initiatives offering insights into operational resilience.

Governance: Governance assessment focuses on board independence, committee effectiveness, and robustness of compliance systems, supported by readily available disclosures on board structure, audit mechanisms, and risk-management practices.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 22 - 23 (Audited)	FY 23 - 24 (Audited)	FY 24 - 25 (Audited)
Operating Revenue	Rs.Crs.	67.52	63.79	67.14
EBITDA	Rs.Crs.	8.58	8.76	8.71
PAT	Rs.Crs.	1.95	2.77	2.95
Tangible Net Worth	Rs.Crs.	24.07	27.63	30.58
Total Debt / Tangible Net Worth	Times	0.78	0.49	0.77
Current Ratio	Times	1.15	1.58	1.36

NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY(IF ANY)

Not Applicable

ANY OTHER INFORMATION

NIl

RATING HISTORY FOR THE PREVIOUS THREE YEARS(including withdrawal and suspended)

Name of Instrument (NCD/Bank Loan /Non- Fund Based facilitates/ Commercial Paper etc.)	Current Rating (2026)			2025		2024		2023
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	24.97	BWR BB+/Stable (Reaffirmation/Withdrawal)	17Apr2025	BWR BB+ Stable (removal from ISSUER NOT COOPERATING* category/Upgraded)	24Jan2024	BWR B- Stable (Continues to be in ISSUER NOT COOPERATING* category/Downgraded)	NA	NA
Non Fund Based	LT	0.85	BWR BB+/Stable (Reaffirmation/Withdrawal)	17Apr2025	BWR BB+ Stable (Assignment)	NA	NA	NA	NA
NFB SubLimit	LT	(0.50)	BWR BB+/Stable (Reaffirmation/Withdrawal)	17Apr2025	BWR BB+ Stable (Assignment)	NA	NA	NA	NA
Non Fund Based	ST	0.00	NA	NA	NA	24Jan2024	BWR A4 (Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed)	NA	NA
Grand Total		25.82	(Rupees Twenty Five Crores and Eighty Two lakhs Only)

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Chinmaya R Rating Analyst chinmaya.r@brickworkratings.com	Nitika Srivastava Associate Director Ratings nitika.s@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com	Customer Support \| CustSupport@brickwrokratings.com

Avon Cottex Pvt. Ltd.

ANNEXURE-I

Details of Bank Loan Facilities rated by BWR

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	Axis Bank Ltd.	Term Loan - Out-standing	14.49	_	14.49	Simple##
2	Axis Bank Ltd.	Cash Credit - Sanctioned	10.00	_	10.00	Simple##
	Sub-Limit (Bank Guarantee (Long Term)) - Sanctioned	(0.50)
3	Axis Bank Ltd.	Bank Guarantee - Sanctioned	0.85	_	0.85	Simple##
4	Axis Bank Ltd.	Emergency Credit Line Guarantee Scheme (ECLGS) - Out-standing	0.48	_	0.48	Simple##
Total			25.82	0.00	25.82
TOTAL (Rupees Twenty Five Crores and Eighty Two 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.

ANNEXURE-II

INSTRUMENT(NCD/Bonds/CP/FDs) DETAILS

Instrument	Issue Date	Amount (Rs.Crs)	Coupon Rate (%)	Maturity Date	ISIN Particulars	Complexity of the Instrument
Nil	Nil	Nil	Nil	Nil	Nil	Nil

ANNEXURE-III

List of entities consolidated

Name of Entity	% Ownership	Extent of consolidation	Rationale for consolidation
Nil	Nil	Nil	Nil

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