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-CARE rates Ardor bank lines at BBB-/PR3.

M2 EQUITYBITES-December 8, 2010--CARE rates Ardor bank lines at BBB-/PR3(C)2010 M2 COMMUNICATIONS

8 December 2010 - CARE today gave its BBB-/PR3 ratings to the bank facilities of chemicals trader Ardor International Private Ltd.

The agency issued the following press release:

Facilities Amount (Rs. crore) Rating11 Remark

Long-term Bank Facilities 82.00 CARE BBB- (Triple B Minus) Assigned

Short-term Bank Facilities 75.00 PR3 (PR Three) Assigned

Commercial Paper* 25.00 PR3 (PR Three) Assigned

Total 182.00 *carved out of the sanctioned working capital limits

Rating Rationale

The ratings derive strength from the established track record of the promoters of over three decades, long standing client relationships, the assured supply arrangements through group/associate concerns and healthy income and PAT growth in the last three years. The ratings are, however, constrained by trading nature of operations characterized by low profitability margins, product concentration risk and family-centric management. The working capital intensive nature of operations, and competition from large corporates further constrain the ratings. Being a trading company, sustainability of volumes as well as margins in the medium term would be crucial. Significant change in the capital structure of the company would also be a rating sensitivity.

Company Profile

AIPL is an Ahmedabad-based company incorporated in 2003 by Mr Fenil Shah involved in trading of chemicals mainly Linear Alkyl Benzene (LAB), Dodecyle Benzene (DDB), Sodium Aluminium Silicate Zeolite 4A (Zeolite) etc. for the soaps & detergent manufacturing companies.

During FY10, AIPL reported PAT of Rs.7.50 crore on total income of Rs.612.20 crore against PAT of Rs.3.92 crore on total income of Rs.380.47 crore in FY09. During 5mFY11 (provisional), AIPL earned PAT of Rs.4.72 crore on total income of Rs.372.65 crore.

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Publication:M2 EquityBites (EQB)
Date:Dec 8, 2010
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