ZUARI - Zuari Agro Chem.

📊 NSE: ZUARI 🏢 Fertilizers 📅 Last Updated: 12/14/2025 15:24

💰 Financial Performance

Revenue Growth by Segment

Standalone revenue from operations for FY25 was INR 47.80 Cr, representing a 42.4% decrease from INR 83.00 Cr in FY24. Subsidiary performance shows Mangalore Chemicals & Fertilizers Limited (MCFL) with a turnover of INR 3,331.90 Cr and Zuari Farmhub Limited (ZFL) with INR 1,107.36 Cr. Standalone revenue in Q3 FY19 had previously dropped 37% YoY to INR 908 Cr from INR 1,434 Cr due to lower sales volumes.

Geographic Revenue Split

The company's primary markets are Maharashtra and Karnataka. Revenue in these regions was severely impacted by drought conditions, leading to a loss of market share in December. Specific percentage split by region is not disclosed in available documents.

Profitability Margins

Profitability has declined sharply; Net Profit Margin fell to -153% in FY25 from 26% in FY24. Standalone Profit After Tax (PAT) was a loss of INR 73.10 Cr in FY25 compared to a profit of INR 21.40 Cr in FY24. The decline is attributed to lower product contributions and high finance costs.

EBITDA Margin

Operating Profit Margin (EBITDA/Revenue) collapsed to -20% in FY25 from 0.83% in FY24, a variation of 2560%. Standalone EBITDA before exceptional items for FY25 was INR 17.27 Cr, an 86.3% decrease from INR 125.94 Cr in FY24.

Capital Expenditure

The company is undertaking a priority energy efficiency project with a CAPEX of INR 380 Cr to improve manufacturing cost structures. Historical CAPEX includes the development of the Goa facility which has been operational since 1973.

Credit Rating & Borrowing

ICRA ratings of [ICRA]B (Long-term) and [ICRA]A4 (Short-term) were withdrawn in August 2022 at the company's request following a No Due Certificate from bankers. Previously, ratings were on watch with developing implications due to the sale of urea and phosphatic assets to Paradeep Phosphates Limited (PPL).

⚙️ Operational Drivers

Raw Materials

Ammonia and Phosphoric Acid (Phos Acid) are the primary raw materials. These are used for the production of DAP and NPK complex fertilizers.

Capacity Expansion

The company has transitioned to an asset-light model by selling its Goa-based urea and phosphatic fertilizer manufacturing assets to Paradeep Phosphates Limited (PPL). It retains Single Super Phosphate (SSP) operations and acts as a holding company for MCFL and ZFL.

Raw Material Costs

Raw material costs for Ammonia and Phos Acid increased significantly in FY19, coupled with Rupee depreciation to 74 per USD, which the market could not absorb, leading to losses. The company switched production from DAP to NPK complexes because manufactured DAP contributions were lower than traded DAP.

Manufacturing Efficiency

Manufacturing efficiency is being addressed through the INR 380 Cr energy efficiency project. The company shifted its product mix toward NPK complexes to optimize contribution margins.

📈 Strategic Growth

Growth Strategy

The strategy involves a shift to an asset-light holding company model. Growth is pursued through subsidiaries like MCFL and ZFL, and diversifying into manufacturing, investment, and trading businesses. The company cleared external liabilities by selling bulk fertilizer assets to PPL for a valuation that allowed debt reduction.

Products & Services

Urea, Di-ammonium Phosphate (DAP), Muriate of Potash (MOP), NPK Complex fertilizers, and Single Super Phosphate (SSP).

Brand Portfolio

Jai Kisaan.

New Products/Services

The company is focusing on NPK complexes and diversifying into broader agri-business trading and investments through Zuari Farmhub Limited.

Market Share & Ranking

The company reported a loss of market share in December (YTT) due to lower DAP and MOP sales compared to the previous year.

Strategic Alliances

Joint Venture with Zuari Maroc Phosphates Private Limited (ZMPPL). ZMPPL provided a performance security of INR 250 Cr to secure obligations related to the transfer of MCFL shares.

🌍 External Factors

Industry Trends

The industry is moving toward Direct Benefit Transfer (DBT) for subsidies. The government uses special banking arrangements to clear subsidy outstandings, which helps companies manage high working capital requirements.

Competitive Landscape

Competitors include other major fertilizer players who may have better inventory positioning or lower cost structures, impacting Zuari's ability to lead price increases.

Competitive Moat

Moat is based on the 'Jai Kisaan' brand and a long operational history since 1973. However, this is offset by high debt and vulnerability to raw material price volatility.

Macro Economic Sensitivity

Highly sensitive to agricultural cycles and monsoon patterns; droughts in key states like Maharashtra and Karnataka led to significant revenue declines and losses.

Consumer Behavior

Farmers' purchasing behavior is highly price-sensitive and dependent on weather conditions; drought leads to lower uptake even if prices are stable.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to the Fertiliser Control Order and government subsidy policies (DBT). The company must comply with Secretarial Standards and the Companies Act, 2013.

Legal Contingencies

The company entered a performance security agreement of INR 250 Cr with Zuari Maroc Phosphates Private Limited regarding the transfer of 2,90,37,000 equity shares of MCFL.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the recovery of government subsidies and the volatility of international Ammonia/Phos Acid prices, which can impact margins by over 20% if not hedged or passed on.