CRISIL?s ratings on the bank facilities of Mangalore Chemicals and Fertilizers Ltd (MCF) continue to reflect MCF?s established position in the fertiliser business, especially in South India, and healthy operating efficiency. These rating strengths are partially offset by MCF?s average financial risk profile, and vulnerability of its profitability to volatility in raw material prices. The ratings also factor in the highly regulated nature of the fertiliser industry.

* includes non fund based sub limit of Rs.2000 Million interchangeable with Buyer?s credit and Letter of Credit
^ includes sub limit of Rs.1000 million interchangeable with cash credit, Rs.200 Million bank guarantee, and Rs.4650 Million Buyer?s credit

Outlook: Stable

CRISIL believes that MCF will maintain its stable cash flows over the medium term on the back of its established market position and healthy operating efficiencies. The company?s profitability, however, will remain vulnerable to raw material price volatility. MCF?s working capital requirements are also expected to remain large, given its large subsidy receivables. The outlook may be revised to ?Positive? if there is sustained increase in the company?s profitability, coupled with sustained decrease in subsidy receivables. Conversely, the outlook may be revised to ?Negative? in case of fresh significant debt-funded capital expenditure programme, incremental group-related investments, or if there is a reduction in subsidy because of non-conversion of its existing naphtha-based urea plant to a gas-based one.