Fitch Ratings Thursday announced that it has affirmed Mauritius-based SKI Carbon Black (Mauritius) Ltd's (Birla Carbon) long-term foreign currency Issuer Default Rating (IDR) at 'BB' and said that the outlook is positive.
'BB' ratings indicate an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial flexibility exists that supports the servicing of financial commitments.
The affirmation reflects Birla Carbon's position as the world's second-largest carbon black producer, with a well-diversified geographic presence and good degree of feedstock flexibility, Fitch Ratings said.
These factors support its competitive positioning in the niche sector, which offers limited end-market diversification compared with broader chemical sector globally, it said.
The rating also factors in industry-specific risks associated with its commoditised products despite a reasonable ability to pass on feedstock price volatility.
"The positive outlook underscores Fitch's expectation that Birla Carbon's leverage will continue to improve over the next couple of years, after increasing in the financial year ending 31 March 2019 (FY19) due to a large payout to shareholders and other entities," it said.
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