| UPL Limited | ||||||
| Ratings reaffirmed at 'Crisil AA+ / Negative / Crisil A1+ ' | ||||||
| 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 reaffirmed its ‘Crisil AA+/Negative/Crisil A1+’ ratings on the bank facilities and commercial paper programme of UPL Ltd (UPL).
The rating reaffirmation reflects UPL’s healthy business risk profile supported by sustained leadership in the agrochemical sector driven by its strong R&D and wide portfolio which is expected to drive continued revenue growth. Besides, its highly backward integrated manufacturing processes and stable input prices are expected to translate into healthy operating efficiencies. The company's financial risk profile though gradually improving, is slightly overleveraged, due to a sizeable acquisition in the past, and working capital intensive nature of operations. UPL also has sizeable repayment obligations in the next two fiscals which will require part financing, as accruals will not entirely suffice. Timely refinancing of debt obligations, including raising new debt with extended maturity, and/or raising equity to pare debt, will be critical. The operations also remain slightly susceptible to risks inherent in the agrochemical sector.
Crisil Ratings has taken note of the announcement by UPL on February 20, 2026, that its Board of Directors have approved a Composite Scheme of Arrangement amongst UPL, UPL Sustainable Agri Solutions Ltd (‘UPL SAS, rated ‘Crisil AA+/Negative’), UPL Global Sustainable Agri Solutions Ltd (“UPL Global”) and UPL Crop Protection Holdings Ltd (“UPL Cayman”). The reorganization is set to consolidate UPL’s India (UPL SAS) and international crop protection businesses (currently under UPL Cayman) into UPL Global.
As part of the scheme and first step, for every 48 shares held in UPL SAS, shareholders will be issued 1000 shares of UPL. The second step involves the vertical demerger of India’s crop protection business from UPL to UPL Global and following which UPL’s shareholders will receive 1 share of UPL Global for each of their 1 share in UPL. As part of the last step of the scheme, the global crop protection business under UPL Cayman will be merged into UPL Global and for every 213 shares of UPL Cayman by its shareholders, 1000 shares of UPL Global will be issued. The scheme is being carried out to simplify the organization structure and create a single entity, UPL Global, which will house the domestic and international pure-play crop protection businesses. On the other hand, UPL will continue to house the formulation business, and will operate as a strategic parent, which will also incubate and scale up new businesses, with cash flows upstreamed from support flatforms (crop protection, seeds and specialty chemicals). Crisil Ratings expects there will be no material impact on the credit profile of UPL, considering the scheme is being implemented within its subsidiaries.
UPL currently holds 91% in UPL SAS and 78% in UPL Cayman. Post completion of the scheme of arrangement, UPL through UPL Corp is set to hold ~65.7% while UPL’s promoters will hold ~5.8% and rest will be with public shareholders including private equity investors. Also, as a result of the scheme, promoter shareholding in UPL will reduce to 33.09% from the present level of 33.51%.
The appointed date for the first step of the scheme (UPL SAS into UPL) shall be opening of business hours on April 1, 2026, whereas the appointed date for the Demerger (Demerger of India crop protection business from UPL into UPL Global) and Merger 2 (UPL Corp into UPL Global) will be the Effective Date as defined in the scheme. The scheme of Arrangement has been filed with the stock exchanges and is subject to the approval of shareholders, several statutory and regulatory authorities, while the completion is expected to be carried out over the next 12-15 months. The indicative timeline for listing UPL Global shares is June 2027. On proforma trailing 12 month basis in 2025, UPL Global’s revenues are estimated at ~Rs.40000 crore and operating profitability at 15.5%. Net debt to earnings before interest, depreciation, tax and amortization (EBITDA) ratio for UPL Global is expected at ~2-2.30 times during year of its listing.
UPL’s consolidated operating revenues grew by 7.8% to Rs 33504 crore during nine months ended fiscal 2026 from Rs 31064 crore in previous corresponding period supported by healthy volume demand across all regions for the crop protection and seeds business, and favorable exchange rates. Operating profitability also improved to 17.1% during the period supported by better operating leverage and lower input prices. Crisil Ratings expects that UPL’s revenue will grow by high single digits in fiscal 2026 and over the medium term, supported by steady demand across regions supporting the volume growth. Operating profitability is expected to improve to 17-18% in fiscal 2026, albeit will remain lower than 18-20% registered by the company up to fiscal 2023. Gradual improvement in operating profitability too is expected over the medium term.
UPL’s financial risk profile remained healthy and continues to improve, though net debt levels remained higher at Rs 23,317 crore at the end of December 31, 2025 compared with Rs.15,172 crore as of March 31, 2025. The increase is partly due to slightly higher working capital requirements which are expected to normalize by the end of this fiscal. The company raised USD 400 mn by way of a rights issue, in 2 tranches equally in fiscal 2025 and 2026. Besides, UPL also divested 12.5% stake in its seeds subsidiary, Advanta Enterprises Ltd (AEL, rated ‘Crisil AA+/Negative’) to a leading global investment fund, Alpha Wave Ventures, for a total consideration of USD 350 million, which included USD 250 million in form of secondary sale of shares by UPL and USD 100 million as primary infusion in AEL. These funds with existing surpluses together were utilized to prepay the USD-denominated Perpetual Subordinated Capital Securities (bonds) of $400 million. UPL’s net worth is expected at over ~Rs.28,000 crore at March 31, 2026, while debt levels are also expected to reduce, due to normalization of working capital cycle and partly due to non-recourse securitization of receivables and a repayment of USD 500 million due in March 2026. Further, the ratio of net debt to EBITDA is set to decline to ~1.8 time in fiscal 2026 from 1.94 times in fiscal 2025 (5.3 times in fiscal 2024), while interest coverage is estimated at above 3 times.
UPL is expected to incur annual capital expenditure (capex) of Rs 2,500 crore over the medium term, which will be met by cash accruals and existing surpluses. Cash surpluses stood at Rs 5147 crore as of December 31, 2025 compared to Rs 9,857 crore as on March 31, 2025. The company has sizeable debt obligations of USD 900 mn (USD400 mn in September 2026 and remaining in December 2026) and USD 750 mn in fiscal 2028, respectively, which may require part refinancing. AEL has filed its draft red herring prospectus (DRHP) with the Securities Exchange and Board of India (SEBI) and listing proceeds through offer for sale process generated by UPL may be utilized to pare down debt obligations. Timely refinancing of debt obligation, including raising new debt with extended maturity in case of delay in raising funds from AEL, will remain critical. Net Debt to EBITDA ratio is expected at ~1.4-1.6 times over the medium term, given healthy annual cash generation. |
Analytical Approach Crisil Ratings has combined the business and financial risk profiles of UPL and its subsidiaries, collectively known as UPL. This is because all these companies are under a common management and have close operational linkages and fungible cash flow. Crisil Ratings follows a moderate integration approach for investment in associates and joint ventures in which UPL has significant influence but not a controlling interest—specifically, Crisil Ratings factored in UPL's share in the profit of these entities and any incremental investment required.
Goodwill on the acquisition of Arysta which was acquired in fiscal 2019 is being amortised over 15 years commencing from fiscal 2019. Consequently, reported profit after tax (PAT), networth and ratio computations are adjusted.
USD-denominated Perpetual Subordinated Capital Securities (bonds) of $400 million (interest coupon rate of 5.25% per annum) raised by UPL Corporation Ltd (subsidiary of UPL) was treated as 50% debt and 50% equity till fiscal 2025. With UPL exercising the option to call the perpetual bonds in May 2025, the treatment was discontinued from fiscal 2026 onwards.
Non-recourse factoring of receivables has not been treated as debt.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers - Strengths Large scale with diverse geographical presence: UPL is among the top five players in the global agrochemical industry. The revenue base is well diversified with ~67% generated from LatAm, Europe and North America as of nine months of fiscal 2026, from ~70% in earlier fiscals indicating the UPL’s geographical diversification. Wide geographical reach reduces susceptibility to cyclicality in demand from any one region. The company is also the leading agrochemical player in the domestic market, which contributed less than 15% to its turnover in the current fiscal. UPL has grown organically as well as through inorganic acquisitions over the years, the largest being that of Arysta, which strengthened its position as a leading global agrochemical player.
Wide product portfolio: UPL is also present across the crop lifecycle from seeds, seed-treatment products, pre- and post-harvest products to storage-treatment products. This ensures low business volatility compared with peers with a less diversified portfolio. The business risk profile remains healthy, aided by a portfolio of more than 15,000 registrations, more than 1,800 product formulations and more than 3000 patents. UPL is present in 140+ countries with 43 manufacturing locations, employing more than 12,000 people across the globe.
Adequate operating efficiency, supporting profitability: Backward integration and supply-chain management have strengthened operating efficiency, which along with steady revenue growth translated into healthy operating profitability of 19-21% between fiscals 2018 and 2023. As a sizeable portion of raw material and power requirement is met in-house, the group is assured a steady supply with less price volatility. Flexible and multi-product manufacturing facilities, and robust supply chain and distribution network support its profitability.
However, sluggish offtake and pricing pressure exacerbated by cheap Chinese supplies, had forced industry players, including UPL, to offer rebates, impacting realisation and operating profitability in fiscal 2024. With the write-down of inventories, low rebates with selling closer to season, and demand picking up gradually, the operating profitability of UPL increased to 16.8% in fiscal 2025 from 10.4% in fiscal 2024. Further improvement in the operating profitability to 17-18% is expected in fiscal 2026, owing to better demand, lower input prices, healthy product mix and the intrinsic strength of UPL’s established product profile. A gradual improvement in operating profitability is expected thereafter. |
Key Rating Drivers - Weaknesses Average but improving financial risk profile: UPL’s financial risk profile is average, but gradually improving, with its net worth is expected to cross Rs.28,000 crore by March 31, 2026, supported by better cash flows from operations. The acquisition of Arysta in fiscal 2019 was funded through substantial debt (~$3 billion), which led to gross debt of ~Rs 29,000 crore as on March 31, 2019, and resulted in moderation in the debt protection metrics. Debt peaked at ~Rs 30,200 crore as on March 31, 2020, and thereafter reduced by ~Rs 5,000 crore a year later, supported by strong operational cash generation and partial pre-payment. The gross debt then increased by ~Rs 2,500 crore in fiscal 2022, mainly on account of high working capital requirement and then declined by Rs 2,880 crore to Rs 24,379 crore as on March 31, 2023, supported by cash flow from stake sale in some of its businesses, and increase in non- recourse factoring.
While the debt was expected to reduce further due to prudent capex spend, gross debt increased to Rs 29,331 crore as on March 31, 2024, owing to modest cash generation, stretched working capital cycle and reduced non-recourse factoring. Due to modest performance in fiscal 2024, net debt to Ebitda and interest coverage ratios were 5.3 times and 1.2 times, respectively, compared with below 2 times and 3.6 times, respectively, in fiscal 2023. Improved cash generation due to better performance and better management of working capital, and proceeds from the rights issue and divestment, led to the net debt to Ebitda ratio declining to 1.94 times in fiscal 2025.
Due to loans raised for acquisition of Arysta, and subsequent refinancing of part of the loans, UPL has sizeable upcoming debt maturing viz. USD 500 mn in March 2026, USD 400 mn in September 2026, and USD 500 mn in December 2026. Besides, it also has repayment obligations of USD 750 mn in fiscal 2028. While maturing obligations in March 2026 are likely to be met from accruals and cash surpluses, other repayment obligations may require part refinancing. Besides, proceeds from IPO of AEL may also be utilized to pare down debt. The company’s management has a demonstrated track record of raising sizeable funds to meet forthcoming debt obligations and hence is expected to be able to arrange for necessary funding in a timely manner. With the retirement of perpetual debt and regular debt repayment, net debt to Ebitda ratio is set to further improve to ~1.7 times in fiscal 2026, and continue improving thereafter.
UPL Corporation’s minority investors, ADIA and TPG, each with ~11% stake, who had invested in UPL Corporation to support the acquisition of Arysta have the option to sell their stakes, to which UPL has the right of first refusal. These stakes have now moved to UPL Ltd, Cayman under the recent restructuring. Post the proposed scheme of Arrangement, these private equity investors will hold shares in new listed entity, UPL Global.
Large working capital requirement: The crop protection business is seasonal in nature. Sales occur at the start of the season, but payment is realised post-harvest, resulting in stretched receivable cycle. Furthermore, as goods are manufactured in one place and distributed to other locations, a sizeable stock of finished goods needs to be maintained. The large credit required by customers in key LatAm markets also leads to a stretch in the working capital cycle. In the third quarter of fiscal 2025, on account of competitive intensity and high interest costs, one of the large dealer filed for bankruptcy and UPL had provisioned USD 15mn on account of the same. However, there has been no such instances subsequently. Although, UPL will contain the exposure to markets with long credit cycle to less than one-third of its revenue and utilise securitisation benefits (without recourse) wherever available, thereby mitigating the impact of a stretched cycle on the overall credit profile.
Susceptibility to risks inherent in the agrochemicals sector: The crop protection sector remains susceptible to specific and separate registration processes in different countries, and to various environmental rules and regulations. Changes in regulatory requirement such as export and import policies, and environmental and safety requirement in countries where the company has significant exposure, could weaken the growth prospects. Tariffs levied by US will also bear watching in the road ahead. Furthermore, the sector is highly dependent on monsoon and the level of farm income. Hence, timing and distribution of rainfall during a year plays a crucial role. This is somewhat mitigated by the geographically diverse base of UPL. |
Liquidity Strong UPL has cash and cash equivalents of Rs 5147 crore as of December 31, 2025 and is expected to sustain the surplus of Rs 6000-6500 crore going forward. The utilisation of domestic fund-based working capital limits of Rs 2082 crore was modest at 12% (of total drawing power) on average for the twelve months through January 2026. The annual capex of around Rs 2,500 crore is expected to be funded by expected internal accruals of Rs 4,500-5,000 crore while no long-term debt addition is expected.
UPL has debt obligations of USD 500mn falling due in March 2026, which will be met with existing surpluses and internal accruals. For next fiscal, total debt obligation is around USD 900 mn, out of which USD 400 mn is due in September 2026 and USD 500mn in December 2026, which will require part refinancing. Another USD 750 mn is due for repayment in fiscal 2028. Timely refinancing of debt obligation, including raising new debt with extended maturity, will remain critical, as internal accruals may not entirely suffice. Also, proceeds from IPO of AEL may be utilized to pare down debt.
Crisil Ratings expects UPL will refinance the required portion of their sizeable forthcoming debt obligations, given past instances of successfully arranging for similar refinancing, ahead of actual repayment. |
ESG Profile Crisil Ratings believes that UPL’s ESG profile supports its already strong credit risk profile.
The agrochemical sector has a high impact on the environment because of high greenhouse gas (GHG) emissions, water use and high hazardous waste generation by its core operations. The sector has a social impact because of its large workforce and has an impact on the health and well-being of its workers and local community on account of the nature of operations.
UPL has undertaken various initiatives and efforts towards mitigating its environmental and social impact and strengthening its ESG profile.
Key ESG highlights:
There is growing importance of ESG among investors and lenders. The commitment of UPL to ESG principles will play a key role in enhancing stakeholder confidence, given the high share of market borrowing in its overall debt and access to both domestic and foreign capital markets. |
Outlook Negative While UPL’s business risk profile is gradually strengthening with the recovery in agrochemical sales in India and overseas, cash generation is also benefitting from improved profitability, which is expected to sustain over the near to medium term. Due to large debt stock for the acquisition of Arysta and working capital intensive nature of operations, debt protection metrics are at average levels, though gradually improving. Hence, sustained improvement in debt metrics will be critical for improvement in UPL’s credit profile. |
Rating sensitivity factors Upward factors
Downward factors
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About the Company Incorporated in 1969 and promoted by Rajnikant Shroff, UPL manufactures, markets and distributes crop protection products, intermediates, specialty chemicals and other industrial chemicals; and undertakes research in these segments. Over time, UPL has made several acquisitions and entered strategic alliances to diversify its product profile and increase geographical reach. UPL now includes over 200 entities. Apart from UPL, the other key operating companies in the group are UPL NA Inc (US), UPL Europe Ltd (UK), UPL Agro SA DE CV (Mexico), UPL Argentina SA (Argentina), UPL France, UPL Italia SRL, UPL South Africa PTY Ltd and UPL do Brasil Industria e Comercio de SA (Brazil). UPL group has manufacturing units in India, France, Argentina, the UK, Vietnam, Turkey, Brazil, the USA, China, Thailand, Italy, Australia and Columbia. |
Key Financial Indicators
^Crisil Ratings-adjusted numbers for treatment of goodwill |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
& - Fully interchangeable between cash credit, working capital demand loan, foreign currency non-resident (Bank) loans, packing credit in INR, packing credit in foreign currency, export bill discounting in INR and foreign currency, buyer's credit for imports and domestic purchases, and domestic sales bill discounting. It can also be converted into non-fund-based facilities.
< - Fully interchangeable with Non-fund based facilities
^^ - It can be converted into non-fund-based facilities
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Annexure – List of entities consolidated
*As of March 31, 2025 |
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Criteria Details
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