CRISIL has assigned its ratings of ‘BB-/Stable/P4’ to Rajiv Petrochemicals Pvt Ltd’s (RPPL’s) bank facilities. The ratings reflect RPPL’s weak financial risk profile, and exposure to risks relating to debtor defaults, and to the trading nature of its operations. These weaknesses are partially offset by the benefits that RPPL expects to derive from its revenue diversification initiatives, and increase in profit margins.

As part of this rating exercise, CRISIL has combined the business risk profiles of RPPL, and Atlantis Products Pvt Ltd (APPL). This is because RPPL and APPL, together referred to as the Rajiv group, are in the same line of operations and have common manufacturing facilities.

Outlook: Stable
CRISIL believes that the RPPL will sustain its credit profile on the back of its improving operating margins with increasing proportion of high margin manufacturing operations. The outlook may be revised to ‘Positive’ if the group’s consolidated capital structure improves substantially, led by improvement in net cash accruals or external equity infusion. Conversely, the outlook may be revised to ‘Negative’ if the company’s financial risk profile deteriorates materially due to large debt and working-capital requirements.

About the Group
Incorporated in 1993 by Mr. Rajiv Vastupal Mehta and Ms. Arati Rajiv Mehta, RPPL is the flagship company of the Rajiv group. The company is a stockist/trader in polyvinyl chloride (PVC) resin, high- and low-density polyethylene (HDPE and LDPE), masterbatches and polyester film. RPPL also manufactures HDPE/LDPE woven bags, under its manufacturing division Pariplast Industries (Pariplast). RPPL’s group company, APPL, commenced operations in September 2009, manufactures HDPE/PP woven bags.

RPPL reported a profit after tax (PAT) of Rs.2.9 million on net sales of Rs.2.8 billion for 2008-09 (refers to financial year, April 1 to March 31), as against a PAT of Rs.6.8 million on net sales of Rs.2.6 billion for 2007-08.