| Nirma Limited | ||||||
| Long-term rating placed on 'Watch Developing; Short-term rating reaffirmed; Rated amount enhanced for Bank Debt | ||||||
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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 placed its rating on the long-term bank facilities and non convertible debentures of Nirma Ltd (Nirma) on ‘Rating Watch with Developing Implications’ while reaffirming its ‘Crisil A1+' rating on the short-term bank facilities and commercial paper programmes of the company. Furthermore, Crisil Ratings has withdrawn its ratings on the Rs 1,200 crore non-convertible debentures (NCD) upon receipt of independent confirmation on redemption. The withdrawal is in line with the Crisil Ratings policy on rating withdrawal.
The rating watch follows approval by Nirma’s board of directors for the scheme of arrangement on April 15, 2026, wherein the operational undertakings of Nirma (domestic chemical and consumer businesses) are being demerged and transferred to Ocular Enterprises Pvt Ltd on going concern basis, while Nirma will hold the investments in Karnavati Holding Inc and Alivus Life Sciences Ltd (Alivus; formerly, Glenmark Life Sciences Ltd). The transaction is subject to approvals from shareholders, stock exchange, National Company Law Tribunal, lenders, or any other appropriate authority. Considering that the businesses of Nirma will be transferred under the current scheme, the analytical approach of Nirma may undergo a change. While the broad contours of the transaction are available, a detailed assessment of residual businesses and holdings of the company would decide the credit risk profile post-demerger. The watch will be resolved once greater details of the transaction and its impact on the credit risk profile can be ascertained. As per current understanding, Crisil Ratings believes that upon resolution of the watch, the rating is unlikely to change by more than one notch.
The ratings factor in the healthy business and strong financial risk profiles of Nirma. The company has an established market position in the domestic soda ash, soaps and detergent businesses. The acquisition of Alivus in March 2024 has further enhanced the company’s already diversified business profile. Moreover, forward and backward integration in its chemicals business and high operating margin in the pharmaceutical business, coupled with various cost-initiatives across segments, result in healthy profitability. The financial risk profile is supported by the company’s track record of successfully deleveraging its balance sheet after acquisitions. These strengths are partially offset by vulnerability of the business to price fluctuations owing to the commoditised nature of the chemicals business and shall be monitorable. |
Analytical Approach Crisil Ratings had earlier combined the business and financial risk profiles of Nirma, Karnavati Holding Inc, USA (holding company of Searles Valley Minerals Inc, USA; soda ash operations) and its subsidiaries and Alivus. This is because all these entities belong to the Nirma group and have common management.
However, after the announcement of scheme of arrangement for demerger and pending clarity on the resulting structure, the analytical approach is being re-evaluated.
Crisil Ratings has adjusted the networth for amortisation of goodwill on account of acquisitions.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers - Strengths Healthy market position in the domestic soda ash, soaps and detergents businesses, supported by significant backward integration Nirma is one of the largest players in the domestic soda ash, soaps and detergents segments. Backward integration is a major strategic strength with the company manufacturing key raw materials, including soda ash and linear alkyl benzene (LAB), which are used to make detergents. Access to key raw materials and captive production facilitates provides greater control over quality and raw material cost. This, coupled with healthy utilisation of existing facility, results in competitive cost.
Diversity in business risk profile and geographical presence Nirma has diversified its revenue profile through a wider geographical reach with capacities in India and the USA. Within the domestic chemicals business, revenue and profitability are well diversified across soda ash, caustic soda, LAB, soaps and detergents, and other industrial and consumer products; resulting in mitigating the volatility from individual commodity cycle. The company also acquired stake in Alivus, which manufactures and markets active pharmaceutical ingredients globally, resulting in further diversification of the business.
Strong financial risk profile Financial leverage, as measured by net debt to Ebitda (earnings before interest, taxes, depreciation, and amortisation), declined to 2.2 times in fiscal 2025 from 2.7 times in fiscal 2024 (after factoring in full-year impact of Alivus) with improvement in profitability and reduction in debt. On the other hand, adjusted interest coverage ratio moderated to 3.8 times in fiscal 2025 owing to increase in finance cost on the back of debt-funded acquisition of the majority stake in Alivus in March 2024.
The company is also undertaking capital expenditure (capex) of Rs 1,600-1,800 crore over fiscals 2026-2027 largely towards capacity expansion in Alivus and replacement/maintenance capex. Annual accrual of around Rs 1,500 crore should suffice to meet the debt obligation and part-fund this capex, and Crisil Ratings expects the leverage to continue to decline over the medium term. Furthermore, the company’s past track record of deleveraging within 2-3 years of any large debt-funded expansion or acquisition provides comfort. |
Key Rating Drivers - Weaknesses Vulnerability of the chemicals segment to price fluctuations and cyclicality In the past few years, revenue mix has changed significantly towards soda ash, caustic soda and LAB (contributing 60-65% of the revenue in the domestic chemical business), thereby increasing the susceptibility to fluctuation in prices of these inputs, which are linked to global markets.
Subdued performance of overseas business continue to impact overall operating efficiency The operating performance of the overseas business has moderated over the past few years owing to weak pricing environment. The ability of the company to minimise the extent of losses in the overseas business will remain monitorable. |
Liquidity Strong Liquidity is driven by Nirma's financial flexibility to raise short- and long-term debt at a short notice and at competitive rates. Liquidity was around Rs 1,152 crore at a consolidated level as on March 31, 2025, and fund-based working capital limit was utilised ~30% in the six months through March 2026. The company is expected to generate annual cash accrual of around Rs 1,500 crore at a consolidated level. The liquid funds and surplus accrual shall comfortably cover debt obligation. |
Rating sensitivity factors Upward factors:
Downward factors:
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About the Company Nirma, set up by Dr Karsanbhai K Patel in 1980 to manufacture detergents, expanded its operations to soaps, chemicals and processing of minerals. It has plants in Searles Valley, the USA, and Mehsana, Ahmedabad, Vadodara and Bhavnagar in Gujarat.
The largest soda ash manufacturer in India, Nirma acquired the California-based natural soda ash producer, Searles Valley Minerals Inc, in fiscal 2008, which has manufacturing facilities in Argus, Trona and Westend in the USA. The company acquired 75% stake in Alivus in March 2024, after which it became a subsidiary of the company.
For fiscal 2025, consolidated operating income stood at Rs 12,231 crore against Rs 10,419 crore during previous fiscal. Profit after tax (PAT) was negative Rs 2,310 crore in fiscal 2025 against Rs 297 crore in fiscal 2024. |
Key Financial Indicators (consolidated; Crisil Ratings-adjusted numbers)
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
# Non Fund based limits are interchangeable with fund based limits as per Bank’s Sanction Letters (as amended from time to time) and as advised Banks time to time
Annexure - Details of Rating Withdrawn
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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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Annexure: List of instruments and names of regulators of the instruments As required by SEBI CRA Circular dated Feb 10, 2026, a list of activities or instruments falling under the purview of various FSRs, along with the names of respective FSRs, is being disclosed below:
* Includes securitisation transactions involving assignee payout, acquirer's payout. ~ The rated instrument may involve issuance of different instruments such as debt securities (listed or otherwise), bank loans, commercial paper (listed or otherwise), etc. The regulator of the instrument may accordingly be SEBI, RBI or MCA and can only be determined upon issuance. In PRs subsequent to issuance(s), Crisil Ratings Limited shall separately capture the rated quantum details along with names of respective regulators. ^ Includes bank facilities such as liquidity facility, second loss facility that are part of securitisation transactions. # There is no instrument being rated and hence, Regulator of the Instrument is not applicable. The rating scale and definitions are being followed as stipulated in SEBI Master Circular for CRAs. @ These ratings were assigned during regulatory regime prior to introduction of SEBI CRA Circular dated Feb 10, 2026 and the investor side regulators have accordingly been included.
Note: Kindly note that for activities or instruments falling under the purview of FSRs other than SEBI, the grievance/dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available. |
Criteria Details
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