| NACL Industries Limited | ||||||
| Ratings upgraded to 'Crisil AA/Stable/Crisil A1+'; Removed from '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 removed its ratings on the bank facilities of NACL Industries Ltd (NACL) from ‘Rating Watch with Positive Implications’ and has upgraded the ratings to ‘Crisil AA/Crisil A1+’ from ‘Crisil BB+/Crisil A4+' while assigning a ‘Stable’ outlook to the long-term rating.
The upgrade factors in improvement in the credit risk profile of NACL after acquisition by Coromandel International Limited (CIL; ‘Crisil AAA/Stable/Crisil A1+’) and consequent change in analytical approach where the ratings of NACL are notched up to factor in support from CIL. Under CIL’s umbrella, the financial flexibility of NACL has materially improved and resultantly the business performance is expected to witness a significant turnaround.
CIL had announced the stake acquisition in NACL in March 2025 and subsequently acquired 53.08% stake on August 8, 2025. Post which, there has been a change in the board of directors and some of the key managerial personnel. NACL, with its strong market presence, is expected to play an important role in diversification of agrochemicals business of CIL. In addition to the management and business synergies, CIL is in the process of providing letter of comfort to lenders of NACL which underlines financial linkages between the two companies. Further, CIL is in the process of seeking necessary shareholder approvals to provide a line of credit of up to Rs 160 crore to NACL. Following the acquisition announcement, the lenders lifted the restrictions on the utilisation of working capital limits between March and April 2025, thereby easing the company's liquidity position. All these developments have enabled the company to improve the business performance. The business performance has witnessed a recovery in first half of fiscal 2026 with NACL reporting total operating income and profit after tax of Rs 905.30 crore and Rs 15.59 crore as against Rs. 765.32 crores and net loss of Rs. 5.90 crores respectively in the first half of previous fiscal. Going forward, with improved availability of working capital limits, the operating income is expected to reach ~Rs 1,600-1,700 Cr in the current fiscal and EBITDA margin is expected to be at 8.0-9.0%. The ratings also reflect the strong market presence and brand of NACL in the agrochemicals industry, its established clientele and geographic diversification in revenue. These strengths are partially offset by the large working capital requirement, 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. Crisil Ratings has applied its parent notch-up framework to factor in the extent of support expected to be available to NACL from Coromandel International Limited (Crisil AAA/Stable/Crisil A1+). |
Key Rating Drivers - Strengths Support from Coromandel International Limited NACL is expected to receive financial support from CIL, if required, due to its importance in overall diversification strategy of CIL. Further the proposed letter of comfort to lenders and intercorporate credit lines from CIL strengthen the support articulation of CIL. In addition to the financial support, CIL is expected to provide managerial support as the board of NACL already has representatives from CIL.
Established market presence in the agrochemical segment NACL has built a good market position in the agrochemicals segment over the past three decades. It sells a wide range of insecticides, fungicides, herbicides and plant growth regulators across both technical and formulation segments. The management has built healthy relationships with customers across geographies, and the clients include large and reputed global players. Currently NACL has presence across 22 countries, has more than 66 branded products in it’s portfolio. It’s ability to develop products to meet demand may further drive growth over the medium term. Further, current capacity utilisation levels of ~70% along with ongoing investment plans in de-bottlenecking of capacities will provide adequate room for growth in the near term. |
Key Rating Drivers - Weaknesses Working capital-intensive operations The operations are inherently working capital intensive owing to inventory requirements, credit period to be offered to dealers as per the industry standards. Receivables improved to less than 100 days as on March 31, 2025, on account of lower sales in the fourth quarter, vis-a-vis sales recorded in the corresponding quarter of the previous fiscal. Going forward, receivables are expected to be in the range of 130-140 days in line with historic levels, due to credit periods offered in the domestic formulations business. Inventory may remain high around 90 days, given the significant number of SKUs, import of raw materials and seasonality in operations. Operations may remain working capital intensive with gross current assets in the range of 220-230 days in the medium term.
Moderate financial risk profile The financial risk profile is marked by a moderate networth of Rs 399 crore and gearing of one time as on March 31, 2025. Following the availability of full working capital limits and business resuming normalcy, debt may increase in fiscal 2026. Capital structure is likely to remain moderately leveraged with gearing projected to be less than 1.5 times in the medium term. The net cash accruals to repayment and interest coverage ratios were impacted due to subdued profitability in fiscal 2025. Interest coverage ratio is expected to improve to over 2 times with recovery in business in the medium term. Further the net cash accruals are expected to be sufficient to meet the debt repayment obligations in the medium term.
Susceptibility to competition, regulatory changes and seasonality in the agrochemicals sector There are several organized agrochemical players operating at a regional level. As NACL is into generic molecules, it faces intense competition from organised as well as unorganised players in India. Fortunes of the agrochemical sector are linked to the quantum, timing and distribution of rainfall in a year and the level of farm income, thereby exposing the players’ revenue to seasonal trends. Besides, surplus or inadequate rainfall could impact profitability of players and cause a stretch in the working capital cycle. NACL’s business performance, like that of other agrochemical manufacturers, could be further impacted by regulatory changes, such as export and import policies, registration policies and product and environment safety requirements. |
Liquidity Strong The company has Rs 26.5 cr cash an cash equivalents as on September 30,2025. Further, CIL is in the process of seeking necessary shareholder approvals to provide a line of credit to NACL of up to Rs 160 crore. |
Outlook Stable The credit risk profile is expected to be supported by the strong parentage of CIL and expected improvement in the business risk profile. |
Rating sensitivity factors Upward factor:
Downward factors:
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About the Company NACL, incorporated in 1986, manufactures and exports crop protection technicals (active ingredient) and formulations. It manufactures pesticides, insecticides, herbicides, fungicides and other plant growth chemicals. The formulations business is mainly in the Indian market, and the company sells through a large retail dealer network spread across the country. It also has a range of branded formulations. The company has two manufacturing units at Srikakulam and Ethakota in Andhra Pradesh, and one research and development centre in Telangana. NACL has set up a manufacturing unit at Dahej through it’s wholly owned subsidary NACL Spec-Chem Limited with installed capacity of 6,000 tonne per annum for manufacturing technicals and intermediates for the domestic as well as overseas markets. NACL became subsidary of Coromandel International Limited (CIL) post CIL acquiring 53.08% stake in NACL On August 8, 2025. |
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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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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