The agency has also affirmed the company’s short-term rating at '[ICRA] A’.

ICRA said that the reaffirmation of ratings continues to consider the healthy financial profile of Carysil, as reflected by healthy debt metrics, which is expected to continue on the back of the established position of the Carysil Group in the kitchen sink industry.

Additionally, the entity’s diversified product portfolio, reputed clientele, coupled with no near-term large debt-funded capex and adequate liquidity profile, provide comfort. The ratings reaffirmation continues to consider the extensive experience of the promoters of Carysil and the increasing scale of operations marked by a year-on-year (YoY) growth of 23% (at consolidated level) in its operating income in FY2023 and healthy return indicators.

The ratings, however, are constrained by demand volatility in key export markets, coupled with competition from other established players, although it is favourably placed in terms of cost efficiency as the manufacturing operations are based in India. The company at the standalone level posted a dip in the topline for FY2023 and has reported only a marginal rise in 9MFY2024 on account of subdued demand conditions in its key export markets, which will remain a near-term challenge. This is attributed to the vagaries of the Red Sea crisis.

Further, its operations are working capital-intensive due to the high inventory holding period and the relatively longer collection cycle. The company has recently undertaken capex for capacity enhancements in its sink as well as in kitchen appliances business. The company’s ability to successfully scaleup operations to generate commensurate returns from the same remains critical from the credit perspective.

Carysil is involved in the manufacturing of granite-based kitchen sinks, which are referred to as ‘composite quartz sinks’. The company also manufactures stainless-steel kitchen sinks to primarily cater for the domestic market. The company also trades in kitchen appliances such as chimneys, cook-tops, wine-chillers and others. The product portfolio also includes bath segment products such as wash basins, quartz tiles and bath fittings, sold under the brand name, Sternhagen.