CRISIL has revised its rating outlook on the long-term bank facilities and NCD programme of DIC India (DIC India) to 'Negative' from 'Stable', while reaffirming the rating at 'AA-'; the rating on the short-term bank facilities has also been reaffirmed at 'A1+'.

The revision in outlook reflects pressure on DIC India's operating performance over the medium term with the slowdown in the end-user industry and the company's inability to pass on input price hikes to its customers. The company's operating margin fell to 3.9% in 2013 (refers to calendar year, January 1 to December 31) from around 8% in 2009.

The ratings continue to reflect DIC India's strong financial risk profile, marked by low gearing and healthy debt protection metrics. The ratings also factor in the company's established position in the Indian printing inks segment, backed by technological support from the ultimate parent, DIC Corporation, Japan (DIC Japan), the global leader in printing inks; and the company's established relations with key customers. These rating strengths are partially offset by DIC India's modest profitability, constrained by fluctuations in raw material prices and limited pricing flexibility, driven by intense competition and working-capital-intensive operations.

CRISIL believes that DIC India's operating performance will remain constrained by the slowdown in the end-user industry. The rating may be downgraded if the company's operating performance deteriorates leading to sustained pressure on profitability and cash accruals. Conversely, the outlook may be revised to 'Stable' if the company sustains the improvement in its operating performance.

Shares of the company gained Rs 12.15, or 3.04%, to settle at Rs 412.25. The total volume of shares traded was 6,434 at the BSE (Monday).