Credit rating agency, ICRA, has reaffirmed the long-term rating of 'BBB' for the Rs 200 million (revised from Rs 180.0 million) long-term, fund based bank facilities of Remsons Industries.

ICRA has also reaffirmed the short-term rating of A3+ for the Rs 7 million short-term, non-fund based bank facilities of the company. ICRA has assigned a long-term rating of BBB for the Rs 15 million proposed term loan facility of the company. The outlook on the long-term rating is 'stable'.

The reaffirmation of the ratings continues to factor in the long standing experience of the promoters in the auto ancillary industry, the established client base which includes leading domestic and international automobile OEMs, healthy share of revenue from the after-market along with increasing exports which are likely to partially insulate the company from the volatility in demand from the domestic automobile sector, and moderate and steady working capital intensity.

The ratings are, however, constrained by subdued profitability and moderate capital structure, exposure to the inherent cyclicality in the automobile industry, competitive nature of the auto component industry especially in the replacement market, and susceptibility to volatility in raw material prices given the bargaining power of the OEMs, though any increase in raw material prices in excess of 5% is passed on to the customers.