Rationale

 The ratings continue to favourably factor in the promoters' extensive experience and the established position of Commercial Syn Bags Limited (CSBL) as a supplier of bulk packaging material in the global market. The ratings consider the completion of capacity expansion over the last few quarters, which is expected to result in a ramp-up in scale. Higher proportion of valueadded products, along with backward integration, is likely to augur well for the company's profitability going forward. The ratings also note CSBL's established customer base, across various end-user industries, which insulates it from the risk of slowdown in any particular industry. The rating reaffirmation is also supported by the favourable demand prospects of the flexible intermediate bulk container (FIBC) bags industry. The ratings, however, are constrained by CSBL's relatively modest scale of operations that limits the benefit derived from economies of scale. ICRA notes the moderation in its profitability in Q1 FY2022 on account of increase in polymer prices and rising freight container costs. Further, the ratings are constrained by the increase in the external debt availed by the company forsetting up and operational ramp-up of its wholly-owned subsidiary Comsyn India Private Limited (CIPL),resulting in pressure on leverage metrics. However, with returns being generated from these capacities, going forward, ICRA expects the leverage to moderate. The ratings also factor in CSBL's working capital-intensive operations with high inventory holding requirements and vulnerability of its profitability to fluctuations in polypropylene (PP) granules prices. Further, the stiff competition in the fragmented packaging industry limits its pricing flexibility. The Stable outlook on the [ICRA]BBB+ rating reflects ICRA's opinion that the company will continue to benefit from the extensive experience of its promoters, its established track record in the FIBC manufacturing business and the recent capacity additions.