CARE has reaffirmed the ratings assigned to the bank facilities of Atul Ltd. The revisions in the ratings primarily take into account the improvement in Atul?s overall financial risk profile during FY10 and H1FY11 characterized by improvement in profitability along with moderation of gearing levels, comfortable liquidity position, improvement in operating cycle and significant reduction in mark-to-market losses arising out of hedged export receivables. The ratings continue to factor in the wide experience of the promoters and competent management, established track record and strong position of the company in the chemical industry with diversified product portfolio, its leadership position in some of the high-value products, strong R&D setup and established customer base.

The long-term rating is however constrained by its exposure to raw material price fluctuations (which is determined by international prices) and foreign exchange fluctuation, implementation and stabilization risks associated with the ongoing debt-funded projects and subdued performance of color division due to high operational overheads coupled with the stiff competition from unorganized players. The company?s ability to improve its profitability further through better raw material price-risk management, control over operational overheads, timely execution of ongoing projects & their stabilization and control over gearing levels are the key rating sensitivities.