ICRA's ratings to Tata Refractories' facilities

ICRA has also assigned an A1+ rating to both the Rs 100 crore non-fund-based bank facilities and the Rs 30 crore short-term loan/commercial paper programme of TRL, indicating the highest credit quality in the short-term.        

The ratings reflect the positive demand outlook for the domestic refractory industry, given the large expansion plans drawn by end-user industries such as steel, cement and non-ferrous metals, ICRA said in a press release issued here today.        

The ratings take into consideration TRL's established position in the domestic industry supported by a wide product portfolio of high-quality refractories, strong brand image and a large and reputed client base, the release said.        

The ratings also take into consideration TRL's cost-competitiveness on certain categories of refractories on account of captive raw material sources and long-term arrangement with key raw material suppliers.        

"ICRA also notes TRL's high financial flexibility derived from a moderate gearing and the company's status as a 71 per cent subsidiary of Tata Steel Limited," the release said.        

The ratings, however, also reflect the limited pricing power of refractory players because of the fragmented industry structure with suplus capacity and competition from imported refractories on the back of low-duty protection and vulnerability to raw material price increases.