By: ICN Bureau
Last updated : March 06, 2018 7:58 pm
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 strength
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.
| Rs.2000 Million Cash Credit* (Enhanced from Rs.600 Million) | A-/Stable (Reaffirmed) |
| Rs.570 Million Term Loan (Enhanced from Rs.320 Million) | A-/Stable (Reaffirmed) |
| Rs.7150 Million Letter of Credit^ (Enhanced from Rs.2600 Million) | P2+ (Reaffirmed) |
| Rs.100 Million Loan Equivalent Risk | P2+ (Assigned) |
* 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.