ICRA has assigned an LBBB- rating to the Rs. 10 crore cash credit facility of Mayur Dye-Chem Intermediates Limited (MDCIL). The outlook for the rating is stable. ICRA has also assigned an A3 rating to the Rs. 1.50 crore, short-term, non-fund based facilities of MDCIL.

The ratings have taken into account the more than a decade of experience of the promoters in manufacturing of dyes and dye intermediates, the favourable location of the company in Gujarat which is the dye and dye intermediate manufacturing hub of India and the healthy financial profile of the company characterized by healthy profitability margins and moderate gearing levels. The ratings have also positively considered the expected growth in reactive dye segment and the textile industry in the medium term, resulting in a positive outlook for the company?s products.

The ratings are however constrained by the dependence on the business cycles of end user industries like textile and leather, high share of raw material costs in overall cost structure resulting in vulnerability of profitability to raw material prices, highly competitive scenario for VS and H-acid (though capitive production of Acetanilide and significant H-acid capacity provides some competitive advantage) and low bargaining power due to presence of several dye intermediate manufacturers as well as large sized customers. The ratings are further constrained by exposure of the company to currency movement risks due to export sales (which is however lowered with increase in the proportion of domestic sales and merchant sales) as well as regulatory risk in the form of stringent pollution control norms.

Mayur Dye-Chem Intermediates Limited (MDCIL) commenced dye-intermediate manufacturing operations as a partnership firm in 1984 and was later converted into a Public Limited company in 1993. At the Vatva (Ahmedabad) facility, the capacity of the VS plant is 4200 MTPA and that of reactive dyes is 600 MTPA. At the Padra (Vadodara) facility, the H-acid plant has a manufacturing capacity of 2700 MTPA and the VS plant has a capacity of 3000 MTPA.