4/30/2020 Fertiliser firms’ working capital borrowings set to rise: ICRA - The Economic Times

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Fertiliser firms’ working capital borrowings

set to rise: ICRA
The subsidy requirement of Rs. 1250 billion includes a subsidy backlog which is expected
to increase.
ET Bureau | Last Updated: Jan 03, 2020, 03.57 PM IST Save

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Comments

Rating agency ICRA NSE 3.12 % on Friday said that as the

subsidy budget gets exhausted for the fertiliser industry
working capital borrowings will rise.

The Central government had allocated Rs. 800 billion in WHAT'S YOUR MARKET
the Union Budget for FY2019-20 for payment of the SCORE?
fertiliser subsidy. While the budgetary sanction increased
QUESTION: 1/3 HIGHEST SCORE: 30
from the budgetary allocation of Rs. 700 billion in the recent years, it remains inadequate
0
to meet the total requirement of the fertiliser subsduy which stands at around Rs. 1250
billion.
What is the full form of GST?
The subsidy requirement of Rs. 1250 billion includes a subsidy backlog which is expected
Goods and Services Tax
to increase to Rs. 450 billion by the end of FY2020. Of the total budgetary allocation, GoI
had released nearly 84 per cent by the end of October 2019. With the subsidy budget
Goods and Securities Transaction
expected to be over by the end of December 2019, the subsidy receivables will rise till the
end of FY2020 end. As a result, the working capital borrowings of the industry will rise
leading to moderation in the credit metrics, as per an ICRA note. Goods and Services Transaction

Throwing more insights Mr. K.

NSE BSE Goods and Securities Tax
Company Summary
Ravichandran, Senior Vice-President &
ICRA Ltd. 78.80 (3.51%) Group Head, Corporate Ratings, ICRA, says
, “We do not expect any additional budgetary Mid-cap Growth Stocks
allocation for the fertiliser industry in the current fiscal from the GoI as the possibility of GoI
Alembic Pharma 750.00 -1.62%
missing its fiscal deficit target looms large. However, the GoI is expected to sanction a
Endurance Technolog… 677.15 2.91%
Special banking Arrangement (SBA) in Q4 FY2020, which will help in reducing interest
outgo to a small extent. Overall, GoI needs to increase the budgetary allocation in the V-Guard Ind. 180.10 1.12%

upcoming Union Budget for FY2020-21 to around Rs. 100 billion in order to reduce the Timken India 900.00 3.12%
subsidy backlog. The increased budgetary allocation if continued for a couple of years will
wipe out the subsidy backlog and pave the way for implementation of the true form of
Direct Benefit Transfer (DBT) in the fertiliser sector.”
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sowing levels in the rabi season have witnessed healthy growth. The outlook for fertiliser
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sales in the current rabi season remains healthy with DAP/NPK offtake expected to grow
at a robust pace as there has been significant moderation in the retail prices Y-o-Y driven
by a fall in the raw material prices. Urea demand is expected to remain stable as the Most Read Most Shared
offtake by farmers remain more or less uniform , given fixed and low retail price.
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Secure
Fertiliser firms’Your
workingRemote
capital borrowings
2
Will India lift lockdown on May 4? Read
3
Govt allows movement of stranded people
4 No
of Covid hotspot districts decrease
set to rise: ICRA this with conditions 129 afrom
No, equities have not found 170 These charts
bottom:
Workforces. prove it
https://economictimes.indiatimes.com/markets/stocks/news/fertiliser-firms-working-capital-borrowings-set-to-rise-icra/articleshow/73083215.cms… 1/17
4/30/2020 Fertiliser firms’ working capital borrowings set to rise: ICRA - The Economic Times
Workforces. prove it
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Adds Mr. Varun Gogia, Senior Analyst, Corporate Ratings, ICRA, “ The overall fertiliser
offtake is expected to be healthy in the current rabi season. The profitability of the urea
players is expected to be stable given the stable pooled gas prices over the past 12-14
DISCOVER MUTUAL FUNDS
months and steady volume offtake. Profitability of the P&K players is expected to improve
in H2 FY2020 as key raw material prices i.e. phosphoric acid and ammonia prices have
softened . While retail price of P&K players has been reduced, ICRA expects slight All Mutual Top Tax
Funds Saver Funds
expansion in the contribution margin for DAP/NPK players which should support
profitability. Nonetheless, the credit metrics of the industry are expected to remain subdued
given the continued delay in the subsidy disbursement by the GoI. ” Better Than Low Cost
Fixed High Return
Deposits Funds

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Fertiliser firms’ working capital borrowings Will India lift lockdown on May 4? Read Govt allows movement of stranded people No of Covid hotspot districts decrease
1 set to rise: ICRA
2 this
3 with conditions
4 129 from 170
The Centre on Wednesday gave clear Most Read Most Shared
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https://economictimes.indiatimes.com/markets/stocks/news/fertiliser-firms-working-capital-borrowings-set-to-rise-icra/articleshow/73083215.cms… 2/17