CARE Ratings has reaffirmed the A1+ rating for Rashtriya Chemicals and Fertilizers Limited’s (RCF) Commercial Paper (CP) issue, valued at ₹3,000 crore. The rating reflects RCF’s established market position, diverse product portfolio, efficient operations, and strong government backing. The rating considers the cyclicality of the chemical industry and dependence on subsidy budget.
Rating Reaffirmation Details
CARE Ratings Limited has reaffirmed the A1+ rating for Rashtriya Chemicals and Fertilizers Limited’s commercial paper. This rating applies to a CP issue amounting to ₹3,000 crore. The reaffirmation underscores RCF’s solid financial standing and operational efficiency within the fertilizer sector.
Key Rating Drivers
The rating is supported by several factors, including RCF’s established position in the domestic fertilizer industry and its diverse product range, which includes urea, complex fertilizers, and industrial chemicals. RCF benefits from vertically integrated operations and its strategic relationship with the Government of India, which holds a 75% equity stake. The plants have been operating with optimal capacity and healthy energy efficiency. The company has a strong liquidity position.
Factors to Consider
The rating is offset by the regulated nature of the fertilizer industry. Delays in subsidy receipts from the Government of India can impact operations. The cyclicality of the industrial chemical business and forex rate fluctuations are other factors. RCF is undertaking capex plans, which are primarily debt-funded.
Financial Performance
RCF’s operating performance improved in FY25 with the PBILDT margin increasing to 3.16% from 2.01% in FY24. This improvement was primarily due to reduced fuel costs. The company’s capital structure is comfortable, with gearing improving to 0.58x as of March 31, 2025.
Planned Capex
RCF is undertaking a capex of approximately ₹3,000 crore over the next two years. This includes establishing a new NPK plant and revamping the ammonia plant at Thal. The NPK plant with capacity of 1200 TPD is estimated to cost ₹1,400 crore.
Source: BSE
