By: ICN Bureau
Last updated : November 30, 2022 2:08 pm
CRISIL has upgraded its ratings on the bank facilities of Diamines & Chemicals Ltd (DACL) to "˜BBB/Stable/P3+' from "˜BBB-/Stable/P3'. The upgrade reflects significant scale-up in DACL's operations: the company's sales are estimated to have
CRISIL has upgraded its ratings on the bank facilities of Diamines & Chemicals Ltd (DACL) to ?BBB/Stable/P3+? from ?BBB-/Stable/P3?. The upgrade reflects significant scale-up in DACL?s operations: the company?s sales are estimated to have grown by 80 per cent in 2010-11 (refers to financial year, April 1 to March 31) over the previous year, with net sales of about Rs.800 million.
| Rs.22.50 Million Cash Credit Facility | BBB/Stable (Upgraded from 'BBB-/Stable') |
| Rs.53.0 Million Term Loan | BBB/Stable (Upgraded from ?BBB-/Stable?) |
| Rs.4.50 Million Bank Guarantee | P3+ (Upgraded from ?P3?) |
| Rs.89.9 Million Letter of Credit | P3+ (Upgraded from ?P3?) |
The healthy growth in sales has been driven
primarily by improved availability of raw material, and healthy demand from old
and new customers. Moreover, the company has maintained a comfortable financial
risk profile, with gearing estimated at less than 1 time as on March 31, 2011.
The upgrade also factors in CRISIL?s belief that DACL will maintain its
financial risk profile despite its capital expenditure (capex) plans of Rs.170
million for the medium term.
The ratings continue to reflect DACL?s established market position in the
ethylene amines (EAs) segment, and its above-average financial risk profile
marked by healthy gearing and debt protection metrics. These rating strengths
are partially offset by DACL?s exposure to risks related to volatility in raw
material prices, to supplier and product concentration, and working capital
intensity in operations.
Outlook: Stable
CRISIL expects DACL to maintain its business and
financial risk profile, supported by improving scale of operations and healthy
operating profitability. The outlook may be revised to ?Positive? if the
company?s revenues grow substantially, following diversification into
manufacture of ethylene diamine (EDA), while maintaining its operating
profitability;and if its raw material supplier concentration reduces, ensuring
higher capacity utilisation. Conversely, the outlook may be revised to
?Negative? if its gearing and debt protection measures deteriorate on account of
large, debt-funded capex or its operating profitability declines resulting in
pressure on liquidity.