Indian chemical companies are debt-free enough to survive trade wars

Mumbai: A report on India's chemical manufacturing industry, released by India Ratings and Research (Ind-Ra), reveals a surprisingly solid financial foundation. Despite facing global challenges like too much supply worldwide and the recent increase in US trade tariffs, the companies’ bank accounts are strong enough to protect them from sudden economic troubles. Think of it this way: the industry has built a thick financial safety cushion.

Their financial health is clearly getting better. A key measure of debt – how much money a company owes compared to its annual operating income – has fallen significantly. It dropped to 0.9x in the last financial year (FY25) from 1.4x the year before. In simple terms, the industry's total debt is now less than what it earns in a single year, showing a low-risk position.

Another important indicator is their ability to pay interest on loans. For every rupee (₹) of interest they had to pay in the first quarter of the current year (Q1FY26), they earned ₹5.4. This high figure proves they can easily handle their loan payments, giving them a large amount of financial ‘headroom’ or breathing space to absorb unexpected costs or drops in sales.

This strong position is not accidental; it's the result of smart, cautious management. The industry has been careful about spending money. Companies have been paying down their debts by gradually reducing the amount of stock they hold and by limiting major construction projects. Overall spending on new factories and expansions (called capital expenditure, or capex) dropped by 4 per cent last year, with factory building efforts slowing down to 7.1 per cent of revenue. This suggests companies are choosing prudence over aggressive expansion.

The timing of this financial strength is crucial because of new external pressures. Siddharth Rego, an Associate Director at Ind-Ra, explained the situation with the new trade rules. “Chemical companies likely witnessed the impact of increased US tariffs in Q2FY26, although the full impact will be visible only in Q3FY26. This is because the tariffs were increased towards the end of August and there was frontloading of orders and deliveries in the previous weeks,” said Rego. This looming tariff threat to export earnings highlights why a secure balance sheet is vital.

Looking ahead, the manufacturers are also being smart about their long-term investments. Instead of starting large, risky new projects, they are concentrating only on essential maintenance and finishing projects they've already started. Even more telling is their focus on building multi-purpose facilities. This means they are creating flexible factories that can easily switch production if the market for one product collapses, effectively diversifying their risk and offering more operational agility when prices change rapidly.

As a result of this careful approach, most of the industry is financially secure. About 84 per cent of chemical companies are considered to have a moderate credit profile, meaning they can pay their loan interest more than three times over. This suggests widespread stability. However, the report cautions that not every company is safe as about 8 per cent are still struggling financially, and those currently building large new plants might feel a temporary squeeze if market conditions worsen.

While the industry faces tough headwinds from global competition and new US tariffs, the Indian chemical sector's low debt levels and strong cash flow provide a powerful foundation. This financial cushion allows them to manage risks and remain stable throughout the current challenging economic cycle.

Manufacturers signal intent to expand despite persistent constraints

Mumbai: India’s manufacturing sector is showing signs of sustained momentum, with average capacity utilisation holding steady at 75 per cent and more than half of surveyed firms planning to invest or expand operations over the next six months. These findings, drawn from the Federation of Indian Chambers of Commerce and Industry’s (FICCI) latest quarterly survey on manufacturing, reflect cautious optimism across industries despite enduring challenges.

The survey, which covered eight major manufacturing sectors and included responses from both large enterprises and small and medium enterprises (SMEs) with a combined annual turnover exceeding ₹3 lakh crore, found that capacity utilisation levels have remained broadly consistent with previous quarters. Sub-sector data reveals minor variations – machine tools and miscellaneous segments reported higher-than-average utilisation at 77 and 78 per cent respectively, while capital goods and electronics hovered around 70 per cent.

This level of activity, according to FICCI, indicates a stable production environment and a willingness among manufacturers to commit fresh capital. ‘The investment outlook is positive’, the report notes, ‘with over 50 per cent of respondents indicating plans for investments and expansions in the next six months’. This sentiment is echoed across sectors such as automotive, metal products, and textiles, where firms are preparing to scale up capacity in anticipation of stronger domestic demand.

However, the path to expansion is not without friction. Respondents cited a range of constraints that continue to impede growth. Global trade uncertainties – including tariffs, supply chain disruptions, and geopolitical tensions – remain a concern, particularly for export-oriented units. Operational bottlenecks such as raw material shortages, labour availability, and high input costs have also been flagged as persistent issues.

Regulatory hurdles, especially those affecting compliance and approvals for new projects, were mentioned by several firms as a deterrent to timely execution. In some cases, manufacturers reported delays in securing industrial land and navigating environmental clearances, which have slowed down planned investments. A respondent from the capital goods sector noted that ‘uncertainty in demand and financial constraints make further investments difficult’, underscoring the need for more predictable policy support.

Despite these challenges, the survey suggests that access to finance is not a major barrier for most firms. Over 81 per cent of respondents reported sufficient availability of funds from banks for working capital and long-term capital needs. The average interest rate paid by manufacturers stood at 8.9 per cent, with some sectors such as capital goods reporting slightly lower rates.

The broader investment intent appears to be driven by a combination of stable production levels, anticipated demand recovery, and sector-specific policy measures. Recent goods and services tax (GST) rate cuts, for instance, have boosted sentiment in consumer-facing segments, while infrastructure-linked sectors are banking on continued public spending to sustain order flows.

Still, the uneven pace of recovery across sub-sectors calls for targeted interventions. While machine tools and automotive are poised for moderate to strong growth, chemicals and textiles remain cautious, citing cost pressures and limited export visibility. The survey also highlights the need for improved labour skilling, with around 20 per cent of respondents indicating a shortage of skilled workforce in their respective sectors.

India’s manufacturing sector is preparing to invest and expand, but the momentum is tempered by structural and external constraints. The next six months will be critical in determining whether this intent translates into tangible capacity additions, and whether policy and infrastructure can keep pace with industry’s evolving needs.

Microalgae-powered air purification device tackles indoor CO₂ with scientific precision

Mumbai: In a city where air quality concerns often focus on traffic and industrial emissions, a 17-year-old student from Mumbai has turned attention to a quieter but equally pressing issue – indoor carbon dioxide levels. Hridank Garodia, a Grade 11 student at Dhirubhai Ambani International School, has developed Aerovive, a microalgae-based air purification device that directly addresses elevated carbon dioxide (CO₂) concentrations in enclosed spaces.

Garodia’s interest in the problem began with a simple observation: students struggled to concentrate during exams. His research revealed that CO₂ levels in classrooms frequently exceeded 1200–1500 parts per million (ppm), well above the threshold of around 945 ppm where cognitive performance begins to decline. The issue extended beyond schools to offices, clinics, gyms and homes – environments where people spend the majority of their time.

Aerovive offers a biologically driven solution. The compact unit uses living microalgae to absorb carbon dioxide and release oxygen, effectively replicating the air-cleaning capacity of approximately 40 houseplants. Unlike conventional air purifiers that rely on filters or chemical treatments, Aerovive leverages photosynthetic organisms to perform continuous gas exchange. The device has undergone three rounds of prototyping and field testing, supported by researchers at IIT Bombay, and has demonstrated measurable reductions in indoor CO₂ levels.

Hridank Garodia

“We obsess over outdoor pollution, but spend 90% of our time indoors breathing air that’s often worse. Aerovive is designed to make homes, schools and offices healthier – so we can breathe better, think better and live better,” said Garodia.

The innovation has attracted attention from both scientific and commercial quarters. Aerovive was recognised at the IRIS National Science Fair and presented at the ICSEAT International Conference. It has also secured a ₹10 lakh Letter of Intent (LoI) for deployment in Mumbai’s largest office park, indicating early interest in scaling the technology for corporate environments.

Garodia’s work extends beyond the device itself. Through The Invisible Heroes Lab, he has developed a 15-session educational programme that introduces students to the unseen biological systems – algae, fungi and bacteria – that underpin environmental health. The initiative has reached over 1,000 students through workshops across Mumbai, with plans to engage hundreds more in the coming year.

The broader ambition is to integrate Aerovive into clinics, schools and corporate campuses, while expanding the educational outreach nationwide. Garodia’s approach combines scientific rigour with a focus on human wellness, positioning clean indoor air not just as a technical challenge but as a public health priority.

His efforts have earned recognition from institutions including National Geographic, where he received the Cultivating Empathy for Earth Award, and the World Science Scholars programme under physicist Brian Greene. Mentorship from experts at IIT Bombay and Harvard has helped refine both the technical and educational dimensions of his work.

Aerovive’s uniqueness lies in its biological foundation. While air purification technologies typically rely on mechanical filtration or ionisation, this device uses a living system to perform gas exchange – a method that is both energy-efficient and scalable. Its design reflects a growing interest in biomimicry and nature-based solutions to environmental challenges, particularly in urban settings where space and energy constraints limit traditional approaches.

Garodia’s innovation arrives at a time when indoor air quality is gaining renewed attention, especially in the context of post-pandemic health and workplace design. By focusing on CO₂, a gas often overlooked in indoor pollution discussions, Aerovive addresses a subtle but significant factor affecting cognitive function and overall wellbeing.

As the device moves toward broader deployment, its success will depend on sustained performance, ease of maintenance and cost-effectiveness. But its early reception suggests that biologically inspired solutions may have a growing role in how cities manage air quality – not just outdoors, but in the spaces where people live, learn and work.

NBFCs expand gold loan portfolios despite losing market share

Mumbai: Non-Banking Financial Companies (NBFCs) are poised to record robust growth in their gold loan portfolios in the current financial year, even as their share of the organised market continues to shrink. According to a recent report by ICRA, NBFCs’ assets under management (AUM) in the gold loan segment are expected to grow by 30–35 per cent in FY2026, driven largely by elevated gold prices and a slowdown in unsecured lending.

The organised gold loan market is projected to reach ₹15 trillion by March 2026, a year ahead of previous estimates. This acceleration is attributed to the sustained rise in gold prices, which has boosted the value of collateral and increased demand for loans secured by gold jewellery. Despite this expansion, NBFCs’ share of the market has declined steadily, falling to 18 per cent as of March 2025 from 22 per cent in March 2021. Banks now dominate the segment, accounting for 82 per cent of total organised gold loan AUM.

ICRA notes that NBFCs have maintained strong growth momentum, with their gold loan AUM reaching approximately ₹2.4 trillion by June 2025, a year-on-year increase of around 41%. However, this growth has not translated into a larger market share, as banks have expanded more aggressively. Over the six-year period from FY2020 to FY2025, bank gold loan AUM grew at a compound annual rate of 26 per cent, compared to 20 per cent for NBFCs.

The concentration of gold loan assets among NBFCs remains high, though it is gradually dispersing. The top four NBFCs accounted for 81 per cent of the segment’s AUM in March 2025, down from 90 per cent in March 2022. This suggests that smaller players are beginning to gain ground, albeit slowly.

One notable trend is the divergence between the growth in AUM and the actual quantity of gold held as collateral. Between FY2020 and FY2025, the tonnage of gold held by NBFCs grew at a modest 1.7 per cent compound annual rate, while AUM rose by 20 per cent. In some cases, NBFCs reported a decline in gold holdings even as their loan books expanded. This discrepancy is partly explained by the increase in average loan ticket sizes, which more than doubled during the same period.

Branch expansion has also been subdued, with the number of NBFC branches growing at a compound annual rate of just 3.3 per cent from FY2020 to FY2025. Despite this, NBFCs have managed to sustain healthy lending spreads, supported by operational efficiencies and moderate credit losses. These factors have helped preserve net earnings, even as competition intensifies.

The competitive landscape is shifting, with banks reclassifying gold-backed loans from agricultural to retail categories. This reclassification has led to a rise in retail gold loans, which accounted for 18 per cent of total gold loans in March 2025, up from 11 per cent a year earlier. At the same time, the share of agricultural and other gold-backed loans declined to 63 per cent

ICRA cautions that NBFCs face increasing pressure on yields due to the entry of new players and the continued expansion of banks in the gold loan segment. To remain competitive, NBFCs will need to further improve operational efficiency and build buffers against margin compression.

While NBFCs are unlikely to regain their former dominance in the gold loan market, their projected growth in FY2026 underscores their resilience and adaptability. The segment remains a key area of focus for these institutions, particularly as they seek alternatives to unsecured lending in a high-risk environment.