Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. Crisil Ratings has assessed the impact of the ongoing conflict in West Asia on entities in the fertiliser industry. Since the onset of the conflict, supplies of key raw materials such as liquified natural gas (LNG) and ammonia have been disrupted. Notably, 60–65% of LNG and 75–80% of ammonia imports come from the Middle East.
Disruptions in LNG supply will adversely affect urea production, considering that 80–85% of the gas requirement for the fertiliser sector has been imported during the first nine months of fiscal 2026. As the sector plays a key role in ensuring food supply, the Government of India (GoI) has notified the Natural Gas (Supply Regulation) Order (NGS order), 2026 on March 9, 2026. Accordingly, domestic urea plants will be supplied natural gas to the extent of 70% of the average consumption for the last six months. Further, from April 6, 2026, the supply has been increased to 90% from April 6, 2026 limiting the impact on production to large extent.
However, the reduced capacity utilisation due to limited gas supply is likely to dent profitability, with urea manufacturers likely to see an impact as suboptimal capacity utilisation will reduce energy efficiency.
Based on discussions with fertiliser manufacturers, Crisil Ratings understands that players are getting upto 90% of their gas requirement at present, leading to lower than full capacity utilisation. However, those operating multiple plants are likely to optimise gas usage between plants to lower the impact. Crisil Ratings will continue to monitor natural gas availability and the impact on energy efficiency and profitability of players.
In the non-urea segment, India imports a sizeable portion of key raw materials - ammonia and Sulphur - from the Middle East. Prices of these raw materials have increased significantly in global markets, due the ongoing conflict and resultant supply disruptions. This could impact the cost of manufacturing and profitability thereon.
Thus, the ability of players to set up alternate sources for raw materials will be key to minimise impact on production; however, presence of adequate inventory and raw material should provide some buffer in the near term.
Profitability will remain an interplay of the recently announced nutrient-based subsidy (NBS) rates set by the government and the ability of players to hike retail prices which will be a key monitorable.
In the interim, Crisil Ratings has assessed the liquidity situation of industry players. Crisil Ratings has taken note of Coromandel International Limited’s (CIL) adequate liquidity in form of unutilized fund based working capital limits of Rs ~1,080 Cr , cash & cash equivalents of Rs 3,707 Cr against no term loans outstanding as on 28 February 2026. Crisil Ratings also notes that company has significant outstanding letter of credit payments due in April to June 2026, however Crisil Ratings expects healthy cash conversion of their ongoing sales with timely realization of pending debtors and subsidy release by the government given sector’s criticality ensuring comfortable liquidity.
Crisil Ratings will continue to monitor the evolving situation closely.
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Annexure: List of instruments and names of regulators of the instruments As required by SEBI CRA Circular dated Feb 10, 2026, a list of activities or instruments falling under the purview of various FSRs, along with the names of respective FSRs, is being disclosed below:
* Includes securitisation transactions involving assignee payout, acquirer's payout. ~ The rated instrument may involve issuance of different instruments such as debt securities (listed or otherwise), bank loans, commercial paper (listed or otherwise), etc. The regulator of the instrument may accordingly be SEBI, RBI or MCA and can only be determined upon issuance. In PRs subsequent to issuance(s), Crisil Ratings Limited shall separately capture the rated quantum details along with names of respective regulators. ^ Includes bank facilities such as liquidity facility, second loss facility that are part of securitisation transactions. # There is no instrument being rated and hence, Regulator of the Instrument is not applicable. The rating scale and definitions are being followed as stipulated in SEBI Master Circular for CRAs. @ These ratings were assigned during regulatory regime prior to introduction of SEBI CRA Circular dated Feb 10, 2026 and the investor side regulators have accordingly been included.
Note: Kindly note that for activities or instruments falling under the purview of FSRs other than SEBI, the grievance/dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available. |
Criteria Details
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