CRISIL assigns A+ & P1+ ratings to Vardhman Acrylics

31 Mar '08

2 min read

However, Vardhman Acrylics's profit margins are vulnerable to fluctuations in the prices of raw materials, primarily acrylonitrile (ACN). The price of ACN, a derivative of crude oil, is on an uptrend.

This has affected the operating margins of all players, which are likely to remain under pressure, as ACN prices are expected to rise further.

Moreover, the domestic acrylic fibre market is currently in an oversupply situation; this could depress finished goods prices, further eating into margins.

Outlook: Stable
CRISIL expects Vardhman Acrylics to maintain a stable business and financial risk profile, because of its association with the Vardhman group and its established position in the acrylic fibre industry.

However, the company's profitability will remain vulnerable to fluctuations in the price of ACN. The outlook may be revised to 'Negative' if the company undertakes any large debt-funded capital expenditure, or if there is a reduction in the support from Vardhman Textiles.

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