ICRA has assigned an LBB rating to the Rs. 15 crore proposed term loans, the Rs. 6 crore proposed fund-based limits and the Rs. 12 crore proposed non-fund based limits of Lords Chloro Alkali Limited (LCAL). The outlook on the rating is stable.

The rating is constrained by moderately high cost structure arising from high power consumption, dependence on high cost grid power and low capacity utilisation; cyclical nature of chlor-alkali industry;
moderately high financial risk profile due to recent losses and volatility in profitability and return indicators and financial distress faced in the late 1990s, under the erstwhile management, resulting in erosion of networth and debt restructuring. The ratings, however, factor in locational advantage owing to proximity to high demand regions resulting in modest freight savings and hence higher ex-works realisation than competition; experience of a promoter in restructuring & rehabilitation of sick industrial units and long experience of the senior management in the chlor-alkali industry.

Besides, ICRA expects the cost structure of the company to marginally improve in the short to medium term following the company?s efforts to revamp its plant and sourcing of cheaper power from private companies in offpeak hours. The ability to complete the revamp project without significant time and cost overrun will be key rating sensitivity.