CRISIL Ratings has downgraded the long-term bank facilities rating for Archean Chemical Industries Limited (ACIL) to ‘Crisil A-/Stable’ from ‘Crisil A/Negative’. The total bank loan facilities rated have been enhanced from Rs.265 Crore to Rs.1531 Crore. This action reflects moderations in ACIL’s business risk profile due to lower bromine sales and delayed ramp-up of subsidiary operations, alongside increased debt for a significant semiconductor project.
CRISIL Downgrades Archean Chemical’s Rating
CRISIL Ratings has announced a downgrade of Archean Chemical Industries Limited’s (ACIL) long-term bank facilities rating to ‘Crisil A-/Stable’. This rating was previously ‘Crisil A/Negative’. Concurrently, the total amount rated for these facilities has been significantly enhanced from Rs.265 Crore to Rs.1531 Crore.
Reasons for Rating Action
The rating action is attributed to several factors impacting ACIL’s business and financial risk profiles. Business risk profile has been affected by a moderation in sales volume for bromine in fiscal 2026 and a delayed ramp-up in operations at its subsidiary, Acume Chemicals Private Limited. Additionally, the company’s mud chemical business has also shown lower-than-expected operating profits.
While an increase in demand and improved supply is anticipated for bromine and industrial salt in the current fiscal, the overall business performance is expected to remain lower than initially projected. The financial risk profile is further influenced by substantial debt raised for the silicon carbide (SiC) semiconductor fabrication project, with its cost increasing to approximately Rs.2,500 crore. This project is being undertaken at its step-down subsidiary, SiCSem.
Financial Impact and Outlook
The increased debt for the semiconductor project, coupled with rising working capital needs, is expected to lead to a significant increase in ACIL’s debt. Debt is projected to peak at around Rs.1300-1500 crore by the end of fiscal 2027. With cash flow from the semiconductor project anticipated only after fiscal 2029, debt metrics are expected to deteriorate over the medium term.
ACIL’s liquidity has also moderated, with cash surpluses decreasing. However, the company’s financial flexibility is supported by annual cash generation and available working capital limits. The rating outlook remains ‘Stable’, reflecting CRISIL’s belief that ACIL’s business risk profile will remain stable over the medium term, supported by its market position and cost-efficient operations. Nevertheless, the financial risk profile is expected to remain moderate during the semiconductor project’s implantation phase.
The company has informed the stock exchanges about this rating action, as per the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
Source: BSE
