CRISIL’s ratings on the bank facilities of Roha Dyechem Pvt Ltd (RDPL) continue to reflect the company’s established market position in the food colour business, healthy operational capabilities backed by its global distribution network, and healthy financial risk profile, marked by a large net worth, low gearing, and healthy debt protection metrics. These rating strengths are partially offset by RDPL’s limited pricing flexibility, susceptibility of its margins to volatility in raw material prices, and working-capital-intensive operations due to support extended to group companies.

Outlook: Stable

CRISIL believes that RDPL will continue to benefit over the medium term from its established market position in the food colours business and wide distribution network. The outlook may be revised to ‘Positive’ if there is a significant and sustained improvement in the company’s operating margin and working capital cycle. Conversely, the outlook may be revised to ‘Negative’ if there are significant time or cost overruns in completion of the proposed solar power plant or if the power generation from the proposed solar power plant is lower-than-expected, thereby adversely affecting the company’s debt-servicing ability.