Sigachi’s Credit Rating Under Watch as Fire Fallout Raises Financial Concerns

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Care Ratings has placed Sigachi Industries Ltd under ‘Rating Watch with Negative Implications’ following a devastating fire at its Hyderabad facility on June 30, 2025. The incident has triggered operational disruptions and raised questions about shortterm financial stability.

Revised Ratings and Rationale

Longterm bank facilities downgraded from Care A Stable to Care A RWN.
Combined longterm/shortterm facilities revised to Care A/Care A2 (RWN).
The Hyderabad unit, contributing nearly 20% of total revenue, was severely damaged, impacting production and profitability.

Operational and Financial Impact

Sigachi plans to offset losses by ramping up capacity at its Gujarat units (Dahej and Jhagadia), currently operating at 85% utilization.
The company is exploring a 3,300 MTPA expansion at these sites with minimal capital outlay.
Onetime expenses include ₹1 crore ex gratia compensation per deceased employee, medical support, and fixed overheads.

Liquidity and Insurance Coverage

Sigachi holds ₹40 crore in free cash and ₹30 crore in unutilised working capital limits.
Insurance coverage includes structural damage, inventory loss, and 90day production disruption.

Outlook and Monitoring

Care Ratings will reassess once clarity emerges from ongoing investigations and recovery efforts.
Profitability and free cash flows are expected to dip temporarily due to compensation and operational strain.

This rating revision underscores the importance of contingency planning and operational resilience in manufacturingheavy sectors.

Sources: The Hindu, Business Today, CARE Ratings, JM Financial Services, Bazaar India.