Rationale

 While arriving at the ratings, ICRA has taken a consolidated view of the operational and financial profiles of Ravi Dyeware Company Private Limited (RDCPL) and Siddharth Colorchem Private Limited (SCPL), given their common promoters and the significant operational and financial synergies between them. The consolidated entities include RDCPL, SCPL, and its subsidiaries, Indus Ventures Limited and Waterside Colors Limited (WCL). The change in the outlook to Positive factors in the Group’s healthy earnings in FY2024 and H1 FY2025 and the likely sustenance of same, going forward. The improvement in earnings supported the financial risk profile, reflected in the improved debt coverage metrics and healthy cash and bank balances and investments. Further, the outlook underlines ICRA’s expectation that the entity’s incremental capex, which will help expand the product portfolio and also result in cost savings, will be funded in a manner that it is able to durably maintain its comfortable debt protection metrics. The ratings continue to derive comfort from the extensive experience of the Group’s promoters and its long track record in dye manufacturing, coupled with its established customer base, leading to repeat business. The ratings, however, continue to be constrained by the working capital intensive operations, intense competition in the global markets from large and reputed players, and the vulnerability of its profitability to the fluctuations in raw material prices and foreign exchange rates to the extent of the Group’s unhedged foreign exposure.