June 21, 2012

Mumbai

Omkar Speciality Chemicals Limited

Rated Amount Enhanced

(Refer to Annexure 1 for details on facilities)

CRISIL’s ratings on the bank facilities of Omkar Speciality Chemicals Ltd (Omkar) continue to reflect Omkar’s healthy business risk profile, marked by diversified product profile and healthy operating profitability in the speciality chemical compound business, and its comfortable financial risk profile, marked by moderate gearing and healthy debt protection metrics. These rating strengths are partially offset by the risks associated with Omkar’s significant capacity expansion plans, its working-capital-intensive operations, and exposure to risks related to intense competition in the speciality chemicals industry.

For arriving at the ratings, CRISIL has combined the business and financial risk profiles of Omkar and its wholly owned subsidiaries, Urdhva Chemicals Company Pvt Ltd and Desh Chemicals Pvt Ltd. This is because all the three entities are in the same line of business and have common promoters and significant fungible cash flows among them.

Outlook: Stable

CRISIL believes that Omkar will continue to benefit over the medium term from its increased capacities, established relationships with clients, and its promoters’ extensive experience in the chemicals industry. The outlook may be revised to ‘Positive’ if Omkar’s operating income and profitability improve considerably. Conversely, the outlook may be revised to ‘Negative’ in case of lower-than-expected capacity utilisation of the company’s enhanced capacities, or if it undertakes larger-than-expected debt-funded acquisitions or capital expenditure programmes, thereby increasing its gearing considerably, or in case of any time or cost overruns in its expansion project.

About the Company

Omkar, set up in 1983, manufactures speciality chemicals, organic and inorganic chemicals, and inorganic intermediates, such as iodine, selenium, molybdenum, and their derivatives. The company’s managing director, Mr. Pravin Herlekar, has nearly 35 years of experience in the speciality chemicals business. The company manufactures around 80 products for an established clientele, such as Dr. Reddy’s Laboratories Ltd, Cipla Ltd, Biocon India Ltd (rated ‘CRISIL AA+/Stable/CRISIL A1+’), Asahi India Glass Ltd, Jubilant Organosys Ltd, Cadila Healthcare Ltd (rated ‘CRISIL AA+/Stable/CRISIL A1+’), and Lupin Ltd.

In January 2011, Omkar made an initial public offering of its shares and raised Rs.790 million to finance the expansion and modernization of its existing facilities and to set-up a new manufacturing facility. The company has subsequently acquired a 100 per cent stake in Urdhva Chemicals Company Private Limited and Desh Chemicals Private Limited for the purpose of further expanding its manufacturing capacity.

For 2011-12 (refers to financial year, April 1 to March 31), Omkar reported a profit after tax (PAT) of Rs.160 million on net sales of Rs.1.63 billion, against a PAT of Rs.101.8 million on net sales of Rs.1.04 million for 2010-11.

Annexure 1 - Details of various bank facilities

* Includes sublimit of Rs.100.0 Million of packing credit/foreign bill discounting/bank guarantee and Rs.250.0 Million of foreign currency loan [FCNR (B)]

** Includes inland foreign guarantees (performance/ financial) of Rs.20.0 Million.