CRISIL Revises Laxmi Organic Industries' Outlook to Negative, Maintains AA Rating

Laxmi Organic Industries Ltd. has announced a significant update to its credit rating, as reported by CRISIL Ratings Limited. The rating agency has revised its outlook on the company's long-term bank facilities while maintaining its overall rating.

Key Rating Changes

Facility Type	Previous Rating	New Rating	Outlook
Long-term bank facilities	CRISIL AA	CRISIL AA	Negative (Revised from Stable)
Short-term bank facilities	CRISIL A1+	CRISIL A1+	Reaffirmed
Commercial paper	CRISIL A1+	CRISIL A1+	Reaffirmed

Impact and Implications

The revision of the outlook to 'Negative' from 'Stable' for Laxmi Organic Industries' long-term bank facilities suggests that CRISIL perceives an increased risk in the company's credit profile. This change could potentially impact the company's borrowing costs and financial flexibility in the future.

However, it's important to note that CRISIL has reaffirmed the 'CRISIL AA' rating for the long-term facilities. This rating indicates a high degree of safety regarding timely servicing of financial obligations and very low credit risk.

The reaffirmation of the 'CRISIL A1+' rating for both short-term bank facilities and commercial paper is a positive sign. This rating represents the highest level of safety in the short term, indicating that the company's ability to meet its short-term obligations remains very strong.

Disclosure and Transparency

In compliance with SEBI regulations, Laxmi Organic Industries promptly disclosed this rating update to the stock exchanges. The company has also provided a link to CRISIL's detailed rationale behind the ratings, demonstrating transparency in its communications with stakeholders.

Investors and stakeholders are advised to review the full rating rationale available on CRISIL's website for a comprehensive understanding of the factors influencing this rating action.

As the market digests this news, it will be crucial to monitor any potential impacts on Laxmi Organic Industries' stock performance and future financial strategies.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
+0.35%	-2.62%	-9.86%	-6.47%	-25.43%	+11.51%

Laxmi Organic Industries Limited has initiated a postal ballot seeking shareholder approval for two key matters: the re-appointment of an Independent Director and the reallocation of QIP funds. This follows the company's earlier confirmation of no deviation in the utilization of its Qualified Institutional Placement (QIP) proceeds from the stated objectives in the placement document dated October 10, 2023.

Director Re-appointment

The company proposes to re-appoint Dr. Rajeev Vaidya as Independent Director for a second three-year term from November 25, 2025 to November 24, 2028. Dr. Vaidya brings 33 years of chemicals industry experience and previously served as Global President at DuPont Building Innovations.

QIP Fund Reallocation

Laxmi Organic Industries is seeking approval to reallocate ₹109.58 million of unutilized proceeds from its October 2023 QIP issue. These funds, originally allocated for the Mahape innovation center project, will be redirected to the Dahej manufacturing facility project due to cost savings achieved in the Mahape project.

QIP Fund Utilization

According to the monitoring agency report by India Ratings Research Private Limited for the quarter ended September 30, 2023, the company has adhered to its stated objectives for the QIP funds. The QIP raised ₹2,591.21 million for three main purposes:

Purpose	Original Allocation (₹ million)	Utilized (₹ million)	Unutilized (₹ million)
New innovation center at Mahape MIDC	360.01	250.43	109.58
New manufacturing facility at Dahej, Gujarat	1,619.66	1,383.38	236.28
General corporate purposes	500.97	506.05	0.00
QIP issue expenses	110.57	105.49	0.00

Timeline Extension

The revised timeline for utilizing Dahej project proceeds has been extended to June 30, 2026. This extension allows for more efficient and phased deployment of funds, aligning with the project's execution schedule.

Project Delays

Both the Mahape and Dahej projects have experienced delays of more than 18 months due to various factors:

Mahape Innovation Center: Limited workspace in the existing structure delayed sequential activities.
Dahej Manufacturing Facility: Delays in obtaining government approval for consent to establish (CTE), which was received on May 23, 2024.

Management Commentary

The company states that the proposed changes will ensure optimal utilization of QIP proceeds, accelerate project execution, and maximize long-term returns for shareholders while supporting the company's growth plans. The management emphasizes that this variation does not introduce any new objectives and remains within the scope disclosed at the time of the QIP.

Financial Impact

Post-utilization of the reallocated proceeds, the company expects an improvement in earnings and operating cash flows over the long term, driven by earlier commissioning/ramp-up and better asset utilization. No adverse impact on liquidity or leverage is anticipated, and there will be no change in the accounting treatment of the proceeds.

Shareholder Voting

The e-voting period for the postal ballot runs from November 7, 2025 to December 6, 2025, with results to be announced by December 9, 2025.

Laxmi Organic Industries Limited continues to monitor its QIP fund utilization closely, ensuring transparency and compliance with regulatory requirements while adapting to changing project needs and market conditions.