CRISIL’s rating on the short-term debt programme of Akzo Nobel India Ltd (ANIL) continues to reflect ANIL’s robust financial risk profile with strong liquidity, and the company’s sizeable market share and strong brand position in the decorative paints segment. The rating also factors in the technological support that the company receives from its parent, Akzo Nobel NV (Akzo Nobel, rated ‘BBB+/Stable/A-2’ by Standard & Poor’s). These rating strengths are partially offset by ANIL’s susceptibility to volatility in raw material prices and to limited pricing flexibility in the decorative paints business.

ANIL has a strong liquidity, marked by cash and marketable securities of around Rs.9.5 billion as on September 30, 2011, and no debt. CRISIL believes that ANIL will maintain its strong capital structure, given its robust liquidity and expected healthy cash accruals, and limited capital expenditure plans.