| NACL Industries Limited | ||||||
| Ratings continues on 'Watch Positive' | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has continued its ratings on the bank loan facilities of NACL Industries Ltd (NACL, a part of the NACL group) on ‘Rating Watch with Positive Implications’.
Crisil Ratings had placed the ratings on ‘Watch Positive’ on March 24, 2025, post the announcement made by Coromandel International Ltd (CIL; rated 'Crisil AAA/Stable/Crisil A1+') regarding the acquisition of a majority stake in NACL.
CIL is expected to purchase 10,68,96,146 equity shares of NACL, representing 53.13% of the paid equity share capital of the company from the promoters. The acquisition is expected to result in improvement in the financial flexibility of the NACL group by being a part of the Murugappa group. Further, the NACL group would benefit from the strong operational, managerial and financial support from CIL; this is also expected to act positively for the recovery in the business profile and improvement in the financial risk profile of the entity. The transaction is subject to receipt of applicable governmental and statutory approvals and the satisfaction of conditions precedents under the share purchase agreement (SPA). Promoter SPA has been executed and upon consummation of the promoter sale transaction contemplated under the promoter SPA, CIL will acquire control over NACL and become its promoter.
Crisil Ratings will continue to monitor the transaction and the expected impact of this event on the overall business and financial risk profiles of the NACL group. The ratings shall be removed from watch and a final rating action will be assigned once there is more clarity on these aspects and transactions.
The ratings continue to reflect the significantly weak business performance of the group in fiscal 2025 with reported revenue of Rs.1234.52 crore and net loss of Rs 92.13 crore. The performance in the fourth quarter of fiscal 2025 was impacted with operations lower than usual and limited access to working capital funds on account of the restrictions placed by lenders. Currently, the restrictions imposed by the lenders have been eased and the company has access to working capital funds. Business performance is expected to recover in fiscal 2026 with the stabilisation of prices and recovery in sectoral performance.
The ratings reflect the strong market presence and brand of NACL in the agrochemicals industry, supported by the extensive experience of the management, its established clientele, geographic diversification in revenue and a moderate financial risk profile. These strengths are partially offset by the large working capital requirement, and susceptibility to competition, regulatory changes and seasonality inherent in the agrochemicals sector. |
Analytical Approach Crisil Ratings has evaluated the consolidated business and financial risk profiles of NACL and its subsidiaries and associate companies. This is because these entities, collectively referred to as the NACL group, are in the same business and have common promoters and strong business and financial linkages. Also, NACL holds 26% stake in Nasense Labs Pvt Ltd and has been consolidated accordingly.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths:
Weaknesses:
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Liquidity: Adequate Liquidity will remain adequate with expected cash accrual to be sufficiently able to cover the repayment obligations in fiscal 2026. Liquidity has eased with the lifting of restrictions placed by lenders on the usage of the working capital limits. Further, the company had cash balance of more than Rs 50 crore as on March 31, 2025. |
Rating Sensitivity Factors Upward factors:
Downward factors:
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About the Group NACL, incorporated in 1986, manufactures and exports crop protection technicals (active ingredients) and formulations. The company manufactures pesticides, insecticides, herbicides, fungicides and other plant growth chemicals. The formulations business is mainly in the domestic market, and the company sells through a large retail dealer network. It also has a range of branded formulations. The company has a manufacturing unit each in Srikakulam and Ethakota in Andhra Pradesh and a research and development centre in Telangana. Ms K Lakshmi Raju is the promoter and Mr G V Bhadram manages the operations.
NACL Spec-Chem Ltd, set up in April 2020, has a manufacturing unit in Dahej Industrial Zone. The unit has installed capacity of 6,000 tonne per annum for agrochemical technicals and intermediates for domestic as well as export markets. Ms K Lakshmi Raju is the promoter. |
Key Financial Indicators
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
& - Working capital demand loan and Pre&post shipment Credit are sublimits of Cash Credit. |
Annexure – List of Entities Consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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