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Nirma plans Rs 3,500 cr NCDs issue for GLSL acquisition and business growth
Industry News- Dec 19,23
CRISIL, the rating agency, has assigned an “AA” rating to Nirma's proposed NCDs, reaffirming ratings on the company's existing bank facilities and debt instruments.
Nirma, a leading manufacturer of detergents, soaps, and chemicals, aims to raise up to Rs 3,500 crore through non-convertible debentures (NCDs) to fuel its business expansion, including potential acquisitions. The company intends to diversify its operations by acquiring Glenmark Life Sciences (GLSL), with a significant portion of the funding for the acquisition expected to come from debt. This debt issuance is projected to elevate the financial leverage (net debt to Ebitda) to approximately 2.75 times by fiscal 2024.
CRISIL, the rating agency, has assigned an “AA” rating to Nirma's proposed NCDs, reaffirming ratings on the company's existing bank facilities and debt instruments. The agency anticipates the acquisition of GLSL to be finalised in the latter half of fiscal 2024, aligning with the earlier projected timeline.
The rating reflects Nirma's robust business and financial profile. Although the leverage is expected to temporarily increase, it is projected to moderate in the following years. The ratings will be contingent on the management's strategy for de-leveraging.
Nirma has demonstrated a commendable track record of deleveraging over the past three fiscal years, improving the net debt to EBITDA ratio from 2.8 times as of March 31, 2020, to 0.5 times as of March 31, 2023. The company has consistently reduced debt within 2-3 years after significant debt-funded expansions or acquisitions, according to CRISIL.
The company boasts a robust liquidity position, supported by moderately utilised working capital limits and a healthy consolidated liquidity of around Rs 1,800 crore as of March 31, 2023. For fiscal 2024, Nirma is expected to generate annual cash accruals in the range of Rs 1,300-1,500 crore at the consolidated level, with debt repayment estimated at Rs 650-750 crore.
Source: Business Standard
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