CARE reaffirms credit rating on Kanoria Chemicals bank facilities; Revises outlook to Stable

20 Jan 2022 , 11:40 AM

CARE Ratings Limited has reaffirmed the rating for the long-term bank facilities of Kanoria Chemicals & Industries Limited as CARE A- while revising Outlook to Stable and also reaffirmed the rating for the short-term bank facilities as CARE A2+.

“The revision in the rating outlook to “Stable” from “Negative” for the bank facilities of Kanoria Chemicals & Industries Ltd (KCIL) factors in the successful implementation of resolution plan of its subsidiary, Kanoria Africa Textile’s (KAT), debt guaranteed by KCIL along with sustained improvement in its standalone financial performance driven by improvement in sales realization and volume of both formaldehyde and Pentaerythritol attributable to higher demand from end-user segments,” Company shared CARE Ratings rationale on Wednesday.

It further said, the ratings continue to derive comfort from the experience of the promoters, presence of the group in diversified businesses, long track record of operations of the company in the chemicals business, improvement in profitability in FY21(refers to the period April 1 to March 31) and H1FY22and satisfactory capital structure and debt coverage indicators. The ratings continue to remain constrained by vulnerability of profitability to volatility in input prices and high exposure in group companies also leading to low return on capital employed (ROCE).

At around 11.42 am, Kanoria Chemicals & Industries Ltd was trading at Rs161.85 per share down by Rs1.15 or 0.71% from its previous closing of Rs163 per share on the BSE.