CRISIL cuts Archean Chemical Industries' long-term rating to A-/Stable

The rating action in numbers

Reasons given in the rationale

CRISIL says the action follows moderation in the business risk profile. The rationale cites lower bromine sales volume in fiscal 2026, a delayed ramp-up of bromine derivatives at subsidiary Acume Chemicals Private Limited, and lower operating profits in the mud chemical business.

The rationale says the financial risk profile is likely to be affected by sizeable debt raised for the silicon carbide (SiC) semiconductor project through step-down subsidiary SicSem Private Limited. It says the project cost has risen to about ₹2,500 crore from about ₹2,100 crore, mainly because of rupee depreciation against the US dollar and higher procurement costs.

Leverage expected to rise during the project

CRISIL expects net debt to Ebitda to rise to about 3.50-3.80 times, against 1.53 times in fiscal 2026. According to the rationale, the ratio improves only after the semiconductor operations are commissioned, ramped up and stabilised.

The rationale lists downward factors that could affect the rating, including continued moderation in sales volume and realisation, delay in ramping up subsidiaries, operating profitability falling below 15-16%, and higher-than-expected debt levels. CRISIL says its ratings are under continuous surveillance and may be revised or withdrawn at any time.

Other matters in the filing

The Income Tax department conducted search operations at the company and its associate companies in September 2025. Management said the search concluded without material impact on daily operations.

The rationale says the Hajipir, Gujarat plant facilities and land are on leased land, and that the lease term can be extended on mutually agreed duration and conditions. The rating letter says the proposed facilities must be availed within 180 days of the letter, failing which a fresh revalidation letter will be needed.

What the rating action means for Archean Chemical Industries' shareholders

The action lowers the rating one notch to A-, with a stable outlook, and raises the rated bank facilities to ₹1,531 crore. The rationale expects leverage to rise while the semiconductor project is built, and ties any improvement to commissioning and stabilisation of its operations.

The filing does not state the timing or conditions for availing the enhanced facilities, the effect of the action on borrowing costs or lender terms, or the company's own response beyond the income tax search remark. The next dated step in the filing is the 180-day validity window for the proposed facilities.

Reference: Original filing (PDF)