Crisil assigns AA to IFFCO's instrument

THE CREDIT Rating Information Services of India (Crisil) has assigned AA (double A) rating to the Rs. 200 crore non- convertible debenture programme of Indian Farmers Fertiliser Cooperative Limited (IFFCO). The rating reflects IFFCO's strong position in both the nitrogenous and non-nitrogenous fertiliser industry, comfortable business position of its urea operations, large sized operations (in terms of revenues and cash flows) and the relatively new facilities which provide the company with strong operating efficiencies.

The rating also favourably takes into account the strong support base existing in the country for agriculture and the regulatory support in terms of markets and assured returns to urea manufacturers. However, uncertainty pertaining to continuation of this regulatory support, in the present form, in future is a constraining factor. The rating is also constrained by low operating margins of IFFCO's complex fertilizer division due to various extraneous factors, increase in inventory (and competition) in recent years and vulnerability of the fertilizer business to monsoons.

IFFCO, set-up as a co-operative society, is the largest fertilizer manufacturer in the country. It is engaged in the manufacture of urea as well as complex fertilizers at its six plants located in Uttar Pradesh and Gujarat. It reported a profit after tax of Rs. 312.8 crores on a net sales of Rs. 4,688.9 crores in 1999-2000.

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Section  : Business
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