CRISIL has revised its rating outlook on the Rs.650-million cash credit and Rs.200.2-million long-term loan facilities of Dorf-Ketal Chemicals India Pvt Ltd (DKCIPL; part of the Dorf Ketal group) to ?Positive? from ?Stable?, while reaffirming the rating at ?CRISIL A?. CRISIL has assigned its ?CRISIL A/Positive? and ?CRISIL A1? ratings to DKCIPL?s proposed long-term facility and packing credit in foreign currency facility respectively. The rating on DKCIPL?s other above-mentioned short-term facilities has been reaffirmed at ?CRISIL A1?.

The outlook revision reflects CRISIL?s belief that the Dorf Ketal group?s capital structure will improve gradually over the medium term, backed by its healthy cash accruals. The group is likely to maintain its healthy revenues and profitability over the medium term, supported by its established market position in the process chemicals business, strong portfolio of brands in the specialty catalyst segment, enhanced geographic reach, and increase in its production capacity.

The ratings continue to reflect the Dorf Ketal group?s healthy market position in the process chemicals and specialty catalysts business, strong research and development (R&D) capabilities, and moderate financial risk profile, marked by healthy debt protection metrics. These rating strengths are partially offset by the Dorf Ketal group?s exposure to risks relating to segmental and customer concentration in revenues, and large working capital requirements. The group has significant growth ambitions in the specialty chemicals business; hence, larger-than-expected debt-funded acquisitions will remain a key rating sensitivity factor.

For arriving at its ratings, CRISIL has combined the business and financial risk profiles of DKCIPL and DKCIPL?s wholly owned subsidiaries ( Dorf Ketal Chemicals LLC, USA, Dorf Ketal Speciality Catalyst India Pvt Ltd, and Dorf Ketal Speciality Catalyst LLC, USA ( in addition to Dorf Ketal Chemicals, Brazil, and Dorf Ketal BV, Netherland (80 per cent stake in each). DKCIPL and these subsidiaries are collectively referred to as the Dorf Ketal group.

Outlook: Positive

CRISIL believes that the Dorf Ketal group will generate steady cash accruals over the medium term, supported by its healthy market position in the process chemicals segment and growing business in specialty catalysts. The ratings may be upgraded if there is a significant improvement in the capital structure of the group. Conversely the outlook may be revised to ?Stable? in case the group undertakes a larger-than-expected debt-funded capital expenditure programme or acquisition, or if there is significant deterioration in its debt protection metrics.