Credit rating agency, CARE has reaffirmed the assigned ‘A1+’ rating to the Commercial Paper (CP) of United Phosphorus for Rs 700.00 crore where the aggregate of CP and other working capital borrowings should be within the sanctioned working capital limits.
The agency has also reaffirmed the assigned ‘AA+’ rating to the Non Convertible Debenture (NCD) issue of the company for Rs 600.00 crore.
The ratings are however, constrained by seasonality associated with the business and its subsequent impact on the overall working capital cycle, regulatory risk associated with agrochemicals usage and dependence of agrochemical sales on extraneous factors. Healthy profitability margins, comfortable liquidity position and growth largely unaffected by the global meltdown add further strength to the ratings.
United Phosphorus is the largest Indian agrochemical company and is engaged in research, manufacturing, selling and distribution of agrochemicals and specialty chemicals across the globe. The company has registered fall of 13.12% in its net profit from ordinary activities after tax for the year ended March 31, 2011 at Rs 157.50 crore as compared to Rs 181.29 crore for the year ended March 31, 2010. Its total income has increased by 16.65% at Rs 3064.68 crore for the year ended March 31, 2011 from Rs 2627.34 crore for the year ended March 31, 2010.