ICRA has reaffirmed the LBBB (pronounced L triple B) rating to the Rs. 670 crore long-term fund based limits of Paradeep Phosphates Limited (PPL). ICRA has also reaffirmed the A2 (pronounced A two) rating to the Rs. 1700 crore short-term non- fund based limits of PPL. The outlook on the long term rating is „Stable.

The ratings reflect the company's leading market position in phosphatic fertilisers in the territories it operates in, favorable demand outlook for phosphatic fertilizers, moderate cost position due to high operating efficiency and part backward integration into the manufacture of phosphoric acid and high financial flexibility arising from sizeable liquid investments. However, the ratings are constrained by the vulnerability of the company's profitability to agroclimatic and regulatory risks; anticipated decline in profitability in 2011-12 (over 2010-11 levels) due to lower subsidy fixed by GoI under Nutrient based subsidy (NBS) scheme and challenges associated with raising farm gate price and negotiating lower input prices in a corresponding manner, the company's relatively high concentration on Phosphatic/complex fertilisers, and high working capital intensity of its fertiliser business. The key rating sensitivities for PPL are the extent to which the company would be able to pass on the subsidy reduction (in 2011-12) in DAP/NPK to the farmers or suppliers in order to protect its profitability and timely completion of announced capex programme.