The Outlook is Stable.
The ratings reflect KCPL's tight liquidity position as reflected in its almost full use of the working capital limits in the 12 months ended August 2013).
Its founders infused equity of INR15m in August 2013 and this is likely to improve the company's liquidity.
The ratings are, however, supported by KCPL's comfortable credit profile with net financial leverage of 3.1x in FY13 (FY12: 3.8x) and interest coverage of 2.5x (2.2x).
The ratings also factor in the company's proximity to its major buyers and suppliers as its plant is strategically located, giving it a logistical advantage over its industry peers.
It also has established long relationships with reputed customers like National Aluminium Company Ltd., Vedanta Aluminium Ltd. ('IND A-'/Rating Watch Positive) and carbon black manufacturers like Philips Carbon Black Ltd.
Negative: Net financial leverage sustained above 5x could lead to a negative rating action.
Positive: Improvements in the use of the fund-based working capital facilities for three consecutive months will be positive for the ratings.
KCPL is a Kolkata-based coal tar pitch manufacturer.
Its 96,000mtpa manufacturing facility is located in Rourkela (Odisha).
Revenue in FY13 was INR1,000.6m (FY12: INR757.6m) and EBITDA margins were 6pc (6.6pc ).
--IBNS (Posted on 24-09-2013)