💰 Financial Performance

Revenue Growth by Segment

Total revenue from operations reached INR 1,617.14 Cr in FY18, representing a 15.94% increase from INR 1,394.83 Cr in FY17. TTM sales growth is reported at 1%, while the 5-year compounded sales growth stands at 14%, driven by the manufacturing of Urea and Complex Fertilizers.

Geographic Revenue Split

Not disclosed in available documents; however, the company operates primarily out of its Manali, Chennai plant, serving the Indian agricultural market.

Profitability Margins

Operating Profit Margin (OPM) was 1% in FY18, a significant decline from 6% in FY17. Net profit for FY18 was a loss of INR 45 Cr compared to a profit of INR 4 Cr in FY17. TTM profit growth has declined by 39%, reflecting high sensitivity to raw material costs and interest burdens.

EBITDA Margin

Operating profit stood at INR 24 Cr in FY18 (1.48% margin), down 69.6% from INR 79 Cr in FY17. This decline in core profitability is attributed to the cost of materials consumed rising to INR 1,255.52 Cr, which accounts for 77.6% of total revenue.

Capital Expenditure

Capital Work-in-Progress (CWIP) was INR 26 Cr as of March 2018, with fixed assets valued at INR 162 Cr. Historical data shows CWIP fluctuating between INR 3 Cr and INR 31 Cr over the last decade, indicating periodic maintenance and minor upgrades rather than massive capacity overhauls.

Credit Rating & Borrowing

CARE Ratings reaffirmed a 'CARE BB+; Stable' rating for long-term bank facilities (INR 350 Cr) and 'CARE A4+' for short-term facilities (INR 397.80 Cr) as of December 2023. Borrowing costs are high, with interest expenses of INR 94 Cr in FY18 on total borrowings of INR 1,506 Cr.

⚙️ Operational Drivers

Raw Materials

Specific raw material names are not explicitly listed, but 'Cost of materials consumed' totaled INR 1,255.52 Cr in FY18, representing 77.6% of total revenue. Typical materials for this industry include Naphtha and Natural Gas.

Key Suppliers

Chennai Petroleum Corporation Ltd (CPCL) is identified as a key supplier and related party for transactions involving raw material procurement.

Capacity Expansion

Current fixed assets are valued at INR 192 Cr (Mar 2023). Specific installed capacity in MT is not disclosed in the provided snippets, and no major expansion timeline is detailed.

Raw Material Costs

Raw material costs were INR 1,255.52 Cr in FY18, up 6.67% from INR 1,177.03 Cr in FY17. Procurement is managed through long-term arrangements with entities like CPCL to ensure steady supply for fertilizer production.

Manufacturing Efficiency

Capacity utilization metrics are not provided, but ROCE was 5% in FY18 and improved to 10.8% in recent periods, indicating a recovery in capital efficiency.

📈 Strategic Growth

Expected Growth Rate

Not disclosed in available documents

Growth Strategy

The company focuses on its 'Vijay' brand for Urea and Complex Fertilizers while expanding its portfolio into eco-friendly products like Bio-fertilizers, Organic Manure, and City Compost. Growth is tied to maintaining the subsidy-linked revenue model and improving operational margins through better capacity utilization.

Products & Services

Urea, Complex Fertilizers, Bio-fertilizers, Agro Chemicals, Organic Manure, and City Compost.

Brand Portfolio

Vijay

New Products/Services

The company is trading eco-friendly Agro Chemicals and Organic Manure under the 'Vijay' brand to diversify revenue beyond traditional chemical fertilizers.

Strategic Alliances

The company has a significant shareholding from Naftiran Inter Trade Company Ltd (25.77%), indicating a long-standing strategic partnership.

🌍 External Factors

Industry Trends

The industry is shifting toward eco-friendly and organic fertilizers. Madras Fertilizers is positioning itself by manufacturing Bio-fertilizers and City Compost to align with these sustainable agriculture trends.

Competitive Landscape

Operates in a highly regulated environment alongside other public and private sector fertilizer giants; competition is based on distribution reach and brand trust.

Competitive Moat

The company's moat is derived from its status as a Government of India enterprise (59.5% stake) and the established 'Vijay' brand. However, this is offset by a weak capital structure with a negative net worth of INR 492.03 Cr in FY18.

Macro Economic Sensitivity

Highly sensitive to agricultural demand and monsoon patterns, as well as GOI fiscal policy regarding fertilizer subsidies.

Consumer Behavior

Increasing farmer preference for bio-fertilizers and organic manure is driving the company's product diversification.

Geopolitical Risks

Exposure to international prices of raw materials and the strategic involvement of Naftiran Inter Trade Company (Iran-linked) may present geopolitical sensitivities.

⚖️ Regulatory & Governance

Industry Regulations

Operations are strictly governed by the Fertilizer Control Order and GOI subsidy policies, which dictate pricing and distribution of Urea.

Taxation Policy Impact

The company had a 0% effective tax rate in FY18 due to accumulated losses. Recent data shows tax rates fluctuating between 7% and 52% as profitability varies.

Legal Contingencies

The company faces significant legal and financial risks, including contingent liabilities of INR 916 Cr and a default in the repayment of principal on Government of India (GOI) loans.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the restructuring of GOI loans and the sustainability of the negative net worth base (INR -44 Cr in Mar 2023, improved from INR -892 Cr in Mar 2020).

Geographic Concentration Risk

Manufacturing is concentrated at a single location in Manali, Chennai, making it vulnerable to regional operational disruptions.

Third Party Dependencies

High dependency on GOI for subsidies and CPCL for raw materials.

Technology Obsolescence Risk

The aging plant (fixed assets mostly depreciated) may require significant future investment to maintain manufacturing efficiency against newer, more efficient plants.

Credit & Counterparty Risk

Debtor days increased to 156 days in Mar 2022 before dropping to 53 days in Mar 2023, indicating volatility in subsidy and trade receivable collections.