Kredence Electronics Materials India Pvt Ltd

Brickwork Ratings assigns the long-term rating of BWR BBB- with stable outlook and short-term rating of BWR A3 for the Bank Loan Facilities of Rs. 34.29 Crs. of Kredence Electronics Materials India Pvt Ltd

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	34.29	Long Term	BWR BBB - /Stable Assignment
	(10.00)	Short Term	BWR A3 Assignment
Grand Total	34.29	(Rupees Thirty Four Crores and Twenty Nine lakhs Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure RATING ACTION / OUTLOOK

Brickwork Ratings (BWR) assigns the long-term rating of BWR BBB- /Stable and short-term rating of BWR A3 for the bank loan facilities of Rs. 34.29 Crore of Kredence Electronics Materials India Pvt Ltd.

The ratings reflect the entity's strong operational track record, supported by experienced promoters Mr. Bharat Bhatnagar and Mr. Sandeep Mathur, who bring 29 and 32 years of industry experience, respectively. The ratings also factor in the entity's strategic partnerships and long-standing customer base serving the renewable energy sector. The entity has a diverse product portfolio consisting of performance chemicals such as Hydrofluoric Acid, Potassium Hydroxide, Hydrogen Peroxide, Nitric Acid, and Phosphorous Oxychloride. The firm holds necessary industry certifications like ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018 which are in place.

However, the ratings are constrained by execution risk associated with the ongoing capex project, susceptibility to raw material price fluctuations, the entity's exposure to forex risks, and geographical concentration risk.

The ratings consider the entity's improving financial performance, reflecting increase in its total operating income from Rs. 98.42 Crs in FY25 to Rs. 182.19 Crs in FY26 (provisional), along with improving operating margins from 10.91% in FY25 to 16.29% in FY26 (provisional). The entity has a tangible net worth stood at Rs. 36.53 Crs in FY26 (provisional). The ratings further consider the comfortable debt coverage metrics with ISCR improving to 10.58 times and DSCR to 8.10 times in FY26 (provisional), along with satisfactory banker feedback received from its sole banker, Kotak Mahindra Bank, confirming satisfactory account conduct with no instances of delay.

KEY RATING DRIVERS

Credit Strengths:

• Qualified and Experienced Management: :

  The entity is led by highly experienced promoters with deep technical expertise in the specialty and performance chemicals industry. Managing Director Mr. Bharat Bhatnagar brings 29 years of experience, supported by Technical Director Mr. Sandeep Mathur’s 32 years of experience. Their extensive backgrounds underpin the firm’s operational execution, product quality, and ability to navigate the stringent demands of solar cell manufacturers and emerging semiconductor industry.

• High Barrier to Entry and Technology Adoption: :

  The firm operates in a highly niche segment manufacturing ultra-pure wet process chemical. With rigorous customer qualification cycles required by semiconductor and solar fabs, combined with strict regulatory compliance for handling hazardous chemicals, create a formidable barrier to entry for new competitors. 

• Stringent Regulatory Compliance: :

  Manufacturing and transporting ultra-high purity, hazardous chemicals (like Hydrofluoric Acid and Sulphuric Acid) require strict adherence to environmental and safety regulations. The firm has successfully established this compliance infrastructure, holding ISO 9001, 14001, and 45001 certifications. 

Credit Risks:

• Raw Material Price Volatility: :

  The firm is exposed to price volatility in key commodity chemical feedstocks such as Hydrogen fluoride, Potassium Hydroxide etc. while also relying on a limited pool of trusted suppliers to ensure the purity standards required by solar photovoltaic manufacturers. Even minor impurities can compromise cell efficiency and longevity, making consistent access to high-quality inputs essential and increasing supply chain concentration risk.

• Geographical concentration Risk: :

  While the entity offers supply throughout India, most of the firm's revenue are highly concentrated in a single state of Gujarat over 60%.

• Foreign Exchange Risk :

  The firm imports a portion of its critical raw materials (Hydrofluoric Acid and Hydrogen Peroxide from Thailand) and is procuring plant & machinery for the ongoing capex project from China. In the absence of a formal hedging mechanism, the entity remains exposed to adverse currency movements, as reflected in the forex loss of Rs.0.26 Crs incurred during FY26. Continued reliance on imports without structured hedging may exert pressure on margins and project costs.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale). BWR has principally relied upon the standalone business and audited financials for the last three years up to FY25 & provisional financials for FY26 along with Projected financials for FY27 & FY28 and clarification/information provided by the entity.

RATING SENSITIVITIES

Upward factors:

• Successful execution of the ongoing project with commencement of envisaged commercial operations within the projected timelines, resulting in optimal reliance on internal accruals and strengthening of the liquidity & leverage profile, shall remain a key monitorable.
• Increase in Revenues above Rs. 300 Crs and beyond, with operating margins above 20%.
• Current ratio to be maintained at acceptable levels.
• Debt protection metrics of ISCR and DSCR to be maintained at present level or higher.

Negative factors:

• Decline in scale of operations and operating margin compression below 15%, resulting in lower profitability and cash accruals.
• Total Debt / TNW rising above 2.5 times and deterioration in debt coverage ratios with ISCR below 3 times & DSCR below 2 times.
• Any material delay in implementation on ongoing project execution vis-a-vis the envisaged completion timelines and/or substantial cost overruns beyond the estimated project cost, resulting in higher-than-expected reliance on bank debt leading to deterioration in leverage & liquidity profile, shall remain key monitorable.

LIQUIDITY INDICATORS - Adequate

Adequate liquidity is characterized by sufficient cushion in accruals vis-a-vis repayment obligations and moderate cash & bank balance of Rs. 14.09 Crs in FY26 (Prov).  Its capex requirements are modular and expected to be funded using debt of Rs. 28.70 Crs for which it has sufficient headroom. The bank funded working capital limits are utilised to the extent of 45.57% for its operational requirement supported by current ratio of 1.38 times in FY26 (Prov) indicating healthy liquidity. During FY26 the company has generated net cash accruals of Rs.21.55 Crs which adequately covers the CPLTD of Rs.0.38 Crs. The company’s projected cash accruals of Rs.30.16 Crs in FY27 is sufficient to cover upcoming term loan obligations of Rs. 5.00 crs in FY27 thus indicating adequate liquidity.

ABOUT THE ENTITY

Kredence Electronics Materials India Pvt. Ltd., incorporated in 2015 under the Companies Act, is headquartered in Vadodara, Gujarat. The entity is promoted by experienced promoters Bharat Bhatnagar, Sandeep Mathur, Deep Patel and Divya Patel, who have deep expertise in chemical solutions for high‑tech industries. The company specializes in manufacturing and supplying high‑purity wet‑chemistry products for solar cell manufacturers and the semiconductor sector. Its portfolio includes photovoltaic‑grade and electronic‑grade chemicals. The entity operates from its advanced facility with capacity exceeding 20GW, supported by in‑house testing and equipped with ISO certifications. The entity has established strategic partnerships with international technology providers serving a broad client base across renewable energy and electronics industries, with a strong focus on quality, sustainability, and long‑term customer relationships.

ESG Profile

Environmental: Environmental risk management indicators for the company show a reliance on external water sources, specifically tanker water. The company operates on a Zero Liquid Discharge (ZLD) system for hazardous waste generation and disposal, which typically indicates a closed-loop approach to water and waste management. Positively, the company has a clean compliance record with zero reported environmental violations or associated financial fines.

Social
Social factors and human capital metrics are driven by a total permanent workforce of 43 employees, with zero contractual staff reported. The workforce gender mix stands at 31 male employees (approx. 72%) and 12 female employees (approx. 28%). Safety performance indicates operational resilience, with no major accidents or fatalities reported over the last three years, although specific safety certifications are not currently held or disclosed. 
the firm is equipped with ISO certification like ISO 9001:2015, ISO 14001:2015, & ISO 45001:2018 & license from Gujarat Pollution Control Board.

In terms of community development, the company actively participates in social spend. During FY25, the company was statutorily required to spend Rs 7.10 lakhs on Corporate Social Responsibility (CSR) but exceeded this mandate by incurring an expenditure of Rs 15.01 lakhs. These funds were allocated specifically focusing on the promotion of education and related initiatives.

Governance
The governance framework is directed by a four-member board (Bharat Bhatnagar, Sandeep Mathur, Deep Hetalkumar Patel, and Divya Hetalkumar Patel. Due to the size and nature of the business, management has not appointed an internal auditor or an external professional agency for internal audits. Despite the absence of an internal audit mechanism, the broader compliance and risk-management systems appear robust based on statutory disclosures. Statutory audits are conducted by Haribhakti & Co. The auditor reports confirm that there are no pending litigations impacting the company's financial position. 

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 23 - 24 (Audited)	FY 24 - 25 (Audited)	FY 25 - 26 (Provisional)
Operating Revenue	Rs.Crs.	67.29	98.42	182.19
EBITDA	Rs.Crs.	8.09	10.74	29.68
PAT	Rs.Crs.	4.48	6.19	18.74
Tangible Net Worth	Rs.Crs.	11.59	17.79	36.53
Total Debt / Tangible Net Worth	Times	1.02	1.51	1.04
Current Ratio	Times	1.58	1.53	1.38

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include standard covenants normally stipulated for such facilities. 

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating  (2026)			2025		2024		2023
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	34.29	BWR BBB-/Stable (Assignment)	NA	NA	NA	NA	NA	NA
FB SubLimit	ST	(10.00)	BWR A3 (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		34.29	(Rupees Thirty Four Crores and Twenty Nine lakhs Only)

Hyperlink/Reference to applicable Criteria

• General Criteria
• Approach to Financial Ratios
• Short Term Debt
• Manufacturing Company

Analytical Contacts
Santosh S K Ratings Analyst santosh.sk@brickworkratings.com	Suryanarayan N Associate Director - Ratings suryanarayan.n@brickworkratings.com
Media Contact | media@brickworkratings.com	Client Support | clientsupport@brickworkratings.com

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)	Complexity of the Instrument
1	Kotak Mahindra Bank	Term Loan - Sanctioned	6.74	_	6.74	Simple##
2	Kotak Mahindra Bank	Term Loan - Sanctioned	2.00	_	2.00	Simple##
3	Kotak Mahindra Bank	Cash Credit - Sanctioned	13.50	_	13.50	Simple##
	Sub-Limit (Working Capital Demand Loan) - Sanctioned		(10.00)
4	Kotak Mahindra Bank	Over Draft - Sanctioned	7.80	_	7.80	Simple##
5	Kotak Mahindra Bank	Dropline OD - Sanctioned	4.25	_	4.25	Simple##
Total			34.29	0.00	34.29
TOTAL (Rupees Thirty Four Crores and Twenty Nine lakhs Only)

## BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.