CRISIL has affirmed 'A+/Positive' rating on the bank facilities of VIP Industries. The rating continue to reflect VIP's market leadership and strong brand in the domestic luggage industry, strong distribution network, and healthy financial risk profile marked by low gearing and comfortable debt protection metrics.

These rating strengths are partially offset by VIP's dependence on Chinese imports in the soft luggage segment, exposing it to the risk of fluctuations in foreign exchange rates, the company's limited pricing flexibility because of intense competition, and large working capital requirements.

CRISIL believes that VIP will maintain its moderate operating margin and strong financial risk profile over the medium term, supported by the absence of any debt-funded capital expenditure plan. The ratings may be upgraded if VIP achieves healthy revenue growth and profitability on a sustainable basis. Conversely, the outlook may be revised to 'Stable' if VIP's cash accruals come under pressure on account of decline in profitability, or if its debt protection metrics weaken.

Shares of the company gained Rs 1.8, or 2.34%, to trade at Rs 78.75. The total volume of shares traded was 276,215 at the BSE (11.49 a.m., Tuesday).