Crisil, a leading ratings, research, risk and policy advisory company has downgraded its rating on Rohit Surfactants (RSPL), manufacturers of Ghari brand and Red Chief leather items's short-term bank facilities to ‘P1’ from ‘P1+’.
The rating on the long-term facilities has been reaffirmed at ‘A+/Stable’.
The downgrade reflects Crisil’s belief that RSPL’s debt protection measures have weakened, albeit marginally, from their robust levels in the past, because of the debt funding for the capital expenditure (capex). RSPL had initiated a large three-year capex programme that started in financial year 2007-08. RSPL has an installed detergent capacity of around 7,60,000 tonnes per annum. It also has a toilet soap manufacturing unit at Haridwar, which began production in 2007-08.
However, the long-term ratings continue to reflect RSPL’s strong position in the economy segment of detergents in northern India, and its healthy financial risk profile. These rating strengths are partially offset by RSPL’s moderate backward integration, which constrains its overall margins, and its exposure to real estate ventures and intense competition.
RSPL reported a profit after tax (PAT) of Rs 49 crore on net sales of Rs 1084 crore in 2007-08, as against a PAT of Rs 28 crore on net sales of Rs 916 crore in previous year.
