CRISIL’s ratings on the bank facilities of Benzo Chem Industries Pvt Ltd (Benzo Chem) continue to reflect Benzo Chem’s healthy financial risk profile, marked by a moderate net worth, a low gearing, and robust debt protection metrics, and the benefits that the company derives from its promoters’ extensive experience in the organic chemicals industry. These rating strengths are partially offset by Benzo Chem’s customer concentration in revenue profile, limited pricing flexibility, and susceptibility of the company’s profitability margins to volatility in raw material prices.

Outlook: Positive

CRISIL believes that Benzo Chem will maintain its market position in the specialty chemicals industry over the medium term, backed by its promoters’ extensive industry experience and its strong technical capabilities. The ratings may be upgraded in case there is a substantial and sustained increase in Benzo Chem’s revenues, while the company maintains its profitability margins, or in case there is further improvement in its financial risk profile. Conversely, the outlook may be revised to ‘Stable’ if Benzo Chem’s profitability declines steeply from the current levels or there is deterioration in the company’s financial risk profile because of large, debt-funded capital expenditure.