ICRA has assigned an A1+ (A one plus) rating to the Rs 150 crore Commercial Paper programme (enhanced from Rs. 100 Crore) of Deepak Fertilisers & Petrochemicals Corporation Limited (DFPCL). DFPCL has other ratings outstanding of LAA (Stable) to the Rs.38 crore Non-Convertible Debenture-1 programme, Rs. 125 crore Non- Convertible Debenture-2 Programme, Rs 150 crore fund based limits and Rs 258.61 crore term loans. The company also has rating outstanding of A1+ to Rs 800 crore non fund based limits. 

The ratings continue to factor in DFPCL's strong market position in its industrial chemicals business with market leadership in Ammonium Nitrate (AN), Nitric acid & Iso-propyl Alchohol (IPA), diversified product portfolio, favorable demand outlook for AN, earnings upside due to higher production levels arising from augmentation in supply of natural gas, modest financial risk profile characterized by robust profitability, moderate gearing levels and sizeable liquid investments. However, the ratings are constrained by vulnerability of chemicals profitability to inherent price cyclicality, regulatory risk in fertilisers business, Rupee-US Dollar parity levels, import duty levels, recent increase in natural gas prices and underperformance of speciality mall business. Gas being the primary feedstock, its availability & prices has a significant impact on the operating margins of the company. In the past, the company's growth was constrained by inadequate availability of natural gas which led to low capacity utilisation. However, the supply of natural gas increased significantly in 2009-10, which is expected to be fully realised in 2010-11, thereby offering upside potential for production. Despite the recent increase in APM gas prices, the profitability of DFPCL's fertiliser divisions has increased in in H1 2010-11 due to higher production in line with adequate gas supply and higher subsidy for ANP product under Nutrient based subsidy (NBS). However, ICRA notes that the latter is unlikely to sustain in light of significant reduction in subsidy by GoI under NBS for 2011-12, thus creating high dependence on increase in farm gate price and reduction in raw material prices from international suppliers to protect it's profitability in the ANP product segment.