The revised rating of IPCL's NCD programmes continues to indicate high safety. The revision in rating primarily factors in the increase in the risk profile of the company arising from uncertainties associated with the availability of feedstock, which is expected to delay the full commissioning of the second phase of the Gandhar project.

The reduced manufacturing integration of the Gandhar project would expose the company to volatility in the international prices of ethylene till the time the cracker is commissioned and operations are stabilised. The high safety category rating continues to reflect IPCL's strong market position in the domestic petrochemicals industry,favourable market growth prospects, benefits derived from diversified three site operations and a majority ownership by the government of India.

Crisil has said that the profitability of the company would continue to be governed by volatility in the international prices of petrochemicals, primarily ethylene and derived polymers. During 1997-98, IPCL's operating income was at Rs 3,045 crore and the profit after tax stood at Rs 244 crore.

Crisil has also downgraded the Rs 5 crore NCD issue of Lohia Starlinger Ltd (LSL), a company engaged in the manufacture of HDPE/PP woven fabric machinery and synthetic yarn-processing machinery.

The revised rating of the company reflects a deterioration in its overall risk profile due to weakened business conditions in the user segments, increased financial risk characterised by pressure on profit margins and a relative increase in gearing levels due to largely debt-funded capex programmes.