Product Quantum (Rs. Cr) (SEBI) Quantum (Rs. Cr) (Other FSR) Long Term Rating Short Term Rating Regulated By
Bank Loan Ratings 0.00 100.00 ACUITE A | Negative | Reaffirmed - RBI
Bank Loan Ratings 0.00 140.00 - ACUITE A1 | Assigned RBI
Bank Loan Ratings 0.00 1050.00 - ACUITE A1 | Reaffirmed RBI
Total Outstanding 0.00 1290.00 - - -
Total Withdrawn 0.00 0.00 - - -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 the long term rating of 'ACUITE A' (read as ACUITE A) and short term rating of ‘ACUITE A1’ (read as ACUITE A one) on the Rs.1150.00 Cr. bank loan facilities of ‘The Fertilisers and Chemicals Travancore Limited’ (FACT). The outlook is revised from 'Stable' to ‘Negative’.

Acuite has also assigned short term rating of ‘ACUITE A1' (read as ACUITE A one) on the Rs.140.00 Cr. bank loan facilities of ‘The Fertilisers and Chemicals Travancore Limited’ (FACT).

Rationale for rating
The revision in rating outlook reflects the deterioration in the company's profitability metrics, with EBITDA margin declining to 1.21% in FY2026 from 2.34% in FY2025 and 7.08% in FY2024, primarily due to a significant increase in raw material costs amid supply chain disruptions caused by geopolitical tensions in West Asia. Consequently, the company reported a net loss in FY2026, with PAT margin moderating to (0.69)% from 1.02% in FY2025. The rating further continues to be constrained by the inherent regulatory and agro-climatic risks associated with the fertilizer industry, high working capital intensity, and dependence on timely government subsidy support.

However, the rating derives comfort from FACT's established market position in South India, diversified product portfolio, strong brand presence, and strategic importance to the Government of India, which holds a 90 percent stake. The rating also factors in the improvement in scale of operations during FY2026 marked by operating income at Rs. 5723.76 Cr. in FY2026 as against Rs. 4050.91 Cr. in FY2025, driven by higher sales volumes and improved realizations.

Further, while the company does not avail any bank borrowings, it continues to have sizable dues to GoI. The outcome of the financial restructuring proposal submitted by the company to GoI, involving waiver of interest on the loan, conversion of a portion of debt into equity, and restructuring of the balance loan into an interest-free loan repayable in 5 to 8 annual instalments, remains a key monitorable.

About the Company

Kerla based, The Fertilisers and Chemicals Travancore Limited (FACT) was incorporated in the year 1943 as the first large-scale fertilizer plant in India at Udyogamandal, Kochi, Kerala. The company started production in 1947 and became a public sector company in 1960. The Government of India (GOI) became the major shareholder in 1962, and as of date, GOI holds a 90% stake in FACT, and the balance of 10% is public shareholding. The company is under the administrative control of the Department of Fertilizers, Ministry of Chemicals & Fertilizers, and Government of India. The directors of the company are Mr. Sakthimani Seshamani, Mr. Manoj Sethi, and Mr. Santosh Kumar. The company manufactures and markets fertilizers, petrochemicals, and industrial chemical intermediates.
 
Unsupported Rating
­Not Applicable
 
Analytical Approach
­Acuite has considered the standalone business and financial risk profile of The Fertiliser and Chemicals Travancore Limited (FACT) to arrive at the rating.
 
Key Rating Drivers

Strengths

­Established Market Position and Brand value
Promoted by the Government of India (GOI), FACT has established a strong position in South India and has a presence in more than 10 states in India, having both units in Kochi. With a diversified product portfolio, the company is into complex, straight, and organic fertilizers. They manufacture chemicals such as Factamfos and Ammonium Sulphate along with several other by-products including soda ash, nitric acid, gypsum, and sulfuric acid, among others. FACT also offers services to benefit farmers, such as Agro Service Centre, Soil Testing & Soil Health Card, and Field Demonstration, where they analyse the soil samples and give reports on nutrient contents, soil reaction, and micronutrient status. Acuite believes that the company will continue to derive benefit from its established market position and and its strategic importance to the Government of India.

Improvement in operating income
Operating income stood at Rs. 5723.76 Cr. in FY2026 as against Rs. 4050.91 Cr. in FY2025, driven by the higher sales volume and improved price realization across key product segments during the year. The topline growth in FY2026 is primarily driven by Factamfos, which remained the largest contributor with sales, followed by Ammonium Sulphate. In addition, increase in subsidy and services income also elevated the overall revenue of the company. Moreover, the company is undergoing a capacity expansion project involving the installation of a 1,650 MTPD NPK fertilizer plant along with associated storage and logistics infrastructure, which is expected to be commissioned by January 2027. Acuité expects the company's revenue profile to improve further, supported by the proposed capacity addition from Q4 FY2027 onwards. However, timely completion of the project and the company's ability to scale up operations while improving profitability will remain key monitorable factors.

Healthy Financial Risk Profile
The financial risk profile of the company is marked by a healthy net worth, moderate gearing and debt protection metrics. The tangible net worth declined marginally to Rs. 1350.20 Cr. as on 31st March 2026 as against Rs. 1370.54 Cr. as on 31st March 2025 on account of the net losses incurred by the company during the year. Gearing remained moderate at 1.33 times as on 31st March 2026 while the interest coverage ratio and debt service coverage ratio stood at 0.98 times each as on 31st March 2026.

Further, the company does not avail bank term loans or working capital facilities. However, it continues to have sizable outstanding obligations towards GoI. Total debt of the company stood at Rs. 3,982.43 Cr. as on 31st March 2026, comprising GoI loan of Rs. 1,770.49 Cr, accrued interest of Rs. 2,151.8 Cr., and the balance being lease liabilities and working capital loan. The company has submitted a financial restructuring proposal to the GoI seeking waiver of interest on the loan, conversion of a portion of debt into equity, and restructuring of the balance loan into an interest-free loan repayable in 5 to 8 annual instalments. The financial restructuring proposal is still under consideration and will remain key monitorable. Acuité expects the financial risk profile to remain healthy over the medium term in the absence of any major debt-funded capex plans.


Weaknesses

Moderately Intensive Working Capital Operations
The working capital operations of the company remained moderately intensive, marked by GCA days at 177 days as on 31st March 2026 as against 184 days as on 31st March 2025. The high GCA days are primarily on account of a substantial build-up of other current assets and high inventory levels. The other current assets stood at Rs. 916.64 Cr. as on 31st March 2026 as against Rs. 491.55 Cr. as on 31st March 2025 largely comprising dues from statutory authorities and accrued income. The inventory days stood at 80 days as on 31st March 2026 against 87 days as on 31st March 2025. Further, debtor days stood at 22 days as on 31st March 2026 against 26 days as on 31st March 2025 and the creditor days stood at 20 days as on 31st March 2026 against 59 days as on 31st March 2025. Acuite expects working capital operations of the company to remain in a similar range in the near to medium term owing to the nature of operations.

Decline in profitability metrics
Fertilizer production relies heavily on raw materials such as phosphoric acid, rock phosphate, natural gas, sulphur, etc. Volatility in the prices of raw materials leads to vulnerability of profit margins of the manufacturers as reflected by the EBITDA margin, which stood at 1.21% in FY2026 against 2.34% in FY2025 and 7.08% in FY2024, despite an increase in sales volume during FY2026. The decline in margins is primarily attributable to a sharp increase in the raw material procurement costs during the year amid supply chain disruptions caused by geopolitical tensions in West Asia. Further, the company booked net losses of Rs. (39.60) Cr. in FY2026 with PAT margin at (0.69) % in FY2026 as against 1.02% in FY2025. Going forward, the ability of the company to improve its profitability margins while scaling up its operations in the near to medium term will remain a key rating sensitivity.

­Volatility in raw material prices, Agro-climatic and Regulatory risks
The sales of fertilizers are influenced by sowing levels of crops and rainfall, given that a large portion of the farming land in India is dependent on the monsoon in the absence of adequate irrigation facilities. The fertilizer industry is strategic but highly controlled, with fertilizer subsidies being an important component of profitability. Further, fertilizer production relies heavily on raw materials, wherein the regulated nature of the industry and susceptibility of complex fertilizer players to raw material price volatility under the NBS regime (Nutrition-Based Scheme) continues to be key rating sensitivity factors. Any change in the regulatory scenario in the fertilizer industry remains key monitorable.

ESG Factors Relevant for Rating

­FACT is committed to integrating Environmental, Social, and Governance ('ESG') principles across its operations and business practices. The company focuses on managing and mitigating risks throughout the product lifecycle while enhancing value creation for its stakeholders. Its product responsibility and sustainability framework promotes responsible business practices across the supply chain, covering sourcing, procurement, manufacturing, packaging, transportation, marketing, and end-use. Further, FACT has adopted a Business Responsibility and Sustainable Development Policy aligned with BRSR principles. The company has also undertaken initiatives to reduce its carbon footprint and increase the use of renewable energy, including transitioning its feedstock and fuel requirements to RLNG, thereby promoting cleaner and more efficient operations.
 

Rating Sensitivities

Potential triggers (individual or collective) for an upward rating action:
  • Consistent growth in operating income by more than 30%.
  • Significant improvement in the operating profitability position.
  • Improvement in capital structure and debt protection metrics.
Potential triggers (individual or collective) for a downward rating action:
  • Any substantial decline in revenue from operations.
  • Persistent losses and any further deterioration in the earnings profile.
  • Deterioration in the financial risk profile owing to larger-than-expected debt-funded capex.
Liquidity Position
Adequate

The net cash accruals of the company stood at Rs. (3.90) Cr. as on 31st March 2026 against Rs. 77.85 Cr. as on 31st March 2025 on account of net losses booked by the company during the year. Nevertheless, the absence of any significant debt repayment obligations in the near term provides comfort to some extent. Further, free cash and bank balance available with the company stood at Rs. 276.79 Cr. as on 31st March 2026 along with lien-marked cash and bank balances of Rs. 1,393.91 Cr. as on 31st March 2026. Additionally, investments in the form of unquoted equity shares stood at Rs. 185.42 Cr. as on 31st March 2026. The current ratio stood at 0.99 times as on 31st March 2026 as against 0.73 times as on 31st March 2025. Further, non-fund based bank limits remained moderately utilized at 64.24% as on June 2026. Acuite expects the liquidity profile of the company to remain comfortable, supported by the absence of scheduled debt repayment obligations in the near term. However, improvement in operating profitability and the resultant strengthening of net cash accruals will remain key monitorable factors.
 
Outlook: Negative
­
 
Other Factors affecting Rating
­None
 

Particulars Unit FY 26 (Actual) FY 25 (Actual)
Operating Income Rs. Cr. 5723.76 4050.91
PAT Rs. Cr. (39.60) 41.23
PAT Margin (%) (0.69) 1.02
Total Debt/Tangible Net Worth Times 1.33 1.31
PBDIT/Interest Times 0.98 1.37
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

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook
23 Apr 2025 Bank Guarantee (BLR) Long Term 100.00 ACUITE A | Stable (Assigned)
Letter of Credit Short Term 300.00 ACUITE A1 (Assigned)
Letter of Credit Short Term 400.00 ACUITE A1 (Assigned)
Letter of Credit Short Term 100.00 ACUITE A1 (Assigned)
Letter of Credit Short Term 230.00 ACUITE A1 (Assigned)
Derivative Exposure Short Term 20.00 ACUITE A1 (Assigned)
­

Lender’s Name ISIN Facilities Listing Status Regulated By Date Of Issuance Coupon Rate Maturity Date Quantum
(Rs. Cr.)		 Complexity Level Rating
State Bank of India Not avl. / Not appl. Bank Guarantee (BLR) Unlisted RBI Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 100.00 Simple ACUITE A | Negative | Reaffirmed | Stable to Negative
Federal Bank Limited Not avl. / Not appl. Derivative Exposure Unlisted RBI Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 20.00 Simple ACUITE A1 | Reaffirmed
AXIS BANK LIMITED Not avl. / Not appl. Derivative Exposure Unlisted RBI Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 10.00 Simple ACUITE A1 | Assigned
ICICI BANK LIMITED Not avl. / Not appl. Derivative Exposure Unlisted RBI Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 30.00 Simple ACUITE A1 | Assigned
ICICI BANK LIMITED Not avl. / Not appl. Letter of Credit Unlisted RBI Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 300.00 Simple ACUITE A1 | Reaffirmed
State Bank of India Not avl. / Not appl. Letter of Credit Unlisted RBI Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 400.00 Simple ACUITE A1 | Reaffirmed
Federal Bank Limited Not avl. / Not appl. Letter of Credit Unlisted RBI Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 100.00 Simple ACUITE A1 | Reaffirmed
Federal Bank Limited Not avl. / Not appl. Letter of Credit Unlisted RBI Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 230.00 Simple ACUITE A1 | Reaffirmed
AXIS BANK LIMITED Not avl. / Not appl. Letter of Credit Unlisted RBI Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 100.00 Simple ACUITE A1 | Assigned
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

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