Sudarshan Chemical Industries Ltd.

• Non Convertible Debenture- Rs. 50 million Rating : AA-
• Non Convertible Debenture- Rs. 105 million Rating : AA- (Reaffirmed)
• Commercial Paper Programme- Rs. 200 million Rating : P1+ (Reaffirmed)

A ‘AA-’ (pronounced double A minus) rating has been assigned to the proposed Rs. 50 million non-convertible debenture issue of Sudarshan Chemical Industries Limited (SCIL). The ‘AA-’ (pronounced double A minus) rating assigned to the Rs. 105 million non-convertible debenture issue of the company has been reaffirmed. The ‘P1+’ (pronounced P one plus) rating assigned to the Rs. 200 million commercial paper programme of the company has also been reaffirmed.

The re-affirmation of high-safety category ratings reflects the company’s strong and established position in the pigments industry, association with Dainippon Inks and Chemicals of Japan - the leading international producer of pigments, integrated manufacturing facilities, improvement in capital structure as anticipated earlier, and comfortable interest coverage ratio. These factors are partially offset by the highly competitive nature of pigments and agro-chemicals businesses, pressures on realisations in the pigments industry, seasonality in the agro-chemicals business, and the company’s relatively smaller size and limited product range in the agro-chemicals business. Further, despite improvement, the gearing level continues to be relatively high. However, CRISIL expects the capital structure to further improve from the existing level.

SCIL, a Pune based company, is engaged in the manufacture and sale of pigments (organic and inorganic) and agro-chemicals (primarily pesticides). During the year 1998-99, the pigments business contributed around 70% of the company’s net sales (of Rs. 2.2 billion) with the balance being contributed by the agro-chemicals business.