By: ICN Bureau
Last updated : March 17, 2023 6:07 pm
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
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?.
| Rs.481.5 Million Proposed Long-Term Bank Loan Facility | CRISIL A/Positive (Assigned) |
| Rs.650.0 Million Cash Credit | CRISIL A/Positive (Reaffirmed; Outlook Revised from 'Stable') |
| Rs.200.2 Million Long-Term Loan | CRISIL A/Positive (Reaffirmed; Outlook Revised from 'Stable') |
| Rs.250 Million Packing Credit in Foreign Currency | CRISIL A1 (Assigned) |
| Rs.80 Million Bank Guarantee | CRISIL A1 (Reaffirmed) |
| Rs.120 Million Letter of Credit | CRISIL A1 (Reaffirmed) |
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.