Rationale

 The reaffirmation of the ratings continues to factor in the diversified product portfolio of Resil Chemicals Private Limited (RCPL) across industries, providing revenue stability in adverse conditions, and its long-term relationship with customers. RCPL’s consolidated revenue has witnessed a sharp growth in the last two years, driven by the textile segment and continued growth in the non-textile segment along with new customer acquisitions. The capital structure and coverage indicators continue to be comfortable. The ratings also factor in RCPL’s substantial market share in the Indian silicon-based textile finishing agents (TFA) market and the company’s continuous efforts to develop new products through investments in research and development. The ratings, however, are constrained by the vulnerability of the company’s profitability to fluctuations in raw material prices with limited bargaining power. The operating margins declined significantly in FY2023 owing to inventory losses caused by a sharp decline in raw material prices; however, the margins bounced back in FY2024 with stability in the later periods. The ratings are also constrained by high industry concentration risk with dependence on a single industry i.e., the textile industry, and the fragmented nature of the business with the presence of many players that limits the company’s pricing flexibility. The Stable outlook on the rating reflects ICRA’s opinion that RCPL will continue to benefit from the extensive experience of its promoters, a meaningful market share in the Indian silicon-based TFA market and its healthy financial profile.