Ratings agency ICRA has downgraded the long-term rating to the non-convertible debentures and term loans of Deepak Fertilizers and Petrochemicals Corporation Ltd. Outlook on the rating is negative.
The agency has revised the long-term rating assigned to the Rs 600-crore NCD programme, Rs 575-crore (increased from Rs. 500 crore) long-term fund-based limits and Rs 141.44-crore term loans from AA to AA-, the agency said in a note.
ICRA has reaffirmed the short-term rating assigned to the Rs 750-crore commercial paper programme and Rs 1,425-crore (reduced from Rs 1,500 crore) non-fund based limits of the company at A1+.
The ratings downgrade, ICRA said, takes into account the deterioration in the financial profile of the company, owing to the “continued regulatory overhang over gas supply issue and the recovery of unintended benefits from players manufacturing Nutrient “N” using domestic gas. Moreover the company’s working capital position has weakened over the last one year due to holding up of subsidy payments by the Department of Fertilisers’ pending recovery of unintended benefits, resulting in significant build-up of short-term debt.”
The company manufactures nitro-phosphate and bentonite sulphur fertilisers, and industrial chemicals such as low-density ammonium nitrate, methanol, nitric acids and iso propyl alcohol.
The company’s plant is located at Taloja near Mumbai and a company-owned pipeline is used for the transportation of gas from Uran to its plant location. It also trades in chemicals (like methanol and IPA) and bulk fertilisers such as muriate of potash, di-ammonium phosphate, ammonium sulphate, single super phosphate, water soluble fertilisers and bio-fertilisers and micronutrients.
The company’s stock closed down 0.98 per cent at Rs 161.35 on the BSE on Wednesday.