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CRISIL assigns A+ & P1+ ratings to Vardhman Acrylics
31
Mar '08
CRISIL has assigned 'A+/Stable/P1+' ratings to the bank facilities of Vardhman Acrylics Ltd (Vardhman Acrylics). The ratings reflect the strong support Vardhman Acrylics gets from its parent, Vardhman Textiles Ltd (Vardhman Textiles), and the company's own established position in the acrylic fibre business.

These rating strengths are partially offset by the exposure of the company's margins to volatility in raw material prices, and the present oversupply situation in the acrylic fibre industry.

Vardhman Acrylics is a part of the Vardhman group. Vardhman Textiles, the group's flagship company, holds a 54.5 per cent stake in the Vardhman Acrylics. The managerial control of the company rests with the group.

Mr. S P Oswal, the Chairman of Vardhman Textiles, is also the Chairman of Vardhman Acrylics. The company has strong operational linkages with its parent: during 2006-07 (refers to financial year, April 1 to March 31); more than 60 per cent of Vardhman Acrylics's turnover was sold to Vardhman Textiles.

CRISIL believes that the strong linkage with Vardhman Textiles will continue to provide stability to Vardhman Acrylics's revenues; CRISIL expects this to be supplemented by some degree of financial support if required.

The acrylic fibre industry is fairly consolidated, with five main players controlling around 90 per cent of the operational capacity in India. Vardhman Acrylics is one of the large players in the industry, with about 15 per cent of the total domestic capacity.

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