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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 705.00 | ACUITE AA | Stable | Reaffirmed | - |
| Non Convertible Debentures (NCD) | 2000.00 | ACUITE AA | Stable | Reaffirmed | - |
| Bank Loan Ratings | 2295.00 | - | ACUITE A1+ | Reaffirmed |
| Commercial Paper (CP) | 400.00 | - | ACUITE A1+ | Reaffirmed |
| Total Outstanding | 5400.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed its long-term rating of 'ACUITE AA' (read as ACUITE double A) and the short-term rating of 'ACUITE A1+' (read as ACUITE A one plus) on the Rs. 3000 Cr. bank loan facilities of Sun Petrochemicals Private Limited (SPPL). The outlook is 'Stable'.
Acuité has reaffirmed its short-term rating of 'ACUITE A1+' (read as ACUITE A one plus) on the Rs.400.00 Cr. Commercial Paper (CP) of Sun Petrochemicals Private Limited (SPPL). Acuité has reaffirmed its long-term rating of 'ACUITE AA' (read as ACUITE double A) on the Rs.2000.00 Cr. Non-Convertible Debentures (NCDs) of Sun Petrochemicals Private Limited (SPPL). The outlook is 'Stable'. Rationale for rating The rating reaffirmation considers the augmentation in operating performance of the company in FY2025 and H1FY2026 supported by strong growth in volumes especially in Bhaskar -1 field. The rating continues to draw comfort from SPPL’s healthy financial risk profile and strong financial flexibility derived from its parent - Shanghvi Financial Private Limited (SFPL). Further, the rating factors the extensive experience of the senior management team in the oil exploration & production (E&P) segment with contracted offtake agreements limiting revenue risk. These rating strengths are however, partly offset by significant ongoing capex plans of the company towards exploration of new fields and company’s foray into renewable projects at Bihar & Telangana which is expected to require substantial investments, timely sourcing, implementation and materialisation of which remains a key rating monitorable. Further, operations remain susceptible towards volatility in forex rates and crude oil price. |
| About the Company |
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Incorporated in 1955, Vadodara based company Sun Petrochemicals Private Limited (SPPL) is Sun Group (SG)’s expansion into the oil and gas exploration & production (E&P) segment. Presently, company has a total of ten E&P assets including four producing assets at Baola, Modhera, Hazira and Gulf of Cambay (Bhaskar-1 field), two developing oil field located in Gulf of Khambhat (Bhaskar-2 - crude oil) and Gulf of Kutch (Bhaskar-3 - natural gas) and four exploratory assets Prabhakar-1, Prabhakar-2, Prabhakar-3, Prabhakar-4, located in Gujarat’s Cambay basin, all with 100 percent participating interest.
About the parent company Incorporated in 1989, SFPL is Mumbai based company primarily engaged in making investments in various asset classes, viz, debt, listed and unlisted equity, real estate, etc. SFPL is the holding company for Sun Pharma Group, holds ~40 per cent in Sun Pharmaceutical Industries Limited as on March 31, 2025. |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
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Acuité has considered the standalone business and financial risk profile of SPPL while arriving at the rating. Acuité has also factored in the parental support and financial flexibility derived from Shanghvi Finance Private Limited (SFPL).
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| Key Rating Drivers |
| Strengths |
| Established track record and extensive experience of the management in the E&P segment
Since 2014, the company entered into various production sharing contracts with Government of India to carry out development and production of oil & gas business. The upstream operations of the company started with the acquisition of participating interest in the oil fields located in Gujarat and Western Offshore. Further, it signed an agreement in July 2020 with Indian Oil Corporation for offtake of its oil which is benchmarked to the Bonny Light oil index . As on date, the company’s total E & P acreage holding is more than 3,700 sq kms in the state of Gujarat. The production potential from the four fields operated by the company is more than 16,000 barrels of oil equivalent per day. Further, SPPL’s oil E&P operations are headed by Mr. Padam Singh – President, a post-graduate in Chemical Engineering from IIT – Roorkee with over four decades of experience in ONGC, Reliance and GSPC. He is supported by second tier management with experience over three decades from companies such as ONGC and Reliance. Strong financial flexibility and resource mobilization ability of the promoters SPPL is the Sun Group (SG)’s expansion into the E&P segment. SPPL is promoted by Shanghvi Finance Private Limited (SFPL) which holds ~67 percent in SPPL as on March 31,2025. SFPL is the holding and investment company for SG’s flagship company i.e. Sun Pharmaceutical Industries Limited, holds ~40 percent valuing at ~ Rs. 66,228 Cr as on March 31, 2025. The liquid investment and dividends income from SPIL gives the promoters and the promoter group significant financial flexibility. SFPL generated net cash accruals of ~Rs. 1,226.27 Cr. during FY2025 and has a networth of Rs 77,621.88 Cr. as on March 31, 2025. SFPL has provided strong financial and management support to SPPL reflected by infusion of unsecured loans to the tune of ~Rs.586.13 Cr. as on March 31, 25 (Nil as on December 2025) for supporting its operations. Acuité believes that SFPL will continue to provide financial support to the company for smooth running of its operations and capex spends going ahead as and when required. Augmentation in operating performance SPPL has reported significant improvement in its operating performance in FY2025 as reflected by revenues of Rs. 1,719.90 Cr. registering a growth of 38.75 percent from Rs. 1,239.60 Cr. in FY2024. The revenue was driven primarily by higher sales volumes in Bhaskar-1 field, although partially moderated by a decline in crude oil realisations. Further, it has achieved revenue of ~Rs 1,038 Cr. till September 2025. The company has the development and production rights of producing oil in four fields i.e. Bhaskar, Hazira, Baola and Modhera. The Bhaskar oil field remains the major field for its operations contributing to the revenue where it produces oil to the tune of ~10,000 barrels per day (bbls/day) and reached its highest level till date at ~12,198 bbls/day (as on December 5, 2025). This field has nine new wells drilled till December 2025 and another three wells planned by FY2026 end, which would take the total to 46 flowing wells. The operating margins remained healthy at 65.82 percent in FY2025 supported by low operating costs in the range of ~25-30 USD per barrel. Also, PAT margin stood healthy at 50.54 percent in FY2025 as compared to 41.21 percent in FY2024 supported by reduction in finance cost and higher other income sources (mainly consist of share of profit from sale of investment in firms) despite an increase in depreciation cost. Healthy financial risk profile The financial risk profile of the company is healthy marked by healthy net worth, low gearing and healthy debt protection metrics. The tangible net worth increased to Rs. 2,170.56 Cr. as on March 31, 2025 from Rs. 1,291.26 Cr. as on March 31, 2024 mainly on account of accretion of reserves. The total debt of the company increased to Rs 586.13 Cr. as on March 31,2025 from Rs 276.67 Cr. as on March 31, 2024 primarily driven by higher unsecured loans availed from related parties, which remain repayable on demand. Based on that gearing (debt to equity) increased to 0.27 times as on March 31,2025 from 0.21 times as on March 31, 2024. The company’s coverage indicators remained strong, with the interest coverage ratio stood and debt service coverage ratio stood at 29.29 times and 21.69 times respectively as on March 31,2025. Moreover, the company doesn’t have any outstanding borrowings as on December 31,2025.Acuité expects the financial risk profile to remain healthy over the medium term on account of healthy accretion to reserves & absence of debt obligations. |
| Weaknesses |
| Significant capex plans and foray in renewable segment requiring substantial investments
The company has incurred capex of ~Rs 1073.47 Cr in FY2024–25 pertaining to the development of Bhaskar -1, 2 & 3 oil field , and other routine capex (including exploration). Further till December 2025, the company has incurred capex of around Rs.630 Cr. Going forward, the company has plans to explore the oil field and exploratory drilling of Rs ~1000 Cr annually over the medium terms. Moreover, the E&P projects are long gestation ventures, hence timely implementation and materialisation remains a key rating monitorable. Apart from these, company has recently forayed into the renewable segment, signed the MOU with Bihar’s PSP projects for 6,973 MW for Rs 5,200 Cr in the hilly areas of Nawada district. Also, it has signed a MOU with the Government of Telangana to establish three pumped storage hydro power projects in the districts of Nagarkurnool, Mancherial, and Mulugu in Telangana with a combined capacity of 3,400 MW and integrated solar power plants with capacity of 5,440 MW at an estimated investment of Rs 45,500 Cr. Both projects are currently at nascent stage of operations. Therefore, the company’s significant capex spends along with its implication on operational and financial cash flows over the medium term remains a key monitorable. Susceptibility of margins to fluctuations in the oil prices and forex rates SPPL’s offtake agreement with IOCL is benchmarked to Bonny Light oil price index. This is denominated in US dollars. Any adverse movement in oil prices or forex rates will directly impact the SPPL’s margins as the revenues will decline without any corresponding decrease in production costs. |
| Assessment of Adequacy of Credit Enhancement under various scenarios including stress scenarios (applicable for ratings factoring specified support considerations with or without the “CE” suffix) |
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Acuite believes that, given the adequacy of the financial support from SFPL , SPPL will be able to service its debt on time, even in a stress scenario.
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| ESG Factors Relevant for Rating |
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The petroleum industry has a significant environmental impact as the upstream operations of the petroleum industry negatively impact biodiversity. The management of toxic waste and reduction of carbon footprint is crucial for this industry. Furthermore, issues such as reducing environmental impact, sustainable supply chain management and achieving energy efficiency are crucial for the extraction industry. The company has policies, and initiatives to reduce air pollutants & waste. Upstream operations of petroleum industry face several social risks, with occupational health and safety being a major concern due to workers' proximity to heavy machinery, chemicals and equipment repair. Human rights and community development are key social issues critical to the extraction industry. Other material issues include product quality and supply chain management. The company has in place initiatives for human rights, community services and workforce health & safety.
For upstream operations in the petroleum industry, regulatory compliance and board oversight are critical issues. Moreover, ethical business practices are key material issues to the extraction industry. SPPL board comprises mix of experienced and knowledgeable members and has company has constituted various forums such as audit committee, nomination & remuneration committee, corporate social responsibility committee and investment committee to handle specific activities and ensure speedy resolution of diverse matters. |
| Rating Sensitivities |
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| All Covenants |
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Currently not available, since these are proposed NCD limits
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| Liquidity Position |
| Strong |
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SPPL's liquidity position remains strong as reflected by a healthy generation of cashflows of ~Rs. 997.98 Cr. in FY2025 with absence of the long-term debt repayment obligation. Going forward , the net cash accruals are expected to remain in the range of ~Rs 1,100 Cr to 1,250 Cr in near to medium terms. The fund-based limit utilisation remained nil and non fund-based utilisation remained ~67.06 percent as on December 10,2025.
Besides, the company has liquidity buffer from unutilised CPs of Rs. 400 Cr. The strong liquidity profile of the company is also supported by the financial flexibility emanating from SFPL in the form of infusion of funds as a when required wherein the unsecured loans stood Rs 586.13 Cr (Nil as on December-25) for smooth running of operations. The cash and bank balance stood at Rs 0.97 Cr and current ratio stood healthy at 1.51 times as on March 31,2025.Acuite believes SPPL to maintain a strong liquidity profile on account of its healthy cash generation and support available from its parent. |
| Outlook-Stable |
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| Other Factors affecting Rating |
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None
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| Particulars | Unit | FY 25 (Actual) | FY 24 (Actual) |
| Operating Income | Rs. Cr. | 1719.90 | 1239.60 |
| PAT | Rs. Cr. | 869.23 | 510.86 |
| PAT Margin | (%) | 50.54 | 41.21 |
| Total Debt/Tangible Net Worth | Times | 0.27 | 0.21 |
| PBDIT/Interest | Times | 29.29 | 9.23 |
| Status of non-cooperation with previous CRA (if applicable) |
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Not applicable
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| Any other information |
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None
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| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Group And Parent Support: https://www.acuite.in/view-rating-criteria-47.htm • Commercial Paper: https://www.acuite.in/view-rating-criteria-54.htm |
| Note on complexity levels of the rated instrument |
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*Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||
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