Detailed Rationale

Crisil Ratings has reaffirmed its ‘Crisil AA/Stable’ rating on the long-term bank facility of Sumitomo Chemical India Ltd (SCIL).

 

The rating continues to reflect the established market position of the company in the domestic crop protection business, supported by its diversified product portfolio including insecticides, weedicides, fungicides, fumigants, rodenticides, plant growth nutrition products, biopesticides and plant growth regulators, and access to the proprietary products of its parent—Sumitomo Chemical Company Ltd (SCCL). The rating also factors in the healthy financial risk profile of the company. These strengths are partially offset by working capital-intensive operations, exposure to risks related to regulatory changes and risks inherent in the crop protection segment, and susceptibility to the vagaries of monsoon.

 

Revenue grew by ~3.5% to Rs 2,555 crore in the first nine months of fiscal 2026 from Rs 2,469 crore a year earlier, driven by volume growth while realisation remained under pressure owing to continued supply deluge from China. Revenue from the domestic segment (~81% of sales in the first nine months of fiscal 2026) increased by 3.4% on-year to Rs 2,069 crore. The first half of fiscal which generally registers ~60% of annual revenue was impacted by prolonged monsoon. Export increased at a similar pace as domestic, driven by growth in volumes as pressure on realisations being more pronounced in the export category. Revenue growth is estimated at 3% in fiscal 2026 and expected at 7–10% over the medium term supported by stable domestic demand growth, continued recovery in exports and scale up of recently launched products. SCIL, being in the crop protection segment, will remain susceptible to the vagaries of monsoon, and hence, expected impact of El Niño in fiscal 2027 on the performance will remain monitorable.

 

Operating margin remained rangebound at ~21% in the first nine months of fiscal 2026, similar to the corresponding period of fiscal 2025. This was owing to stable input prices, favourable product mix and continued cost optimisation in procurement. Furthermore, tight control on overheads, benefits from operating leverage and pricing pressure bottoming out will translate to operating margin sustaining at 19–20% over the medium term despite expected rise in raw material prices owing to geopolitical conflict.

 

The financial risk profile is supported by sizeable tangible networth (networth minus intangible assets) of Rs 3,115 crore as on September 30, 2025, and external debt free position as on January 31, 2026. Overall debt including lease liabilities were low at Rs 58 crore as on September 30, 2025. Reliance on external debt is expected to remain nil over the medium term as annual cash accrual should be sufficient to meet annual capital expenditure (capex) of Rs 150–160 crore and working capital requirement. Gearing is expected below 0.02 time over the medium term. Debt protection metrics will be robust, with interest coverage and net cash accrual to adjusted debt ratios expected at above 88 times and 10 times, respectively.

Analytical Approach

Crisil Ratings has combined the business and financial risk profiles of SCIL and its wholly owned subsidiaries as all these entities are in similar businesses and have common management and business and financial linkages. Furthermore, Crisil Ratings has amortised goodwill arising out of the acquisition of the balance 85% stake in Barrix Agro Sciences Pvt Ltd in fiscal 2024 over a period of five years.

 

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 the crop protection segment

SCIL is one of the major players in the crop protection segment with a strong brand recall. It has a diversified product portfolio, which includes insecticides, weedicides, fungicides, fumigants, rodenticides as well as plant growth nutrition products, biorationals and plant growth regulators. The market position of SCIL is supported by its well-balanced ability to manufacture technicals and formulations, along with access to the proprietary products of its parent, SCCL. Over the medium term, the company is expected to undertake capex at its Dahej unit to set up a manufacturing hub for the high potential patented molecules of SCCL. This will strengthen the company’s position in the parent group’s global supply chain.

 

Well-diversified product portfolio, with agrochemical products covering multiple crop segments

The product portfolio is well-diversified with SCIL’s agrochemical products covering multiple crop segments in both kharif and rabi seasons and non-agrochemical products for animal nutrition and environment health. With over 15,000 distributors, the distribution network covers 85% of India, providing geographical diversity. Around 19% of revenue in the first nine months of fiscal 2026 came from exports, partially offsetting risks related to demand cyclicality in the domestic market. No product / molecule contributes to more than ~15% of revenue, resulting in lower concentration risk.

 

Healthy financial risk profile

The financial risk profile will continue to remain supported by nil debt, healthy cash generation and prudent capital spending. Tangible networth was healthy at Rs 3,115 crore as on September 30, 2025, while continuing to be external debt-free. Healthy annual cash accrual has enabled robust debt protection metrics, as reflected in strong interest coverage ratio of 108 times in the first nine months of fiscal 2026. The debt protection metrics will remain strong in the medium term, with interest coverage and net cash accrual to adjusted debt ratios remaining above 88 times and 10 times, respectively. Capex of Rs 150–160 crore per annum is envisaged, which will be funded through internal accrual and cash surplus. Any sizeable new capex or acquisitions, necessitating debt raise, will be monitorable.

Key Rating Drivers - Weaknesses 

Large working capital requirement

Operations are working capital intensive owing to large inventory given the seasonal nature of operations and extensive credit to dealers and distributors. While sales occur at the start of the season, payments are realised post-harvest, resulting in stretched receivables. Furthermore, the company must maintain sizeable inventory owing to ready availability of numerous stock-keeping units to ensure that the requirements of dealers are met on time.

 

The company imports 50–55% of its raw materials, which involves high sea time. Owing to ongoing geopolitical conflicts, raw materials will be procured for use over a longer tenure to avoid any delay or shortage in supply. Hence, inventory is expected to increase to 110–120 days in the near term from 104 days as on March 31, 2025.

 

Susceptibility to inherent risks in the agrochemical sector

The crop protection sector remains susceptible to specific and separate registration processes in different countries, and is subject to various environmental rules and regulations both in domestic and overseas markets. Changes in regulatory requirements, such as export and import policies, and environment and safety requirements in countries where the company has significant exposure, could weaken growth prospects. Furthermore, ban on key products will pose a threat to the business of players. Also, with 80% of revenue coming from the domestic agricultural inputs business, SCIL remains exposed to cyclicality in the agrochemicals industry, which is highly dependent on monsoon and level of farm income.

Liquidity Strong

SCIL is expected to generate net cash accrual of Rs 500–530 crore in fiscal 2027 and Rs 500–600 crore over the medium term. This will be sufficient to fund the capex of Rs 60–80 crore in fiscal 2027 as well as Rs 150–160 crore per annum over the medium term and the working capital requirement. SCIL had unutilised fund-based limit of around Rs 301 crore as of January 2026 and unencumbered liquid surplus of Rs 2,163 crore as on December 31, 2025, which provides additional cushion for exigencies.

Outlook Stable

Crisil Ratings believes SCIL will continue to benefit from its established position in the domestic market, supported by steady demand as the company leverages its balanced presence across key sub segments of crop protection, and strong brand and chemistry skills of the parent. The improving business risk profile will be complemented by a strong financial risk profile, prudent capex spend and healthy cash generation.

Rating sensitivity factors

Upward factors:

• Significant improvement in revenue growth and operating margin above 20% on a sustained basis leading to strong annual cash accrual
• Sustenance of healthy financial risk profile and strong liquidity in the absence of any large debt-funded capex

 

Downward factors:

• Sharp decline in revenue and fall in operating margin below 12% leading to lower cash accrual
• Large, debt-funded capex or acquisition or stretched working capital cycle weakening the financial risk profile and liquidity position

About the Company

SCIL is a subsidiary of the Japanese chemical major SCCL. SCIL manufactures and markets crop protection formulations based on active ingredients procured from SCCL and third parties. It has manufacturing plants in Gujarat, Maharashtra, and Dadra and Nagar Haveli. SCCL holds 75% stake in SCIL.

 

SCCL established SCIL in 2000 as its manufacturing and marketing base for crop protection products, household insecticides, public health insecticides and animal nutrition products. SCIL was reconstituted as a public limited company with effect from November 24, 2018. To further fortify its business in India, SCCL acquired majority stake in Excel Crop Care Ltd (ECCL) in fiscal 2016. ECCL, which manufactures agrochemical formulations, was promoted by the Shroff family members. On August 31, 2019, the business and undertaking of ECCL was transferred to SCIL after the National Company Law Tribunal approved the scheme of amalgamation.

 

In December 2023, SCIL acquired 85% stake in Barrix Agro Sciences Pvt Ltd―a Bengaluru-based company engaged in innovation, manufacturing and marketing of integrated pest management and integrated plant nutrition management products, especially pheromone traps and chromatic sheets, for total consideration of Rs 78 crore.

Key Financial Indicators (Crisil Ratings-adjusted numbers)

Particulars	Unit	2025	2024
Revenue	Rs crore	3148	2,844
Profit after tax (PAT)	Rs crore	494	357
PAT margin	%	15.7	12.6
Adjusted debt / adjusted networth^	Times	0.02	0.01
Adjusted interest coverage	Times	111.0	97.5

^ Debt includes lease liabilities

Any other information: Not applicable