RATING RATIONALE
02Aug2021

Gujarat Narmada Valley Fertilizers & Chemicals Ltd.

Brickwork Ratings assigns the ratings to the Bank Loan Facilities of Rs. 2900.00 Crs of Gujarat Narmada Valley Fertilizers & Chemicals Ltd

Particulars
Facilities** Amount(Rs.Crs.) Tenure Rating#
Fund Based 2000.00 Long Term BWR AA + /Stable
Assignment
Non Fund Based 900.00 Short Term BWR A1 +
Assignment
Grand Total 2900.00 (Rupees Two Thousand Nine Hundred Zero Crores Only)
#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure
RATING ACTION / OUTLOOK

Brickwork Ratings (BWR) has assigned BWR AA+/Stable/A1+ to the bank loan facilities of Gujarat Narmada Valley Fertilizers & Chemicals Ltd (GNFC or the Company).

The ratings derive comfort from the demonstrated track record of the company in both fertilisers and chemicals businesses, diversified product profile with the company being the sole/largest manufacturer of key chemicals such as Toluene Di-Isocyanate (TDI), aniline and acetic acid, presence in multiple states and strong brand recall in these areas, strong financial risk profile coupled with high financial flexibility on account of absence of any long term debt, negligible utilisation of working capital limits and generation of substantial cash accruals and realisation of significant subsidy receivables under the Atmanirbhar Bharat scheme bringing down the overall receivables level.

The ratings however, remain constrained on account of the company’s exposure to regulatory risks, fertilisers being a highly regulated sector and susceptibility of the profitability margins to the volatility associated with the chemicals business arising out of movements in fuel prices and exchange rate.

The outlook has been assigned as Stable as the company’s financial risk profile is expected to remain healthy on account of the company’s strong operational efficiencies, its market position and limited reliance on external funding to manage operations.

KEY RATING DRIVERS


Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

BWR has analysed both the standalone and consolidated financial statements of the company while arriving at the rating. However, as GNFC is the only contributing entity in the group, reliance is more on the standalone statements.

RATING SENSITIVITIES

Positive: The rating can be revised upwards if the company reports stable profit margins in the fertilizers segment continuously for a period of two years and the receivables are brought down to the levels of less than 45 days.

Negative: The rating can be revised downwards if the prices of the products deteriorate by more than 25% and the company misses the energy efficiency targets to claim full subsidy for the fertlizers segment for a period of two years.

LIQUIDITY INDICATORS - Superior or Strong

The liquidity position of the company is superior with the absence of long term debt and generation of substantial cash accruals every year on the back of profitable operations of the company. GNFC has sanctioned fund based working capital limits of Rs. 1500 Crs which largely remained unutilised. The company also reported healthy cash balances of Rs. 1450.73 Crs as on 31 March 2021 providing adequate liquidity backup.

ABOUT THE ENTITY

Gujarat Narmada Valley Fertilizers & Chemicals Ltd (GNFC) was incorporated in 1976 by Government of Gujarat (GoG) and Gujarat State Fertilizers and Chemicals Limited. The shareholding of Government of Gujarat was later on transferred to Gujarat State Investments Limited, the investments arm of GoG. GNFC is a manufacturer and trader of fertilizers and industrial chemicals covering a wide range of products. Other than that, the company also offers various IT solutions and services.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 5128.69 5162.42
EBITDA Rs.Crs. 1003.33 541.86
PAT Rs.Crs. 689.21 498.85
Tangible Net Worth Rs.Crs. 5962.57 5200.02
Total Debt/Tangible Net Worth Times 0.00 0.17
Current Ratio Times 3.57 2.03
KEY FINANCIAL INDICATORS (Consolidated)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 5128.69 5162.42
EBITDA Rs.Crs. 1003.33 541.91
PAT Rs.Crs. 696.95 508.01
Tangible Net Worth Rs.Crs. 6047.10 5276.81
Total Debt/Tangible Net Worth Times 0.00 0.16
Current Ratio Times 3.57 2.03
KEY COVENANTS OF THE FACILITY RATED

NA


NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

NA

ANY OTHER INFORMATION

NA

RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)
Facilities Current Rating  (2021) 2021 (History) 2020 2019 2018
Type Tenure Amount
(Rs.Crs.)
Rating Date Rating Date Rating Date Rating Date Rating
Fund Based LT 2000.00
BWR AA+/Stable
(Assignment)
NA
NA
NA
NA
NA
NA
NA
NA
Non Fund Based ST 900.00
BWR A1+
(Assignment)
NA
NA
NA
NA
NA
NA
NA
NA
Grand Total 2900.00 (Rupees Two Thousand Nine Hundred Zero Crores Only)
COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.

Hyperlink/Reference to applicable Criteria
Analytical Contacts

Aakriti Sharma

Manager - Ratings Board : +91 11 2341 2232 aakriti.s@brickworkratings.com

Vipula Sharma

Director - Ratings Board : +91 80 4040 9940 vipula.s@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Gujarat Narmada Valley Fertilizers & Chemicals Ltd.
ANNEXURE-I
Details of Bank Facilities rated by BWR
SL.No. Name of the Bank/Lender Type Of Facilities Long Term(Rs.Crs.) Short Term(Rs.Crs.) Total(Rs.Crs.)
1 Axis Bank Ltd. ILC/FLCSanctioned _ 50.00 50.00
2 Bank of Baroda Cash CreditSanctioned 690.00 _ 690.00
3 Bank of Baroda ILC/FLCSanctioned _ 395.00 395.00
4 Bank of India Cash CreditSanctioned 100.00 _ 100.00
5 Bank of India ILC/FLCSanctioned _ 25.00 25.00
6 Federal Bank Cash CreditSanctioned 10.00 _ 10.00
7 Federal Bank ILC/FLCSanctioned _ 50.00 50.00
8 HDFC Bank Cash CreditSanctioned 263.00 _ 263.00
9 HDFC Bank ILC/FLCSanctioned _ 55.00 55.00
10 Kotak Mahindra Bank Cash CreditSanctioned 150.00 _ 150.00
11 Kotak Mahindra Bank ILC/FLCSanctioned _ 150.00 150.00
12 Others Cash CreditProposed 215.00 _ 215.00
13 State Bank Of India (SBI) Cash CreditSanctioned 572.00 _ 572.00
14 State Bank Of India (SBI) ILC/FLCSanctioned _ 175.00 175.00
Total 2000.00 900.00 2900.00
TOTAL (Rupees Two Thousand Nine Hundred Zero Crores Only)
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