CRISIL has revised its rating outlook on the long-term bank facilities of Benzo Chem Industries Pvt Ltd (Benzo Chem) to ‘Positive’ from ‘Stable’ and has reaffirmed the rating at ‘BBB+’; the rating on Benzo Chem’s outstanding short-term bank facilities has been reaffirmed at ‘P2’.

The outlook revision reflects a significant improvement in Benzo Chem’s operating performance on the back of strong revenue growth, improvement in its operating margin, and increase in its net cash accruals in 2009-10 (refers to financial year, April 1 to March 31).

Outlook: Positive
CRISIL believes that Benzo Chem will derive significant benefits over the medium term on the back of its improved market position in the organic chemicals segment and relationships with reputed multinational players. The rating may be upgraded if Benzo Chem sustains the healthy growth in its revenues and net cash accruals, and further improves its capital structure. Conversely, the outlook may be revised to ‘Stable’ if the company’s financial risk profile weakens, most likely because of more-than-expected debt-funded capital expenditure, or weakening of its capital structure or debt protection indicators.

About the Company
Set up in 1986 and part of the RK Mohatta group, Benzo Chem manufactures specialty chemicals that are used as intermediates by various pharmaceutical and agrochemical companies. The products include parachlorophenol, parachlorobenzyl cyanide, and other chlorine-based specialty chemicals. Currently, Benzo Chem is managed by Mr. Surendra Mohatta, Executive Director, supported by his wife, Mrs. Madhu Mohatta, and son, Mr. Gaurav Mohatta.

Benzo Chem reported (provisional) a profit after tax (PAT) of Rs.200.0 million on net sales of Rs.1050.0 million for 2009-10, against a PAT of Rs.62.0 million on net sales of Rs.706.0 million for 2008-09.