Fitch affirms Pearl Polymer

Fitch Ratings said it affirmed Pearl Polymer Ltd.'s national long-term rating and Rs. 41 million of long-term debt at Fitch BB+(ind). The outlook is stable.

The agency said the ratings reflect Pearl Polymer's stable position in the polyethylene terephthalate bottles industry and its pan-India presence through multiple manufacturing plants, enabling proximity to customers and hence freight savings. The ratings are supported by the company's diversified customer base and high concentration in less cyclical segments like pharmaceuticals, food and beverages and fast-moving consumer goods, Fitch said.

The ratings are constrained by Pearl Polymer's moderate-to-high net debt-to-EBITDA ratio of 3.5 times to 4.2 times and weak operating EBITDA margin of around 10% over 2008 through 2011, Fitch said. The agency attributed this to high competition from smaller, low-cost regional retailers and the company's inability to fully pass on raw material price increases to its end-customers.

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