Thirumalai Chemicals Ltd

GST ITC show-cause

• Show cause notice issued by Assistant Commissioner, CGST and Central Excise, Vadodara.
• Notice relates to non-reversal of ITC on stock difference, audit period April 2020–March 2024.
• Tax demand quantified at Rs 33.47 lakh; interest and penalty amounts not yet ascertained.
• Company will submit its response within prescribed timelines and expects minimal financial impact.

Rating action

• Long-term term loan: rating downgraded to BBB(Negative) from BBB+(Negative).
• Long-term fund-based working capital: rating downgraded to BBB(Negative); enhanced facilities.
• Short-term non-fund-based facilities: rating downgraded to A3+; enhanced amount.
• Unallocated limits (long/short term): rating downgraded to BBB(Negative)/A3+; enhanced amount.
• Non-convertible debentures: rating downgraded to BBB(Negative) from BBB+(Negative).
• Total rated debt increased to Rs 1,404.50 cr from Rs 1,317.55 cr.

Rationale & drivers

• US project cost raised to USD 340m; completion delayed to December 2026.
• Funding through additional debt; leverage and liquidity pressure increase.
• Covenants breached in FY2026; waivers received; monitorable.
• Profitability margins volatile; PAN-OX spreads sensitive to raw materials.
• Liquidity stretched; FY2027 and FY2028 debt repayments.

Outlook & sensitivities

• Outlook: Negative; upgrade only with margin and debt-coverage improvement.
• Positive factors: sustained margin improvement and healthier liquidity.
• Negative factors: inability to improve profitability or liquidity; capex delays.

Financial highlights

• FY2026 OPBDIT/OI: -1.4%; PAT/OI: -9.7%.
• Q1 FY2027 OPBDIT/OI: 6.0%; PAT/OI: -8.0%.
• Cash and equivalents: Rs 63.99 cr as of 31 Mar 2026.

Overview

• Corporate presentation for Q1 FY27 and update on USA expansion.

USA expansion status

• Two integrated plants: 40,500 TPA MAN and 30,000+ TPA food ingredients, commence December 2026.
• Estimated project cost revised to US$340 million due to higher financing costs.
• Mechanical construction completed; commissioning and unit testing underway; financial closure timelines extended.

Q1 FY27 financial highlights

• Q1 FY27 consolidated total income rose 22% YoY to INR 550 crore.
• Consolidated EBITDA turned positive at INR 36 crore; prior year was negative.

Operational highlights

• Dahej PAn facility achieved 95% capacity utilization in Q1 FY27.
• FAC certifications obtained: ISO, Kosher, Halal, and FSSAI.

USA project outlook

• December 2026 start for US MAN/FAc plants; potential competitive advantage.
• Payback about 7 years; capex enables downstream value and market access.

Disposal details

• Target Company: Thirumalai Chemicals Limited.
• Disclosing party: Motilal Oswal Small Cap Fund; MO Multi Cap Fund; MO BSE 1000 Index Fund.
• Not promoter/promoter group: No.
• Transaction Type: Disposal of voting-rights shares.
• Pre-disposal holding: 58,95,373 shares, 4.8903%.
• Disposal details: 1,51,245 shares disposed; 0.1255%; via Market Transactions.
• Post-disposal holding: 57,44,128 shares, 4.7648%.
• Date of disposal: July 17, 2026.
• Equity capital before disposal: 12,05,52,774.
• Equity capital after disposal: 12,05,52,774.
• Total diluted capital after disposal: 12,05,52,774.
• Encumbrance: 57,44,128 shares pledged with acquirer.
• Mode of disposal: Market Transactions.

Dematerialisation status

• Securities for dematerialisation received from DP in quarter ended 30 Jun 2026 were confirmed.
• Securities dematerialised have been listed on the exchanges where the earlier issues are listed.
• Security certificates received for dematerialisation were mutilated and cancelled after verification.
• Depository name substituted as registered owner in records within prescribed timelines.

Overview

• Standalone BRSR for FY2025–26; reporting boundary is standalone; no external assurance.
• Main activity: manufacture of PA and derivatives, Malic Acid, Fumaric Acid.
• Two plants and three offices across five sites.
• Exports 14.29% of turnover; serves 28 states domestically and 33 countries internationally.

Key ESG Risks & Opportunities

• Health & safety risk as a chemical producer; target zero accidents; robust EHS management; potential negative financial impact.
• Water stewardship opportunity; 10% reduction in total water use by 2030; rainwater harvesting program.
• Carbon footprint risk; PNG transition and energy efficiency; plans for renewables and 25% GHG reduction by 2030.
• Governance & regulatory compliance; strong board oversight; zero major violations.
• Product safety & quality risk; rigorous standards and ongoing customer engagement.
• Employee development opportunity; continuous learning and capability building.
• Community support opportunity; CSR initiatives in education, healthcare, resource conservation.
• Zero waste to landfill initiative; improve recovery, reuse; reduce landfill reliance.

Governance & Policy Highlights

• ESG committee established to handle sustainability matters, chaired by the CEO.
• Policies: anti-bribery/anti-corruption, whistleblower, Code of Conduct, equal employment, POSH.
• Stakeholder grievance redressal policy; Business & Human Rights policy; regular ethics trainings.
• Certifications retained: ISO 14001, ISO 50001, FSSC 22000, HACCP, ISO 9001, REACH.
• No significant regulatory violations; full regulatory compliance reported.

Social Responsibility & Workforce

• Total employees including workers: 477; male ~90.6%, female ~9.4%; board female 42.9%.
• Turnover FY2025-26: permanent 19.44%, workers 13.33%.
• LTIFR 0; no fatalities; four sites ISO 45001.
• Health/accident coverage for most staff; maternity benefits for female employees.
• CSR beneficiaries: Thirumalai Charity Trust 51,478; Christian Medical College Vellore 960.

Environmental Performance

• Total energy 548,131 GJ; renewables 126,259 GJ; non-renewables 421,875 GJ; renewables ~23%.
• Water withdrawal 551,650 kl; consumption 549,271 kl; rainwater harvesting 16,839 kl.
• GHG emissions: Scope1 74,585 tCO2e; Scope2 3,774 tCO2e; Scope3 70,679 tCO2e.
• Total GHG intensity: 5.76 TCO2e/M turnover; 0.67 TCO2e/MT; PPP 118.95 TCO2e/M turnover.
• Waste generated: 3,994.59 MT; E-waste 2.65 MT; total hazardous waste 4,909.27 MT; ZLD at Ranipet.

Stakeholder Engagement & Complaints

• Stakeholders: investors, customers, employees, suppliers, communities, regulators; channels include email, website, AGM.
• Shareholders filed 12 complaints in FY2025-26; 0 pending at year end; Customers filed 17; no pending.
• Community engagement via CSR programs; grievance mechanisms available for stakeholders.

Other Notable Metrics

• Sustainable sourcing: ~88% of inputs from suppliers with recognized certifications.
• Purchases from trading houses: 2.18%; top 10 trading houses account for 66.33%.
• Related party transactions: purchases 0.77%; sales 47.19%; loans & investments 100%/99.98%.
• Cybersecurity: Cyber Security Policy; 0 data breaches; POSH and grievance mechanisms in place.
• No product recalls; Green credits generated 0; policy links provided.

Financial performance

• Standalone total income ₹1,39,328 lakh, down from ₹2,18,327 lakh FY25.
• Standalone EBITDA ₹2,013 lakh; margin 1%.
• Standalone PAT ₹-6,540 lakh; FY25 had ₹8,221 lakh.
• Consolidated revenue ₹1,75,423 lakh; Consolidated PAT ₹-16,791 lakh.
• Consolidated PBT ₹-20,179 lakh; tax impact ₹-3,388 lakh.
• Dividend for FY2025-26 not declared.
• Standalone net debt ₹729 crore, up from ₹454 crore.
• Equity raised via two preferential issues totaling ₹365.99 crore.
• Geographic revenue: India ₹1,61,105 lakh; Rest of World ₹12,447 lakh.
• Earnings per share (standalone) negative; consolidated loss per share −₹14.91.

Capital structure & equity

• Equity share capital increased to 12,05,52,774 shares; post-issues.
• Preferential issues: Aug 26, 2025 (₹330 crore) and Dec 23, 2025 (₹35.99 crore).
• Total borrowings ₹2,09,300 lakh consolidated; current ₹52,716 lakh; non-current ₹1,56,584 lakh.
• Consolidated net debt to equity ratio 130%; standalone 50.74%.
• ISIN INE338A01024; BSE code 500412; NSE code TIRUMALCHM.

Debt & liquidity

• Borrowings include term loans, working capital facilities, debentures and buyers credit.
• Covenants breached in 2026; waivers obtained from lenders; classifications remain non-current.
• Refinancing activity ongoing for US project and other facilities.
• Interest rates on bank facilities range roughly 8–11%.
• Liquidity supported by revolving facilities; no forceful reclassification due to covenant breaches.

Major business developments

• Dahej facility now operational and stabilised; supports higher volumes.
• US West Virginia project: pre-commissioning; refinancing underway; completion within 3–4 months.
• Malaysia (Optimistic Organic Sdn Bhd) facing market headwinds; cost control and strategic market realignment.
• Ranipet and Dahej plants provide multi-geo manufacturing footprint across India, Malaysia, USA.

ESG & sustainability

• Ranipet facility: 100% Zero Liquid Discharge; water treated and reused.
• Renewables supplied ~36% of total energy; Scope 1 emissions down 24.3%; Scope 2 down 14.13%.
• Rainwater harvesting 16,839 KL; total water recycled 103,049 KL.
• 2030 sustainability goals: 25% GHG, 10% water, 10% waste reductions from 2022-23 baseline.
• Waste management and circularity initiatives in place; energy recovery and emissions monitoring ongoing.

Governance & compliance

• Board as of Mar 31, 2026: 9 directors; two new independent directors appointed (Meghav Mehta, D. Sabitha).
• Audit Committee chaired by M. Somasundaram; Secretarial audits by RM Mimani & Associates.
• Statutory auditors appointed: PKF Sridhar & Santhanam LLP for 2026-31; five-year term.
• CEO/CFO certificate on financial statements submitted; Board oversight strengthened by robust governance.

Related parties & CSR

• Material related-party transactions with TCL Global BV, TCL Intermediates, TCL Specialties LLC, and TCL Inc.
• CSR spent ₹195.90 lakh; beneficiaries ~25,000; main project with Thirumalai Charity Trust.
• Related-party revenue and balances disclosed; transfers at arm's length; no material conflicts noted.

Shareholder information & AGM

• 53rd AGM scheduled for August 7, 2026 via VC/OAVM.
• Dividend policy: no dividend for FY2025-26; AGM notices and annual report available online.
• Dematerialised shareholding stood at ~99.36% as of 31 March 2026.
• Shareholding pattern shows promoter and group stake; preferential issue affected promoter ownership.

Outlook & risks

• Going concern risk due to net losses and negative cash flows; refinancing plans in progress.
• Market backdrop: subdued global demand; US tariff impacts; supply-chain disruptions persist.
• ICRA downgrade actions for TCL group; ongoing covenant waivers and potential funding needs.
• US project ramp-up and Dahej capacity investments are pivotal for near-term profitability.