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Tilaknagar Industries Limited (TIL) announced that CRISIL Ratings has removed its long-term bank loan facilities from 'Rating Watch with Developing Implications' and reaffirmed the rating at 'Crisil A-/Stable'. This action follows CRISIL's receipt of critical information regarding key financials of Imperial Blue (IB), synergies, future outlook of the combined business, and investment plans.

The rating reaffirmation considers the expected strengthening of TIL's business risk profile due to a tripling of scale and reduced geographical and category concentration. This is partly offset by anticipated moderation in operating margins and return on capital employed (ROCE) due to increased debt levels and interest expenses.

CRISIL Ratings believes TIL's business risk profile will improve over the medium term, supported by the substantial increase in scale following the acquisition of IB. This is expected to be driven by strong brand recall, steady demand, and premiumization initiatives. While operating margins may see some moderation due to IB's lower profitability, cash generation is projected to remain strong. Along with prudent capital expenditure, this is expected to gradually improve debt metrics over the medium term.

The total bank loan facilities rated have been enhanced to ₹2,850 crore from ₹200 crore. The acquisition of Imperial Blue was funded by a mix of internal cash accrual, fresh equity (₹2,093 crore raised through preferential issue), and external debt (₹2,100 crore through term loans).