India Glycols Limited (IGL) announced that CARE Ratings Limited has reviewed its long-term and short-term facilities following the proposed scheme of arrangement. Key facilities remain on ‘Rating Watch with Developing Implications’ (RWD). Notably, the non-fund-based LT-Bank Guarantee rating was Withdrawn. The company expects its net debt to PBILDT ratio to decline to the 2.5x-3.0x range by FY27, supported by business restructuring and steady profitability.
Credit Rating Review Following Restructuring
India Glycols Limited (IGL) has provided an update on its credit ratings following a comprehensive review by CARE Ratings Limited, largely driven by the composite scheme of arrangement announced by the company. This restructuring involves demerging the biofuel (BF) and potable spirits (PS) undertakings into IGL Spirits Limited (ISL), and the bio-pharma (BP) undertaking into Ennature Bio Pharma Limited (EBL).
Instrument-wise Rating Status
The review resulted in the following key actions on the rated facilities:
- Fund-based – LT-Term Loan (₹1229.79 Crore): Rating assigned as CARE A-; RWD, placed on Rating Watch with Developing Implications.
- Fund-based – LT/ ST-Working Capital Limits (₹450.00 Crore): Rating assigned as CARE A- / CARE A2+; RWD.
- Non-fund-based – ST-BG/LC (₹850.00 Crore): Rating assigned as CARE A2+; RWD.
- Fund-based LT-Bank Guarantee (₹0.00 Crore): Rating Withdrawn.
Rationale and Future Projections
The placement on Rating Watch reflects the need to monitor the implications of the demerger, which is expected to be completed within six months, subject to regulatory approvals. Post-restructuring, IGL will focus on its glycols and new specialities units, effectively becoming a pure chemical manufacturer.
Financial Risk Profile Improvement
The company is focused on consolidating performance and strengthening debt coverage metrics. Following a ₹467 crore preferential issue utilized for debt reduction in Q3FY26, total debt reduced significantly. CareEdge Ratings anticipates that adjusted overall gearing will decline to ~0.7x by FY26-end, with net debt to PBILDT expected to reduce to the 2.5x-3.0x range in FY27 onwards.
Key Strengths and Segments
IGL continues to benefit from diversified revenue streams across four major segments: BSPC, PS, BF, and EB. The company remains the largest manufacturer of bio-based glycols.
- PS Segment (Potable Spirits): Remained the primary profit contributor, recording a 25% revenue growth to ₹1,163 crore in FY25.
- BSPC Segment (Chemicals): Contributed 36% of revenue in FY25 (₹3,748 crore total revenue), with EBIT margin improving to 9.33%.
Rating Sensitivities
Positive rating action would require a sustainable improvement in debt coverage, with net debt to PBILDT falling below 3.5x. Conversely, negative pressure may arise from incremental debt or profitability deterioration leading to net debt to PBILDT remaining above 4.50x by FY26-end.
Source: BSE
