| NGL Fine Chem Limited | ||||||
| Rating outlook revised to 'Stable'; Ratings Reaffirmed | ||||||
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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 revised its outlook on the long-term bank loan facilities of NGL Fine Chem Limited (NGL; part of NGL group) to ‘Stable’ from ‘Negative’ while reaffirming the rating at ‘Crisil BBB+’. The Short term rating has been reaffirmed at 'Crisil A2'.
Revision in outlook reflects the sustained improvement in the business risk profile of the company on account of higher operating margin while scale has witnessed steady growth. Improvement in operating performance is on account of increasing contribution from new product and favorable demand across market. The company has reported the revenue of Rs 353 crore at an operating margin of 14% in 9M fiscal 2026. Sales have seen sharp increase as company had reported sales of Rs 363 crore in fiscal 2025. Improved margin and revenue are expected to sustain over the medium term.
The ratings continue to reflect the established market presence of NGL in animal health API industry, diversified customer base and it’s healthy financial risk profile. These strengths are partially offset by susceptibility of profitability to volatility in raw material prices, high product concentration risk with major presence in animal health API and large working capital requirement. |
Analytical Approach For arriving at the ratings, Crisil Ratings has combined the financial and business risk profiles of NGL Fine Chem Limited and its wholly owned subsidiary, Macrotech Polychem Pvt Ltd (MPPL). That is because both these companies, together referred to herein as NGL, have a common management and strong operational and financial links.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers - Strengths Established presence in animal health API industry: Over three decades of experience of the company's directors, Mr. Rajesh Lawande and Mr. Rahul Nachane, has helped the company establish its market position in the veterinary pharmaceutical APIs and intermediates apart from others. The promoters have developed a strong understanding of industry dynamics, which has helped them successfully navigate several business cycles.
Established and diversified customer base: NGLs customer base is well established and diversified across various geographies. It derives 70-75% of its sales from exports and remains from the domestic market. In the export market the company caters to countries in Europe, Asia Pacific, Middle East, Latin America among others. NGL's customer base is diversified with the top five customers accounting for less than 20% in fiscal 2025. The company has been taping new markets by launching new products as well as existing ones to expand their business reach in both domestic and international markets.
Healthy financial risk profile: Moderate debt levels and healthy accretion to reserve supports capital structure. Total outside liabilities to tangible networth (TOL/TNW) ratio of 0.54 times on a networth base of Rs 281.88 crore as on March 31, 2025, represents comfortable capital structure. Networth has further improved to approximate Rs 306 crores as on September 30, 2025, and NGL is expected to pay the dividend as per previous fiscal years over the medium term. Interest coverage has remained at 11.55 times in fiscal 2025. Over next two years, the company has planned a capex of Rs 160 crore which will be funded through debt and internal accruals. Debt protection metrics is expected to remain healthy with interest coverage ratio between 8 to 10 times and net cash accruals to adjusted debt expected to remain around 0.4 to 0.6 times over the medium term. Despite this capex, the financial risk profile is expected to remain healthy given healthy net cash accruals. |
Key Rating Drivers - Weaknesses Vulnerability of profitability to volatility in raw material prices: NGL's major raw materials are intermediates (N-2 and N-3 level intermediates) and solvents used for manufacturing the APIs. The company's operating profitability remains exposed to the adverse movements in the raw materials prices that cannot be adequately passed onto the customers. In fiscal 2025, operating margin saw an impact and was lower at 10.2% as compared to around 17% recorded for fiscal 2024. During 9M fiscal 2026 NGL has reported the improvement in operating margin at 14% and will remain on similar lines over the medium term.
High product concentration risk with major presence in animal health API: NGL primarily manufactures various veterinary APIs, which account for 85-90% of the total annual sales, while the rest are derived from intermediates, formulations, and human APIs. The top 3 products still occupy 34% of the total sales in fiscal 2025 which has reduced from 50% of the total sales in fiscal 2022. Sales for top 3 product remained at 30% during 9M fiscal 2026 and product concentration will remain key monitorable over the medium term
Large working capital requirement: Company’s gross current assets were at 177 days as on March 31, 2025. Debtor days have reduced from 82 days in fiscal 2025 as compared to 98 days in fiscal 2024. However, the company’s inventory is on similar lines of 57 days in FY25. There has been increase in working capital requirements due to increase in debtor days, which is expected to remain around 85 to 90 days. Inventory days is also expected to remain around 65 to 70 days over the medium term. |
Liquidity Aqdequate Net cash accruals are expected to improve from Rs 32.49 crores in fiscal 2025 to over Rs 50 crores against the repayment obligation of Rs 10 to 12 crores. Bank limit utilisation has remained moderate for the past 12 months ending December 2025 and averaged at 74%. Company has a cash and bank balance of Rs 7 crores as of September 2025 and investment of Rs 48 to 50 crores in mutual funds which act as a cushion over the medium term. |
Outlook Stable NGL is expected to exhibit improved operating performance supported by healthy demand and established customer relationships. |
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About the Company Incorporated in 1981, NGL Fine Chem Ltd. (NFC) is engaged in manufacturing of human and veterinary bulk drugs, intermediates and formulations. It primarily deals in animal healthcare products like antiprotozoal, anthelmintics, growth promoters, etc. It has its administrative office at Mumbai and manufacturing facilities at Tarapur (2 units) and Navi Mumbai (all in Maharashtra). NFC is currently managed by Mr. Rahul Nachane and Mr. Rajesh Lawande. About 70 to 75 per cent of its revenues are derived from exports to countries in Europe, Latin America, Africa and Middle East. |
Key Financial Indicators Consolidated Numbers
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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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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