ICRA has upgraded the long-term rating outstanding on the Rs.1.25 crore term loan and the Rs. 19.03 crore fund based bank limits of India Carbon Ltd (ICL) from LBBB  to LBBB+ . The outlook on the long-term rating is stable. ICRA has also upgraded the rating outstanding on the Rs. 80 crore non fund based bank limits of ICL from A3+ to A2..

The rating revisions take into account the sustained improvement in ICL?s overall financial performance, including operating profitability, return on capital, capital structure and debt coverage indicators in recent quarters, the reduced client concentration risk for the company, given the sales being made to steel producers in recent quarters, the favourable demand outlook of CPC, ICL?s main product offering, particularly from the aluminum industry, the fiscal benefits available, under NEIIPP 2007 to ICL?s main plant at Guwahati, and the locational advantage of its Guwahati plant, which is adjacent to the refinery of Indian Oil Corporation (IOC), resulting in low inward freight costs of RPC, its primary raw material.

The ratings, however, also factor in the risks associated with fluctuations in raw material prices given the low level of value addition in the business, although the cost plus pricing followed in most of ICL?s sales contracts protects the company?s profit margins to a considerable extent, the tender based nature of the business which limits the upside in profitability to some extent, the relatively small size of ICL?s operations compared to some of its peers in the domestic CPC industry and the vulnerability of calciners to fluctuations in the aluminum industry, which accounts for around 75% of the global CPC demand.