| Krishana Phoschem Limited | ||||||
| Ratings placed on ‘Watch Developing’ | ||||||
| Rating Action | ||||||
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| 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. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has placed its ratings on the bank facilities of Krishana Phoschem Limited (KPL) on ‘Rating Watch with Developing Implications’.
The developing watch reflects the ongoing conflict in the West Asia, leading to constrained availability of key raw materials, which can impact the business and financial risk profiles of KPL. The conflict has disrupted the raw materials required for manufacturing phosphatic fertilisers, especially ammonia and sulphur, for which India has significant dependence on the West Asia. Any prolonged disruption in supplies could affect production and weaken the company’s business risk profile. While adequate inventory and sourcing from alternate suppliers may support operations in the near term, the company’s ability to secure raw materials at required volume will remain a key monitorable.
The financial risk profile may also be impacted because of the significant increase in raw material prices amid supply disruptions. High ammonia prices are expected to increase cost of manufacturing and can impact profitability. Increase in NBS rates by the government for upcoming Kharif season along with ability of the company to pass on increased prices remains a key monitorable. Further, high input costs are likely to put pressure on the working capital requirement and hence borrowings are likely to increase leading to higher-than-expected net leverage (Net debt/Ebitda [earnings before interest, taxes, depreciation and amortisation]).
Crisil Ratings also notes that the Ostwal group (Ostwal Phoschem India Ltd [OPIL], along with all its subsidiaries), has limited cash balances of Rs 41 crore at year end. However, the group in its subsidiaries has tied up additional funding of ~Rs 85 crore leading to healthy buffer in its fund-based limit to take care of debt obligation. Further, the group has outstanding letter of credit and other vendor financing payments due in April to June 2026, however, the group expects to realise pending debtors and subsidy in the coming days ensuring comfortable liquidity.
Therefore, timely release of subsidy by the government and group’s cash conversion cycle will remain monitorable to assess its ability to service all its debt obligation.
Crisil Ratings notes the government’s track record of timely subsidy disbursement and past trends of additional allocation will keep the working capital cycle stable. Given that the fertiliser industry remains highly strategic and controlled by the government, any deferment or delay in disbursing subsidy or any change in the regulatory scenario would be a key rating sensitivity factor. Further, a relatively low counterparty risk in subsidy-linked receivables should mitigate the impact on the company’s credit profile.
During the nine months of fiscal 2026, KPL’s revenue increased by 88% on-year to Rs 1,663 crore (Rs 1,366 in fiscal 2025 and Rs 924 in fiscal 204), and Ebitda improved to Rs 209 crore up by 65% on-year. The improved operating performance is due to healthy sales volume and healthy realisation, supported by healthy demand, the upward revision in the NBS rates in fiscal 2026 and the ability of the company to take price hikes. Moreover, trading volume also contributed to revenue and profitability growth. The company manufactures only one grade of NPK (20:20:0:13) along with single super phosphate (SSP). However, in case of ammonia shortages persist, the company can produce different grades of NPK with low N content while factoring the demand of that grade. Overall, healthy NPK demand in fiscal 2026 resulted in high-capacity utilisation, along with demand for other grades of NPK fertilisers. This additional demand was met through imports.
While the operating Ebitda improved, the Ebitda margin declined to 12.6% in the first nine months of fiscal 2026 (14.0% in fiscal 2025 and 13.9% in fiscal 2024) due to trading volume (contributing around 24% to the revenue) which has low margin. The interest coverage ratio improved to ~8.2 times in the nine months of fiscal 2026 compared with ~4.0 times during the corresponding period in previous fiscal owing to healthy profitability. |
Analytical Approach Crisil Ratings has applied its parent notch-up framework to factor in the strong linkages between KPL and OPIL. |
Key Rating Drivers - Strengths Established market position in the SSP industry with diversification into DAP/NPK KPL is an established player in the SSP industry with OPIL (at a consolidated level, including KPL) being the second-largest manufacturer with market share of ~9% in fiscal 2025. Its products are sold under the well-known Annadata brand. The group has an established distribution network comprising 2,500 wholesalers and dealers and 30,000 retailers. Additionally, it has witnessed healthy ramp up in volume in the first nine months of fiscal 2026. KPL is likely to maintain its healthy market position, backed by the established position of OPIL in the SSP industry and focus on import substitution for DAP/NPK.
Strong linkages with OPIL and experienced promoters The promoter group and OPIL hold ~72.3% stake in KPL, which is one of the main operating companies of the group with ~45% contribution to revenue in fiscal 2025. KPL benefits from the common sourcing of raw materials for the group. Furthermore, OPIL has extended corporate guarantee and the promoters have extended personal guarantee to the debt facilities of KPL. The group has common directors with decades of experience in the fertiliser industry.
Robust operating profitability owing to backward integration KPL has a relatively higher operating margin than peers, driven by strong backward integration for raw materials undertaken by the Ostwal group, with captive capacity for sulfuric acid, rock phosphate beneficiation and phosphoric acid. The group has long-term supply agreement for procurement of rock phosphate with entities such as Jordan Phosphate Mines Company for import and Rajasthan mining companies for indigenous supply. This ensures continuous availability and low cost of production. The operating margin is expected to be healthy ~14% over the medium term. |
Key Rating Drivers - Weaknesses Exposure to regulatory risks Given the government’s thrust on self-sufficiency in food grain production, the fertiliser industry is important but highly controlled. Hence, players are susceptible to regulatory changes. KPL is vulnerable to delays in subsidies from the government, leading to high reliance on working capital loans. Deferment in disbursement of subsidies on account of under-budgeting and regulatory changes will remain monitorable. |
Liquidity Strong Cash and equivalent were Rs 22 crore as on March 25, 2026. Fund-based limit was Rs 308 crore of which 53% was utilised as on March 25, 2026. Expected cash accrual of Rs 150- 200 crore in fiscals 2027 and 2028 will sufficiently cover annual debt obligation of Rs 35-45 crore and working capital requirement. The company has undertaken capex of Rs 140 crore of which Rs 75 crore will be funded through debt and cash accrual. The new unit is expected to have commenced commercial production by the end of fiscal 2026. Liquidity is supported by the need-based support from the Ostwal group. |
Rating sensitivity factors Upward factors
Downward factors
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About the Company KPL was incorporated in 2004 and taken over by the Ostwal group in 2007. The company was listed on the National Stock Exchange Emerge Platform in 2017 and then shifted to the main platform in 2019. KPL manufactures SSP, DAP and NPK fertilisers. It has six plants in Meghnagar, Madhya Pradesh with installed capacity of 1.20 lakh tonne of SSP, 2.6 lakh tonne of sulfuric acid, 99,000 tonne of phosphoric acid, 1.98 lakh tonne of BRP (crushing) acid and 3.3 lakh tonne of DAP/NPK per annum.
As on December 31, 2025, the company's profit after tax (PAT) was Rs 97 crore and operating income was Rs 1,663 crore, as against Rs 54 crore and Rs 885 crore, respectively, a year earlier. |
Key Financial Indicators*
*As per analytical adjustments made by Crisil Ratings |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: 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. |
Annexure - Details of Instrument(s)
& - ICICI Bank Term Loan of Rs 35 Cr. sanctioned amount taken. |
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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