Pashamylaram tragedy: Sigachi faces financial strain after ₹40 cr ex gratia commitment

Crisis-hit Sigachi Industries' financial stability will come under severe strain as the company has announced an ex gratia payment of ₹1 crore each to the families of 40 employees who lost their lives in the Pashamylaram plant explosion. The total commitment of ₹40 crore would effectively wipe out the company’s FY25 net profit of ₹70.5 crore, placing significant pressure on its operational and financial viability going forward.

The company manufactures microcrystalline cellulose (MCC) powder, which is used in the pharmaceuticals, food, nutraceutical, and cosmetic sectors.

Adding to its woes, Sigachi's share price has fallen 22.6% since news broke about the explosion at its Telangana plant in the early hours of June 30, 2025. Weighed down by the development, the small-cap stock nosedived 11.58% on Monday, followed by another loss of 5.57% on Tuesday.

Extending its downtrend for the third straight session, Sigachi shares ended at ₹42.69 today, down 7.34%, while its market capitalisation slipped to ₹1,631.26 crore. The counter touched its 52-week high of ₹69.75 on August 1, 2024, and a 52-week low of ₹34.51 on February 17, 2025.

In a regulatory filing today, the company also confirmed that 33 employees were injured in the incident and assured comprehensive medical and rehabilitation support for them. Additionally, plant operations have been temporarily suspended for approximately 90 days, further weighing on business continuity.

“Since the time of the accident, we have been coordinating the emergency response, family support, and extending cooperation with the investigation and compliance efforts. Sigachi Industries Ltd has committed to an ex gratia compensation of ₹1 crore to the families of the deceased, while those injured will receive full medical and rehabilitation support,” it said in an exchange filing today.

Clarifying the cause of the explosion, the company said that the accident was not caused by a reactor explosion at the plant, as mentioned in some sections of the media. “As we await the results of the investigation, we would like to clarify that the accident was not caused by a reactor explosion at the plant, as mentioned in sections of the media,” it said.

While Sigachi’s financials prior to the incident indicated robust growth across top line and operating margins, the ex gratia payout, coupled with a three-month plant shutdown, poses serious challenges.

For FY25, Sigachi reported a 23.25% increase in its consolidated net profit to ₹70.5 crore, compared to ₹57.2 crore in the previous fiscal. Revenue from operations jumped 25.4% to ₹500.3 crore, compared with ₹398.90 crore in FY24. On the operating front, Ebitda stood at ₹112 crore, up 46.2% YoY, while the margin improved by 318 basis points to 22.38%.

In the fourth quarter ended March 2025, the company posted a net profit of ₹16.2 crore, up from ₹15.1 crore in the same period of the previous year. Revenue from operations rose 23.15% YoY to ₹128.2 crore, while EBITDA stood at ₹28.5 crore, growing 74.8% on a yearly basis. The EBITDA margin grew significantly by 666 basis points to 22.31%.

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