ICRA has reaffirmed LBBB (pronounced L triple B) rating for the Rs. 50.67 crore bank facilities of Atlas Cycles Haryana Limited (ACL) with stable outlook. ICRA has also reaffirmed A3+ (pronounced A three plus) rating for the Rs. 26.88 crore non fund based bank facilities of ACL. The rating reaffirmation factors in ACL's long track record of operations, its established brand -“Atlas” and increasing proportion of fancy bicycles, which is expected to help improve its profitability indicators and average realisations. In ICRA's view prospects of the domestic bicycle industry remain healthy with scope for further penetration in rural markets, continuing replacement demand and buoyant institutional sales backed by state Government run programmes. The ratings are, however, constrained by ACL's thin profit margins which remain susceptible to increase in raw material prices; in view of limited ability to affect price increases due to price sensitive nature of buyers. Further, the company's financial risk profile has deteriorated with increase in borrowings, though presence of cash balance and liquid investments provides some comfort. The ratings also consider the significant competition from well entrenched players, as well as Chinese imports in the growing fancy segment. ACL's operations as three independent units may restrict improvement in profitability wherein the financial profile of each individual unit varies significantly.