Press Release August 06, 2026 TOPNOTCH CHEMICALS PRIVATE LIMITED Rating Assigned and Reaffirmed

Product	Quantum (Rs. Cr) (SEBI)	Quantum (Rs. Cr) (Other FSR)	Long Term Rating	Short Term Rating	Regulated By
Bank Loan Ratings	0.00	11.00	ACUITE BBB- | Stable | Assigned	-	RBI
Bank Loan Ratings	0.00	31.83	ACUITE BBB- | Stable | Reaffirmed	-	RBI
Bank Loan Ratings	0.00	7.17	-	ACUITE A3+ | Reaffirmed	RBI
Total Outstanding	0.00	50.00	-	-	-
Total Withdrawn	0.00	0.00	-	-	-

Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.

Rating Rationale

­Acuité has reaffirmed the long-term rating of ‘ACUITE BBB-’ (read as ACUITE triple B minus) and the short-term rating of ‘ACUITE A3+’ (read as ACUITE A three plus) on the Rs. 39.00 Cr. bank facilities of Topnotch Chemicals Private Limited (TCPL). The outlook is ‘Stable’. Acuité has also assigned its long-term rating of ‘ACUITE BBB-’ (read as ACUITE triple B minus) on the Rs. 11.00 Cr. bank facilities of Topnotch Chemicals Private Limited (TCPL). The outlook is ‘Stable’. Rationale for Reaffirmation The rating reaffirmation reflects steady growth in revenues albeit moderation in profitability coupled with a healthy financial risk profile characterized by a comfortable net worth base, moderate gearing levels and debt protection metrics, the liquidity position is adequate. The rating also factors in the group's established track record of over three decades in the pharmaceutical industry, supported by the extensive experience of its promoters and management team. The rating strengths are, however, partially offset by the working capital-intensive operations, fragmented and highly competitive nature of the pharmaceutical industry, which limits pricing flexibility. Additionally, the group's profitability remains susceptible to volatility in raw material prices and competitive pressures, thereby exposing margins to fluctuations.

About the Company

­Incorporated in 1988, Topnotch Chemicals Private Limited (TCPL) is engaged in the manufacture of bulk drug intermediates and specialty chemicals catering primarily to the pharmaceutical industry. The company has established capabilities in the production of anti-bacterial, anti-malarial and anti-foaming agents. TCPL benefits from its long operational track record, established customer relationships and presence in the domestic market. The company's registered office is located in Navi Mumbai, Maharashtra. The company had an aggregate installed manufacturing capacity of 1,200 MTPA. The promoters and shareholders of the company are Mr. Khandu Vishnu Varal, Mr. Vasant Ghisulal Jain, Mrs. Sangeeta Khandu Varal and Mrs. Pinky Vasant Jain.

About the Group

­Incorporated in 1986, Calyx Chemicals and Pharmaceuticals Limited (CCPL) is engaged in manufacturing pharmaceutical ingredients and chemical products catering to diverse end-user industries. The promoters and shareholders of the company are Mr. Khandu Vishnu Varal, Mr. Vasant Ghisulal Jain, Mrs. Sangeeta Khandu Varal and Mrs. Pinky Vasant Jain. The company had an aggregate installed manufacturing capacity of 2102 MTPA. The company's registered office is located in Thane, Maharashtra.

Unsupported Rating

­Not Applicable

Analytical Approach

Extent of Consolidation

•Full Consolidation

Rationale for Consolidation or Parent / Group / Govt. Support

­Acuité has consolidated financial and operational risk profile of Topnotch Chemicals Private Limited (TCPL, the parent company) and Calyx Chemicals and Pharmaceuticals Limited (CCPL) to arrive at the rating. Together they’re referred as Topnotch Group (TG). The consolidation is on account of wholly owned subsidiary, strong operational and financial linkages and similarity in business activities.

Key Rating Drivers

Strengths

Established track record of operations along with experienced management The group has an established presence in the bulk drug intermediates and specialty chemicals industry, with an operational track record spanning over three decades. The group is engaged in the manufacture of pharmaceutical ingredients, including anti-bacterial, anti-malarial, and anti-foaming agents. The operations are overseen by experienced promoters and directors, and their experience has supported the group's business growth, operational stability, and the development of enduring relationships with customers and suppliers. Acuite believes that the group's established track record, experienced management team, and long-standing relationships with stakeholders will continue to support its business risk profile over the medium term. Steady growth in revenue albeit moderation in profitability The group registered growth in its scale of operations, with revenue increasing to Rs. 429.22 crore in FY2026 (Prov.) from Rs. 302.97 crore in FY2025 and Rs. 263.13 crore in FY2024. The growth was driven by higher sales volumes, supported by healthy demand from end-user industries. Further, the group reported revenue of Rs. 121.55 crore (before inter-company transaction adjustments) in Q1FY27, as against Rs. 95.41 crore in Q1FY26. Despite robust growth in revenue, the group's operating profitability moderated during FY2026 (Prov.), with the EBITDA margin declining to 8.96 percent from 9.71 percent in FY2025 and 16.22 percent in FY2024. The decline was primarily driven by elevated raw material costs and lower realizations in the API segment, which constrained margin expansion despite higher sales volumes. Despite the moderation in operating profitability, the group's PAT margin improved to 4.97 percent in FY2026 (Prov.) from 4.08 percent in FY2025, primarily owing to reduced finance costs. Acuite believes that the ability of the group to improve its scale of operations while improving the profitability margins will remain a key rating sensitivity factor. Healthy Financial Risk Profile The group's financial risk profile remains healthy, characterized by a healthy net worth, moderate leverage, and comfortable debt protection metrics. The tangible net worth of the group improved to Rs. 171.55 Cr. as on March 31st, 2026(Prov.) and Rs. 150.21 Cr. as on March 31st, 2025. The improvement in tangible net worth is on account of accretion of profits. The gearing (Debt to Equity) of the group improved and stood at 0.59 times as on March 31st, 2026(Prov.), against 0.72 times as on March 31st, 2025, primarily owing to a reduction in overall debt levels during the year, coupled with accretion to reserves through retained earnings. As on March 31, 2026 (Prov.), the group's total debt stood at Rs. 100.59 crore, comprising short-term borrowings of Rs. 76.97 crore, long-term borrowings of Rs. 12.80 crore, current maturities of long-term debt (CPLTD) of Rs. 10.69 crore, and unsecured loans from promoters/directors aggregating Rs. 0.90 crore. Debt protection metrics – Interest coverage ratio and debt service coverage ratio stood at 3.79 times and 1.72 times in FY2026(Prov.), respectively as against 2.67 times and 1.29 times in FY2025, respectively. The Total outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 1.36 times as on March 31st, 2026(Prov.) and 1.25 times as on March 31st, 2025. The debt to EBITDA of the group improved and stood at 2.50 times as on March 31st, 2026(Prov.), as against 3.18 times as on March 31st, 2025. The Net Cash Accruals/Total Debt (NCA/TD) stood low at 0.26 times as on 31st March 2026 (prov.) and 0.16 times as on 31st March, 2025. Acuite believes that the financial risk profile of the company will continue to remain healthy over the medium term in the absence of any major debt-funded capital expenditure and steady accruals generation.

Weaknesses

Intensive Working Capital Operations The group's working capital operations remain intensive in nature, as reflected in the Gross Current Assets (GCA) of 253 days in FY2026(Prov.), albeit improving marginally from 269 days in FY2025. The elevated working capital intensity is primarily attributable to the inventory levels and extend credit to customers. Inventory holding improved to 119 days in FY2026 (Prov.) from 165 days in FY2025, the higher inventory levels in the previous year were primarily driven by the procurement and stocking of raw materials amid elevated input prices to ensure uninterrupted production and protect operating margins from raw material price volatility. With moderation in raw material prices and improved inventory management, inventory levels normalized during FY2026. Debtor days remained relatively high, though improved marginally to 101 days in FY2026 (Prov.) from 106 days in FY2025, supported by timely realization from customers and improved receivables management. The payable period declined to 100 days in FY2026 (Prov.) from 134 days in FY2025. The improvement was mainly on account of a favourable procurement mix, marked by a significant increase in domestic purchases and a corresponding reduction in import dependence during the year. Further, the consolidated fund based average bank limit utilization stood high at ~86.23 percent and non-fund based at 81.67 percent for the six months ended June 2026. Acuite believes that the working capital operations of the company will remain at the similar levels over the medium term. Susceptibility to Fluctuations in Raw Material Prices and Forex Risk The group's profitability remains exposed to volatility in raw material prices and foreign exchange rates, given its reliance on imported raw materials for a significant portion of its procurement requirements. Adverse movements in input prices or currency exchange rates may impact procurement costs and operating margins. While the company does not undertake formal hedging of its foreign currency exposure, the forex risk is partially mitigated through natural hedging arising from import and export transactions. Nevertheless, any significant mismatch between foreign currency inflows and outflows could expose the company to residual exchange-rate risk. ­Regulatory Risk The group remains exposed to regulatory risks inherent in the pharmaceutical industry, which is subject to stringent regulatory oversight and government intervention. The company's manufacturing facilities are required to comply with various domestic and international regulatory standards and are subject to periodic inspections and approvals. Any adverse regulatory observations, non-compliance, or restrictions imposed by regulatory authorities could adversely impact the group's operations, market access, and financial performance. Highly competitive and fragmented industry The pharmaceutical industry remains highly competitive and fragmented, characterized by the presence of numerous organized and unorganized players across various therapeutic segments. The industry is characterized by intense competition and fragmentation, resulting in limited pricing flexibility and modest value addition, thereby exerting pressure on operating margins. The group's ability to maintain its market position, enhance product differentiation, and improve operational efficiencies will remain critical to sustaining its profitability and competitive strength.

Rating Sensitivities

Potential triggers (individual or collective) for an upward rating action:

Sustained growth in the group's scale of operations, while improving the profitability margins. Improvement in working capital management with GCA days reducing to below 200 days and lower reliance on working capital borrowings Improvement in financial risk profile

Potential triggers (individual or collective) for a downward rating action:

Sustained decline in EBITDA margin below 7.5%, indicating pressure on profitability and weakening of the financial risk profile Further elongation in working capital cycle or increased reliance on working capital borrowings. Any substantial increase in debt-funded investments, acquisitions or expansion plans resulting in weakening of the capital structure and debt protection metrics

Liquidity Position

Adequate

­The group's liquidity position is expected to remain adequate over the medium term, supported by cash accrual generation vis-à-vis its debt repayment obligations. The group generated Net Cash accruals (NCA) of Rs. 26.02 Cr. in FY2026(Prov.), while its maturing debt obligations were Rs. 10.69 Cr. during the same period. Going forward, the group is expected to generate net cash accruals of ~Rs. 27.00-30.00 Cr. in FY 2027-28 against of ~Rs. 9.00-10.00 Cr. its maturing repayment obligations. The current ratio of the group stood moderate at 1.30 times as on March 31, 2026(Prov.) as against 1.36 times as on March 31, 2025. The group’s unencumbered cash and bank balances stood at Rs. 0.53 Cr. as on March 31, 2026(Prov.) along with unencumbered fixed deposits of Rs.18.61 crore. The group’s operations remained working capital intensive, as reflected in Gross Current Asset (GCA) of 253 days in FY2026 (prov.) as compared to 269 days in FY2025. Further, the consolidated fund based average bank limit utilization stood high at ~86.23 percent and non-fund based at 81.67 percent for the twelve months ended June 2026. Going ahead, the liquidity position is expected to remain adequate on the back of healthy accrual generation in the near term.

Outlook

­Stable

Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 26 (Provisional)	FY 25 (Actual)
Operating Income	Rs. Cr.	429.22	302.97
PAT	Rs. Cr.	21.34	12.36
PAT Margin	(%)	4.97	4.08
Total Debt/Tangible Net Worth	Times	0.59	0.72
PBDIT/Interest	Times	3.79	2.67

Status of non-cooperation with previous CRA (if applicable)

­Not Applicable

Any Other Information

­None

Applicable Criteria

• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm

Note on complexity levels of the rated instrument

­In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook 04 Jun 2025 Letter of Credit Short Term 5.00 ACUITE A3+ (Reaffirmed) Cash Credit Long Term 25.00 ACUITE BBB- | Stable (Reaffirmed) Term Loan Long Term 8.59 ACUITE BBB- | Stable (Assigned) Proposed Long Term Bank Facility Long Term 0.41 ACUITE BBB- | Stable (Assigned) 06 Mar 2024 Letter of Credit Short Term 5.00 ACUITE A3+ (Reaffirmed) Cash Credit Long Term 25.00 ACUITE BBB- | Stable (Reaffirmed) 02 Feb 2024 Letter of Credit Short Term 5.00 ACUITE A3+ (Assigned) Cash Credit Long Term 25.00 ACUITE BBB- | Stable (Assigned)

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*Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support)

Sr. No. Company Name 1 Calyx Chemicals and Pharmaceuticals Limited 2 Topnotch Chemicals Private Limited

Contacts

Mohit Jain Chief Analytical Officer - Rating Operations Ritika Lalwani Analyst - Rating Operations	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in

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