Rating Rationale
July 07, 2025 | Mumbai
Krishana Phoschem Limited
Ratings reaffirmed at 'Crisil A/Stable/Crisil A1'; Rated amount enhanced for Bank Debt
 
Rating Action
Total Bank Loan Facilities RatedRs.756 Crore (Enhanced from Rs.656 Crore)
Long Term RatingCrisil A/Stable (Reaffirmed)
Short Term RatingCrisil A1 (Reaffirmed)
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 reaffirmed its ‘Crisil A/Stable/Crisil A1’ ratings on the bank facilities of Krishana Phoschem Ltd (KPL; part of Ostwal group).

 

The reaffirmation reflects the healthy business risk profile as seen in the company’s established market position in the single super phosohate (SSP) fertiliser industry, strong linkages with the parent, Ostwal Phoschem India Ltd (OPIL; ‘Crisil A/Stable/Crisil A1’), and KPL’s healthy operating margin aided by backward integration. The financial risk profile remains comfortable, supported by high cash accrual leading to healthy debt protection metrics and prudent funding of the capital expenditure (capex). These strengths are partially offset by significant capacity expansion, leading to moderation of debt protection metrics, and exposure to regulatory risks in the fertiliser industry.

 

Revenue increased to Rs 1,366 crore in fiscal 2025 from Rs 924 crore in fiscal 2024, driven by ramp-up in capacity utilisation of the phosphatic fertilisers (DAP/NPK) plants that were set up recently. Overall sales will be supported by healthy demand of DAP/NPK and overall sales are supported by marketing agreement with National Fertilisers Ltd. The operating margin was ~14% in fiscal 2025 compared with 13.9% in fiscal 2024. It is expected to sustain above 14% over the medium term owing to healthy backward integration and benefits of bulk procurement and will remain monitorable.

 

Debt protection metrics were healthy in fiscal 2025 with interest coverage ratio improving to 4.9 times compared to ~3.5 times in fiscal 2024 due to healthy profitability. Financial risk profile is expected to remain comfortable with debt to earnings before interest, tax, depreciation and amortisation (Ebitda) ratio likely to sustain below 3 times and interest coverage ratio sustaining over 4 times over the medium term.
 

The Rs 1.68-lakh crore subsidy budget of the government for fiscal 2026 should suffice and hence, no major build-up is expected. Track record of timely subsidy disbursement and additional allocation in the past has kept subsidy arrears in check. 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 will be monitorable.

Analytical Approach

Crisil Ratings has applied its parent notch-up framework to factor in the strong linkages between KPL and OPIL.

Key Rating Drivers & Detailed Description

Strengths:

  • Established market position in the SSP industry with diversification into DAP/NPK: KPL is an established player in the SSP industry with OPIL (on a consolidated level including KPL) being the second-largest manufacturer of SSP with market share of ~9% in fiscal 2025. Its products are sold under the well-known Annadata brand. The group has established distribution network of the group comprising 1,400 wholesalers and 15,000 dealers and retailers. Additionally, it has witnessed healthy ramp up in volume in fiscal 2025. Furthermore, the company has entered into a marketing agreement with National Fertilisers Ltd to increase its distribution reach. KPL is likely to maintain its healthy market position, backed by the established position of OPIL in the SSP industry and the focus on import substitution for DAP/NPK.

 

  • Strong linkages with OPIL and experienced promoters: The promoter group and OPIL hold ~74% 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 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 maintained 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 also 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 sustain at a healthy level ~14% over the medium term.

 

Weakness:

  • 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 the disbursement of subsidies on account of under-budgeting and change in the regulatory scenario will remain monitorable.

Liquidity: Strong

Cash and equivalent were Rs 12 crore as on March 31, 2025. The sanctioned fund-based limit was utilised at 37% on average for the 12 months through March 2025. Healthy accrual of more than Rs 80 crore, expected in fiscals 2026 and 2027, is sufficient to cover annual repayment of Rs 25-35 crore as well as any incremental working capital requirement in the absence of any significant capex plans. Liquidity is also supported by articulation of need-based support from the Ostwal group.

Outlook: Stable

The business risk profile of KPL will sustain over the medium term, driven by healthy market position in SSP, recent expansion of DAP/NPK capacity and strong operating efficiency. The financial risk profile will remain stable, driven by healthy accrual and strong linkages with the Ostwal group.

Rating sensitivity factors

Upward factors:

  • Upgrade in the credit rating of OPIL by one notch or more
  • Significant ramp up in capacity utilisation, leading to increase in revenue while sustaining operating profitability
  • Improvement in the working capital cycle resulting in lower gross current assets

 

Downward factors:

  • Downgrade in the credit rating of OPIL by one notch or more
  • Lower-than-expected ramp up in capacity utilisation or subdued volume, leading to decline in operating margin
  • Large, debt-funded capex or acquisition, weakening the financial risk profile
  • Adverse impact of any regulatory/policy change

About the Company

KPL was incorporated in 2004 and taken over by the Ostwal group in 2007. It was listed on the National Stock Exchange’s Emerge Platform in 2017 and then shifted to the main platform in 2019. It 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, 1,324 tonne of H. acid, 1.98 lakh tonne of BRP (crushing) acid and 3.3 lakh tonne of DAP/NPK per annum.

Key Financial Indicators*

Particulars

Unit

2025

2024

Revenue

Rs crore

1366

924

Profit after tax (PAT)

Rs crore

87

40

PAT margin

%

6.34

4.38

Adjusted debt/adjusted networth

Times

1

1.45

Adjusted interest coverage

Times

4.92

3.53

* As per analytical adjustments made by Crisil Ratings

Any other information: Not applicable

Note on complexity levels of the rated instrument:
Crisil Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

Crisil Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

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Annexure - Details of Instrument(s)

ISIN Name Of Instrument Date Of Allotment Coupon Rate (%) Maturity Date Issue Size (Rs. Crore) Complexity Levels Rating Outstanding with Outlook
NA Cash Credit NA NA NA 285.00 NA Crisil A/Stable
NA Letter of Credit NA NA NA 195.00 NA Crisil A1
NA Loan Equivalent Risk Limits NA NA NA 21.58 NA Crisil A1
NA Proposed Fund-Based Bank Limits NA NA NA 90.95 NA Crisil A/Stable
NA Term Loan NA NA 30-Jun-32 49.49 NA Crisil A/Stable
NA Term Loan& NA NA 07-Oct-28 29.17 NA Crisil A/Stable
NA Term Loan NA NA 30-Jun-28 13.93 NA Crisil A/Stable
NA Term Loan NA NA 30-Oct-29 70.88 NA Crisil A/Stable

 & - ICICI Bank Term Loan of Rs 35 Cr. sanctioned amount taken.

Annexure - Rating History for last 3 Years
  Current 2025 (History) 2024  2023  2022  Start of 2022
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities ST/LT 561.0 Crisil A1 / Crisil A/Stable 08-05-25 Crisil A1 / Crisil A/Stable 06-09-24 Crisil A1 / Crisil A/Stable 02-11-23 Crisil A1 / Crisil A/Stable   -- Suspended
Non-Fund Based Facilities ST 195.0 Crisil A1 08-05-25 Crisil A1 06-09-24 Crisil A1 02-11-23 Crisil A1   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Cash Credit 55 State Bank of India Crisil A/Stable
Cash Credit 45 Axis Bank Limited Crisil A/Stable
Cash Credit 75 HDFC Bank Limited Crisil A/Stable
Cash Credit 50 YES Bank Limited Crisil A/Stable
Cash Credit 60 ICICI Bank Limited Crisil A/Stable
Letter of Credit 50 ICICI Bank Limited Crisil A1
Letter of Credit 30 ICICI Bank Limited Crisil A1
Letter of Credit 55 Axis Bank Limited Crisil A1
Letter of Credit 60 State Bank of India Crisil A1
Loan Equivalent Risk Limits 2.58 State Bank of India Crisil A1
Loan Equivalent Risk Limits 14 Axis Bank Limited Crisil A1
Loan Equivalent Risk Limits 3 HDFC Bank Limited Crisil A1
Loan Equivalent Risk Limits 2 ICICI Bank Limited Crisil A1
Proposed Fund-Based Bank Limits 50 Not Applicable Crisil A/Stable
Proposed Fund-Based Bank Limits 40.95 Not Applicable Crisil A/Stable
Term Loan& 29.17 ICICI Bank Limited Crisil A/Stable
Term Loan 13.93 Shinhan Bank Crisil A/Stable
Term Loan 49.49 HDFC Bank Limited Crisil A/Stable
Term Loan 70.88 Axis Bank Limited Crisil A/Stable
& - ICICI Bank Term Loan of Rs 35 Cr. sanctioned amount taken.
Criteria Details
Links to related criteria
Basics of Ratings (including default recognition, assessing information adequacy)
Criteria for manufacturing, trading and corporate services sector (including approach for financial ratios)
Criteria for factoring parent, group and government linkages

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