CRISIL puts GFCL debt plan under rating watch

MUMBAI: CRISIL has placed its ratings on Godavari Fertilisers and Chemicals Ltd’s short-term (Rs 100 crore) and long-term debt programmes (Rs 50 crore) on ‘Rating Watch with Positive Implications’.

The rating action follows Coromandel Fertilisers Ltd’s announcement on July 24 that its board has approved the scheme of amalgamation of GFCL with itself.

In February, Coromandel Fertilisers acquired Indian Farmers Fertiliser Cooperative Ltd’s 25 per cent stake in Godavari Fertilisers for around Rs 120 crore; another 5 per cent stake was acquired for Rs 23.3 crore through an open offer in April.

As per the amalgamation scheme, shareholders of Godavari Fertilisers will be entitled to receive 3 equity shares of Rs 2 each of Coromandel Fertilisers for every 2 equity shares of Rs 10 each held in Godavari Fertilisers.

Foskar Ltd of South Africa and Groupe Chimique Tunisien of Tunisia hold 10 per cent equity stake (5 per cent each) in Godavari Fertilisers under a strategic agreement for securing phosphoric acid supplies. Their stake will be reduced to 1.7 per cent each in Godavari Fertilisers, subsequent to the amalgamation.

The rating watch with positive implications status denotes the benefits that Godavari Fertilisers is expected to have based on the operational synergies and financial strength of Coromandel Fertilisers.

Coromandel Fertilisers is expected to replace the higher cost term debt of Godavari Fertilisers with lower cost debt in the medium term.