CRISIL Ratings assigns 'AA/A1+' rating to the bank facilities of Laxmi Organic Inds

CRISIL Ratings stated that the rating reflects LOIL's healthy business risk profile backed by strong market position across two verticals, essentials and specialty chemicals, diversified end user industries base resulting in low customer concentration risk and its healthy financial risk profile.

These strengths are partially offset by susceptibility to fluctuations in input prices and exposure to risk pertaining to timely execution of the large capital expenditure (capex) being undertaken.

LOIL's financial risk profile continues to remain healthy, supported by comfortable capital structure and debt protection metrics.

The agency further said that a significant increase in scale of operations leading to increase in operating margins and ROCE over 20% on sustained basis; and sustenance of strong financial risk profile, robust debt metrics and healthy liquidity could lead to a rating upgrade.

However, sluggish revenue growth and decline in operating margin below 8-9% on a sustained basis; sizeable additional debt-funded capex or acquisitions or stretched working capital cycle materially impacting the debt metrics; and significant delay in commissioning new projects resulting in major cost overrun could lead to a rating downgrade.

Laxmi Organic Industries commenced manufacturing acetic acid at Mahad, Maharashtra, in 1991. It has diversified into other products and now primarily manufactures ethyl acetate, acetic acid and diketene derivative products (DDP).

The scrip fell 1.05% to currently trade at Rs 249.95 on the BSE.