Thirumalai Chemicals Stirs the Pot with ₹1,000 Crore Debenture Brew

Updated: May 26, 2025 18:31

Image Source: Dalal Street Investment Journal

Thirumalai Chemicals Ltd (TCL), one of India's leading commodity chemicals companies, will consider a issue of non-convertible debentures of ₹1,000 crore (₹1 billion) as part of its ongoing efforts to finance large-scale expansion and to strengthen its capital structure.

Strategic Financing Initiative

The TCL board will discuss the issue of non-convertible debentures worth ₹1,000 crore, intended to support funding for its current and proposed capital expenditure projects.
The decision comes in the wake of heightened capital needs for expansion projects at Dahej (Phase II) and in the US that are intended to diversify the product portfolio of TCL and enhance operating margins on commencement.

Expansion and Growth Plans

TCL's big-ticket capex plans are aimed at consolidating its leadership in the commodity chemical market and minimizing dependence on domestic operations through expansion overseas.
Organic growth is expected to spur future revenue increases and improve profitability through geographical diversification and a wider product range.

Financial and Liquidity Position

While there has been considerable debt-financed capex, TCL has a strong liquidity position, underpinned by available working capital limits and robust cash balances.
The firm has manageable debt repayment commitments for FY2025 and looks forward to better cash flows from new projects in FY2026 and onwards.

Recent Performance Snapshot

In the quarter ended March 2025, TCL registered standalone net sales at ₹578.21 crore, a 16.67% rise over the same period last year, indicating strong operational performance.
The firm's net profit during the period was at ₹37.51 crore, with an earnings per share (EPS) of ₹3.66.

Credit Ratings and Outlook

ICRA has restructured TCL's long-term rating to [ICRA]A. but the outlook is revised to negative due to the debt-funded expansion pressures. and the related execution risks.
The outlook may be revised back to stable if TCL shows sustained margin improvement and working capital management.

Shareholder and Regulatory Updates

Recently, the company conducted a postal ballot exercise. and continues to ensure compliance with SEBI regulations,. again demonstrating good corporate governance.

Conclusion

The planned ₹1,000 crore issue of debentures reflects Thirumalai Chemicals' intent to finance its aggressive growth plan with fiscal prudence. Its investors and stakeholders will keenly watch the decision of the board and TCL's growth projects progress, which are the key drivers of the company's long-term growth chart.

Relevant Sources: ICRA Ratings Report on Thirumalai Chemicals, The Economic Times, Moneycontrol

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