|
|
| Product | Quantum (Rs. Cr) (SEBI) | Quantum (Rs. Cr) (Other FSR) | Long Term Rating | Short Term Rating | Regulated By |
| Bank Loan Ratings | 0.00 | 1263.00 | ACUITE AA+ | Stable | Reaffirmed | - | RBI |
| Bank Loan Ratings | 0.00 | 625.00 | - | ACUITE A1+ | Reaffirmed | RBI |
| Total Outstanding | 0.00 | 1888.00 | - | - | - |
| Total Withdrawn | 0.00 | 0.00 | - | - | - |
| Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available. |
|
Rating Rationale |
|
Acuite has reaffirmed its long-term rating of 'ACUITE AA+ (read as ACUITE double A plus)' and the short-term rating of 'ACUITE A1+ (read as ACUITE A one plus)' on the Rs 1,888 Cr. bank facilities of Gujarat Narmada Valley Fertilizers and Chemicals Limited (GNFC). The outlook is 'Stable'.
Rationale for rating The rating reaffirmation reflects GNFC's established position as one of the largest manufacturers of ammonia and single-stream urea in India, as well as the country's largest manufacturer of key chemicals such as Toluene Di-Isocyanate (TDI). The company benefits from vertically integrated operations across the fertiliser and chemical segments and has a demonstrated operating track record spanning over five decades. The ratings also factor in the company's healthy financial flexibility, supported by its conservative capital structure, robust credit metrics and strong liquidity profile. Further, the ratings take cognisance of the improvement in profitability despite a relatively flat scale of operations in FY2026. GNFC is undertaking significant capex to improve operational efficiency, enhance ammonia production, and strengthen its market position. While the projects entail execution risks, they are being funded through internal means and are not expected to materially impact the company's financial risk profile. The ratings are constrained by the fertiliser segment's exposure to regulatory and agro-climatic risks, along with inherently high working capital intensity of operations. Although subsidy payments have remained timely in recent years, any delay or inadequacy in such payments could adversely affect the company's financial position. Additionally, profitability in the chemicals division remains susceptible to commodity price volatility, fluctuations in foreign exchange rates, and changes in import duty structures. Going forward, the company's ability to sustain its operating performance, maintain healthy profitability levels, and complete the ongoing capex projects within the envisaged timelines and cost estimates, without any significant cost overruns, will remain key rating monitorable. |
| About the Company |
|
Incorporated in 1976, based in Bharuch (Gujarat), GNFC is engaged mainly in manufacturing of fertilizers such as urea, ammonium nitro phosphate (ANP) and calcium ammonium nitrate (CAN), and industrial chemicals such as methanol, acetic acid, aniline, toluene di isocyanate (TDI), formic acid, and nitric acid. The company also trades in a few fertilizers and chemicals. The manufacturing facilities are situated in Bharuch and Dahej, Gujarat. Ms. Gauri Kumar, Ms. Susanta Kumar Roy, Mr. Ranjan Kumar Ghosh, Mr. Bhadresh Vinaychandra Mehta, Mr. Manoj Das, Mr. Ajai Bahadur Khare, Mr. Thiruvenkadam Natarajan, Mr. Ashwinikumar Rajendraprasad Yadav, Mr. Rajkumar Beniwal and Mr. Rajender Kumar are the directors of the company.
|
| Unsupported Rating |
|
Not applicable
|
| Analytical Approach |
|
Acuité has considered standalone business and financial risk profile of GNFC to arrive at the rating.
|
| Key Rating Drivers |
| Strengths |
| Established Market Position
Promoted jointly by the Government of Gujarat (GoG) and Gujarat state fertilizers and chemicals limited (GSFC), GNFC was incorporated as a public limited company in 1976, with the two promoters cumulatively holding a 41.18% equity stake in it. Subsequently however, the entire shareholding of the GoG was transferred to Gujarat state investments limited (GSIL), a GoG undertaking. As of 31st March 2026, the cumulative holdings of the promoters stood at 41.30% and balance by public. GNFC is one of the largest ammonia and single stream urea manufacturers along with sole/largest manufacturer of key chemicals such as TDI in India with vertically integrated operations in fertilisers and chemicals. It has established position across the country on the back of its strong market presence. Further, trading of few fertilizers and chemicals helps to provide a wider basket of products to farmers. Flat scale of operations with improvement in profitability in FY2026 The company's operating income witnessed a marginal decline of around 1.50% to Rs.7,833.80 Cr in FY2026 ( Rs.7,953.25 Cr in FY2025), primarily on account of planned annual shutdowns undertaken at different manufacturing facilities during the year, which impacted production and sales volumes. Revenue continued to be driven largely by the chemicals segment, comprising an integrated portfolio including formic acid, TDI and acetic acid, which contributed Rs.4,899 Cr in FY2026 (Rs.4,900 Cr in FY 2025). The company also reported improved revenue from its IT division, which increased to Rs.110 Cr in FY2026 from Rs.92 Cr in FY2025. However, the overall revenue performance was partly offset by a decline in the fertilizer segment revenue to Rs.2,764 Cr in FY2026 from Rs.2,900 Cr in FY2025, primarily due to lower production during March 2026 arising from supply disruptions in key feedstock caused by geopolitical tensions. Despite the relatively stable revenue profile, the company's profitability improved significantly during FY2026, with the operating margin increasing to 12.16% from 8.50% in FY2025. The improvement was primarily driven by enhanced profitability in the chemicals segment, supported by stronger operating performance during Q4FY2026 and lower input costs on a full-year basis. Profitability of the 'others' segment also improved on account of a reduction in fixed costs within the IT division. These positives were partly offset by losses in the fertilizer segment arising from the impact of higher energy norms and fixed costs. Consequently, the company's PAT margin improved to 10.17% in FY2026 from 7.36% in FY2025, supported by higher operating profitability, increased other income, primarily comprising interest income and insurance receipts, and lower finance costs. Conservative capital structure GNFC’s capital structure continues to be conservative, and demonstrated strong free cash flow generation, with a strong net worth position supporting the company’s deleveraged capital structure. The company’s tangible net worth of the company improved to Rs. 8,944 Cr as on March 31, 2026 (Rs. 8,408.01 Cr as on March 31, 2025), primarily on account of accretion of profits to reserves, despite dividend distribution aggregating to ~ Rs. 260.00 Cr during the year. The company’s leverage remained low, with total outside liabilities to tangible net worth (TOL/TNW) improving to 0.25 times as on March 31, 2026 (0.29 times as on March 31, 2025).The debt protection metrics remained robust with minimal borrowings. The company is also undertaking capital expenditure with a total estimated cost of ~Rs. 2811 Cr, to be funded through internal means. Acuité believes that GNFC’s financial risk profile is likely to remain healthy over the medium term, supported by strong internal accrual generation, negligible debt levels, and the absence of any major increase in borrowings despite ongoing capital expenditure. |
| Weaknesses |
| Intensive nature of working capital operations
The working capital operations of the company remained intensive, marked by an increase in gross current assets (GCA) to 245 days in FY2026 from 185 days in FY2025. The elevated GCA days were primarily on account of higher other current assets, mainly comprising deposits with body corporates, accrued interest, and advances to suppliers. The inventory holding period stood at 54 days in FY2026 (63 days in FY2025). The debtor days remained comfortable at 30 days in FY2026(20 days in FY2025), reflecting timely collections. Volatility in raw material prices Power and fuel are the key cost components for GNFC. Natural gas being an international commodity is subject to price fluctuation. The company is not affected by the price volatility of the natural gas to the extent consumed for urea as under the urea pricing formula the cost of natural gas is pass through if the consumption of natural gas is within the permissible norm for manufacturing of urea. However, raw materials and fuel used for chemicals are subject to price volatility and forex fluctuations to the extent these are imported. GNFC has historically been able to pass on a substantial portion of cost increases to customers, albeit with a time lag. Further, the company follows a prudent forex hedging practices. |
Rating Sensitivities
| Potential triggers (individual or collective) for an upward rating action: |
|
| Potential triggers (individual or collective) for a downward rating action: |
|
|
| Liquidity Position |
| Strong |
|
GNFC’s strong liquidity is supported by healthy free cash flow generation and cash & cash equivalents. The company’s generated healthy net cash accruals which stood at Rs. 844.00 Cr. for the FY2026 against the debt obligation of minimal Rs 2.51 Cr. and going forward accruals are expected to remain healthy ~Rs 600 Cr. as against the minimal repayment obligations in FY2027 and FY2028. GNFC has unencumbered cash and cash equivalents of Rs 909 Cr. as on March 31, 2026. Current ratio stood strong at 3.23 times as on March 31, 2026. Furthermore, the liquid investments of the company stood at Rs. 1558.00 Cr as on March 31,2026. GNFC has sanctioned secured and unsecured fund-based working capital limits of Rs. 1,190 Cr, which largely remained unutilized. Additionally, the sanctioned non-fund-based limits amounts to Rs. 698 Cr, which remains moderately utilised.
|
| Outlook-Stable |
| |
| Other Factors affecting Rating |
|
None
|
| Particulars | Unit | FY 26 (Actual) | FY 25 (Actual) |
| Operating Income | Rs. Cr. | 7833.80 | 7953.25 |
| PAT | Rs. Cr. | 797.00 | 585.52 |
| PAT Margin | (%) | 10.17 | 7.36 |
| Total Debt/Tangible Net Worth | Times | 0.00 | 0.01 |
| PBDIT/Interest | Times | 229.67 | 48.63 |
| FY2026 numbers are based on abridged financials. |
| |
| Status of non-cooperation with previous CRA (if applicable) |
|
Not applicable
|
| Any other information |
|
None
|
| Applicable Criteria |
|
• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm |
| Note on complexity levels of the rated instrument |
|
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available. |
|
Contacts |
List of instruments and names of regulators of the instruments |
