| Nirma Limited | ||||||
| Ratings reaffirmed at ‘Crisil AA/Stable/Crisil A1+’ | ||||||
| Rating Action | ||||||
| ||||||
| ||||||
| 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 reaffirmed its ‘Crisil AA/Stable/Crisil A1+’ ratings on the debt instruments and bank facilities of Nirma Ltd (Nirma). Further, Crisil Ratings has withdrawn ratings on Rs 1,100 crore of non-convertible debentures (NCD) upon receipt of independent confirmation on redemption and Rs 50 crore proposed NCD basis request from the company. The withdrawal is in line with Crisil Ratings’ policy on rating withdrawal.
The rating reaffirmation factors the healthy business profile and strong financial profile of Nirma. The company has an established market position in the domestic soda ash, soaps and detergent businesses. The acquisition of Alivus Life Sciences Ltd (Alivus; formerly known as Glenmark Life Sciences Ltd) in March 2024 further enhanced company’s already diversified business profile. Moreover, forward and backward integration in its chemicals business and high operating margins in the pharmaceutical business coupled with various cost initiatives across segments results in healthy profitability for the company. The financial risk profile is supported by company’s track record of successfully deleveraging its balance sheet post 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.
During fiscal 2025, consolidated operating performance improved with operating margins rising to 15.8% against 11.6% in fiscal 2024, owing to full-year contribution of higher margin pharmaceutical business housed under Alivus as well as recovery in realisations for the company’s key products such as linear alkyl benzene (LAB) and caustic soda in the domestic market. However, overseas business (housed under Searles Valley Minerals Inc, USA [SVM]) continued to incur operational loss. While the performance of overseas business is expected to remain subdued, Crisil Ratings expects consolidated operating margins to remain range-bound at 16-17% going forward supported by stable margins in domestic chemical business and growing contribution of Alivus.
The financial leverage (as measured by net debt to earnings before interest, tax, depreciation and amortization [EBITDA]) declined to 2.2 times (compared with 2.7 times [after factoring in full-year impact of Alivus] during fiscal 2024) owing to improvement in operating profitability. Moreover, with expected healthy annual accruals of around Rs 1,500 crore over the medium term utilised to repay debt and part-fund the capex, the leverage should decline further over the medium-term. |
Analytical Approach Crisil Ratings has 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.
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 among one of the largest players in the domestic soda ash, soaps and detergents segment. Backward integration is a major strategic strength with company manufacturing key raw materials- including soda ash and LAB, which are used to make detergents. Access to the key raw materials and captive production facilitates provides greater control over quality and raw material cost. It 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 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 (APIs) globally, resulting in further diversification of the business.
Strong financial risk profile Financial leverage, as measured by net debt to EBITDA declined to 2.2 times in fiscal 2025 from 2.7 times (after factoring in full-year impact of Alivus) with improvement in profitability and reduction in debt. On the other hand, adjusted interest coverage 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) aggregating to Rs 1,600-1,800 crore over fiscals 2026-2027 largely towards capacity expansion in Alivus and replacement/maintenance capex. Annual accruals of around Rs 1,500crore should suffice to meet the debt obligations and part fund this capex and Crisil Ratings expects the leverage to continue to decline going forward. Further, 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% revenue in 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 overseas business of the company has witnessed moderation in operating performance over 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 primarily driven by Nirma's financial flexibility to raise short- and long-term debt at short notice, and at competitive rates. The liquidity position is supported by healthy liquidity of around Rs 1,152 crore at consolidated level as on March 31, 2025 and moderate utilisation of fund based working capital limits at less than 10% for the past six months ending August 2025. The company is expected to generate annual cash accruals of around Rs 1,500 crore at a consolidated level. The liquid funds and surplus accrual shall comfortably cover debt obligation. |
Outlook Stable The credit risk profile of Nirma is likely to remain strong owing to its diversified products and healthy margin, and expectation of improvement in debt protection metrics with stable accruals. |
Rating sensitivity factors Upward factors:
Downward factors:
|
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, 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 USA. The company acquired 75% stake in Alivus in March 2024, post which it became a subsidiary of the company.
For fiscal 2025, operating income at consolidated level stood at Rs 12,231 crore against Rs 10,419 crore during previous fiscal. Profit after tax (PAT) stood at negative Rs 2,310 crore in fiscal 2025 as compared with Rs 297 crore in fiscal 2024. |
Key Financial Indicators (consolidated; Crisil Ratings-adjusted numbers)
|
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
*Fund based limits may be fully interchangeable into non fund based and vice a versa subject to Maximum Permissible Bank Finance Limit (Drawing Power) and as per Bank’s Sanction Letters (as amended from time to time) and as advised Banks time to time Annexure - Details of Rating Withdrawn
# Yet to be issued |
Annexure - List of Entities Consolidated
|
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Criteria Details
|