| Solar Industries India Limited | ||||
| Rating outlook revised to 'Positive'; Ratings Reaffirmed | ||||
| 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 revised its outlook on the long-term bank facilities and non-convertible debentures (NCDs) of Solar Industries India Ltd (SIIL; part of the Solar group) to ‘Positive’ from ‘Stable’ while reaffirming the rating at 'Crisil AA+'. Crisil Ratings has withdrawn its rating on NCDs of Rs 15 crore (of the original issued Rs 60 crore NCD) as this has been fully redeemed as per schedule and the same has also been confirmed by the debenture trustee. The withdrawal is in line with the Crisil Ratings policy.
The revision in outlook reflects the continued improvement in the business risk profile of SIIL, driven by increasing scale and enhancement in business diversification. The revenue of SIIL has increased from Rs 2,515 crore in fiscal 2021 to Rs 7,551 crore in fiscal 2025 and is estimated at Rs 9,500–10,000 crore in fiscal 2026, led by ramp up across various segments. The defence segment, while enhancing business diversification, has been a key contributor to the growth, with ~24% revenue contribution in the first nine months of fiscal 2026, as against 5% in fiscal 2021. Along with leading position in the domestic explosives industry, SIIL is a leading player in Turkiye, Zambia, Nigeria and Tanzania, while expanding its presence in South Africa, Australia and Indonesia. The export segment contributed ~41% of revenue in the first nine months of fiscal 2026.
The order book stood at Rs 21,200 crore as on December 31, 2025, of which defence orders accounted for Rs 18,000 crore, providing growth visibility. With leading position in the explosives segment and growing presence in international and defence segments, SIIL’s revenue growth is expected to be healthy at ~15% compound annual growth rate (CAGR) over the medium term.
Operating margin has also improved from ~22.5% in fiscal 2021 to ~26% in fiscal 2025 and is estimated at a similar level in fiscal 2026. For the first nine months of fiscal 2026, the operating margin was 26.5% led by higher share of the defence segment, improving profitability in the international business and ability to pass through fluctuations in raw material prices. Going ahead, the operating margin is expected to sustain at 25–27%.
The financial risk profile remains strong with robust estimated networth of Rs 5,973 crore as on March 31, 2026, healthy cash accrual estimated at Rs 1,600 crore in fiscal 2026 and comfortable liquidity position. Total outside liabilities to tangible networth (TOLTNW) and interest coverage ratios are estimated at a comfortable 0.61 time and 23.5 times, respectively, as on March 31, 2026. The company is expected to generate healthy accrual over the medium term, which will sufficiently cover annual capital expenditure (capex) of Rs 2,000 crore, keeping the debt protection metrics comfortable. Sizeable debt-funded acquisition and aggressive growth plans impacting the debt metrics will remain monitorable.
Crisil Ratings takes note of past legal proceedings for vacation of office of the executive director, Kailash Chandra Nuwal, (K C Nuwal group - Promoter shareholding 29.26%). SIIL had filed an appeal with the Supreme Court against the impugned order passed by the National Company Law Appellate Tribunal on January 22, 2022. On August 26, 2025, the Supreme Court disposed of the civil appeal filed by SIIL as the term of the director had already expired. Over the years, this litigation has not impacted the business of the Solar group, as per management articulation and overall performance. Nonetheless, Crisil Ratings will continue to monitor developments in this regard and their impact on operations.
The ratings continue to reflect the group’s robust position in the explosives and detonators industry in India and overseas, growing presence in the defence industry, sound operating efficiency and strong financial risk profile. These strengths are partially offset by susceptibility to regulatory changes and volatility in foreign exchange (forex) rates. |
Analytical Approach Crisil Ratings has combined the financial and business risk profiles of SIIL, its subsidiary, Solar Defence and Aerospace Ltd (‘Crisil AA+/Positive/Crisil A1+’), and other subsidiaries and step-down subsidiaries. This is because all these entities, collectively referred to as the Solar group, have common management and significant business and financial linkages.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers - Strengths Robust market position in the explosives industry With a market share of around 24% in the explosives industry, the Solar group is one of the largest manufacturers and exporters of explosives and initiating systems in India. Its Nagpur unit is the world’s largest single-location plant. The group offers a complete product range such as explosives like bulk & cartridge and explosive accessories like detonators & detonating cord also military explosives like HMX & its compounds, detonators and detonating cords.
The group has 32 manufacturing units in India, providing regional proximity to customers. The acquisition of Rajasthan Explosives and Chemicals Ltd (RECL) in fiscal 2024 provided further geographic expansion in the domestic market. Internationally, SIIL has 10 manufacturing units in Nigeria, Zambia, South Africa, Turkiye, Tanzania, Indonesia, Thailand, Australia, Ghana and Kazakhstan. Additionally, the group has plans to expand in Saudi Arabia.
SIIL is a leading player in the industrial explosives sector, with Coal India Ltd (CIL) being its major client contributing 10% to overall revenue during the first nine months of fiscal 2026. The domestic non-defence businesses such as non-CIL and institutional, and housing and infrastructure contribute ~24% to overall revenue. The group's diversified clientele, spread across geographies and sectors such as mining, infrastructure and defence, along with ability to secure repeat orders enhances its market position.
Significant increase in scale and improving business diversity led by the defence segment SIIL saw revenue increase to an estimated Rs 9,500–10,000 crore in fiscal 2026 from Rs 2,515 crore in fiscal 2021. With robust order book, wide product portfolio and strong brand recall, the business is expected to achieve ~15% CAGR over the medium term.
The increase in revenue was supported by step-up in contribution of the defence segment to around 24% of revenue, compared with 5–7% five years ago. The defence portfolio is diverse, comprising hand grenades, missiles, rockets, unmanned aerial vehicles (UAVs), loitering munitions and counter-drone systems, positioning the company across modern warfare domains. The defence order book, as on December 31, 2025, stood at Rs 18,000 crore, including international defence orders worth Rs 11,000 crore, which provides growth visibility.
Sound operating efficiency with significant backward integration Rising contribution from high-margin defence and export segments has been the primary driver of operating margin improvement, which has increased to ~26.5% in the first nine months of fiscal 2026 from 22.5% in fiscal 2021, and is expected to stabilse over 25% in the medium term. The group has the ability to pass on fluctuations in raw material prices to customers through price escalation clauses in contracts. This favourable mix shift has been complemented by deep backward integration, with in-house manufacturing of most of the raw materials (apart from ammonium nitrate) such as detonator components, emulsifiers, sodium nitrate and calcium nitrate, and other explosives precursors. Also, all bulk explosive manufacturing units are located 50–60 km from major mining regions. This has structurally improved cost efficiency and supply chain resilience, leading to cost savings, quality control, and stable operating margin of 18–21% over the five fiscals through 2023.
Strong financial risk profile Tangible networth was Rs 4,353 crore and gearing was 0.22 time as on March 31, 2025. Networth is estimated at more than Rs 5,900 crore as on March 31, 2026. Debt protection metrics are comfortable, as reflected in estimated TOLTNW and interest coverage ratios of 0.61 time and 23 times, respectively, in fiscal 2026, as against 0.82 time and 17.5 times, respectively, in fiscal 2025. Despite capex of ~Rs 2,000 crore in fiscal 2026 and Rs 1,500-2,000 crore planned over the next few years, the financial risk profile and debt metrics will remain strong with healthy accrual. |
Key Rating Drivers - Weaknesses Exposure to regulatory risks The explosives industry has a high entry barrier; players require industrial licensing and various clearances from the government, the Chief Controller of Explosives and the Directorate General of Mines Safety. Furthermore, as per the Ammonium Nitrate Rules, 2012, ammonium nitrate, a key raw material that accounts for 65% of the total raw material cost, is classified as an explosive. Hence, its production, distribution, sale and stocking require licence. The sale of explosives is regulated by the Petroleum and Explosives Safety Organisation and the Joint Chief Controller of Explosives to prevent misuse of end products. Though the group takes precautions during the manufacturing process and is a member of SAFEX, an international apex body that promotes global best practices on safety standards in the explosives industry, it remains exposed to regulatory risks.
Susceptibility to volatility in forex rates The group remains vulnerable to fluctuations in forex rates, given its import of certain raw materials and presence in overseas markets. To safeguard against this volatility, it borrows debt in local currency in overseas markets. It also bills in US dollars in some markets. It hedges all imports and keeps exports open. However, on account of overseas presence, forex risk persists. |
Liquidity Strong Cash accrual is estimated at Rs 1,500-1,700 crore in fiscal 2026 against debt obligation of ~Rs 362 crore. Cash and equivalent and short-term investments stood at Rs 423.6 crore as on September 30, 2025. Bank limits were adequate to meet the working capital requirement, while estimated capex of Rs 2,000 crore in fiscal 2026 was funded through debt and accrual. The group has a policy of paying dividend but is expected to conserve cash over the medium term for pursuing growth opportunities. |
Environment, social and governance (ESG) profile Crisil Ratings believes the ESG profile supports its credit risk profile. The explosives (chemical) sector has a significant impact on the environment owing to high water consumption and waste generation and greenhouse gas (GHG) emissions. The sector’s social impact is characterised by health hazards leading to higher focus on employee safety and well-being and the impact on local community, given the nature of operations. The group has continuously focused on mitigating its environmental and social risks.
Key ESG highlights:
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Outlook Positive The revenue of the Solar group will continue to increase led by the defence business while its robust market position will be maintained amid stable operating efficiency and strong financial risk profile. |
Rating sensitivity factors Upward factors
Downward factors
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About the Group The Solar group is one of the largest domestic manufacturers of bulk and cartridge explosives, detonators, detonating cords and components. It has manufacturing facilities in 32 locations in India as well as units in Nigeria, Zambia, South Africa, Turkiye, Tanzania, Indonesia, Australia and Ghana. In fiscal 2010, the group entered the defence sector to manufacture high-energy explosives, delivery systems, ammunition filling and pyros fuses. For the first nine months of fiscal 2026, SIIL registered revenue of Rs 6,785 crore and profit after tax (PAT) of Rs 1,181 crore. |
Key financial indicators (consolidated)
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
& - Interchangeable with other fund-based facilities
^ - Interchangeable with non-fund-based facilities
Annexure - Details of Rating Withdrawn
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Annexure – List of entities consolidated
Note i: The entity has not commenced its business operations. Note ii: The entity is under liquidation. Note iii: Emul Tek Private Ltd obtained control of Rajasthan Explosives and Chemicals Ltd with effect from December 16, 2023. Rajasthan Explosives and Chemicals Ltd subsequently got merged with Emul Tek Pvt Ltd as per NCLT order with effect from October 17, 2024. Note iv: The entity was incorporated on June 10, 2024. Note v: The name of company has been changed with effect from February 17, 2025, formerly known as Economic Explosives Ltd. Note vi: The entity was acquired w.e.f. July 1, 2024. Note vii: Joint Operation effective from October 1, 2024. |
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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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