Rationale

 The assigned ratings factor in the established presence of Rama Phosphates Limited (‘RPL') as a manufacturer of single super phosphate across the states of Maharashtra, Madhya Pradesh, Rajasthan, Karnataka, Gujarat, Uttar Pradesh and Haryana. ICRA notes that its three manufacturing plants, stationed across Madhya Pradesh, Maharashtra and Rajasthan, provide good access to vast end-user markets. The ratings favourably consider the extensive experience of the promoters with more than five decades in the fertiliser and chemicals business. The ratings also take into account the diversified product portfolio of phosphate fertilisers, sulphuric acid and soya-based products as well as its highly integrated operational structure, which enables cost competitiveness. The ratings further take into consideration the comfortable capital structure as well as adequate debt coverage indicators led by healthy cash accretion and net worth, along with modest debt levels due to absence of longterm debt. ICRA notes that the company has undertaken capex of ~Rs. 35 crore in FY2021, which was commissioned in February 2021, primarily for expanding its sulphuric acid manufacturing facilities and setting up LABSA and phospho gypsum plants. The capex was funded entirely through internal accruals, and as part of the company's backward and forward integration plans, it is expected to improve the top line as well as reduce manufacturing costs. The ratings, however, remain constrained by RPL's modest profitability margins led by low value addition involved in its soya business; nevertheless, the profitability in its fertilisers and chemicals segments remains healthy. ICRA also notes the vulnerability of the company's scale of operations and profitability to agro-climatic conditions and vagaries in crop cultivation. Further, the company's operations also remain vulnerable to adverse fluctuations in raw material prices for production of single super phosphates (SSP) and foreign exchange (forex) rates. The ratings further consider that being in the fertilisers business, the company's operations remain exposed to regulatory risk. The Stable outlook on the [ICRA]BBB+ rating reflects ICRA's opinion that RPL will continue to benefit from the extensive experience of its promoters in the fertilisers and chemicals sectors.