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Informist, Wednesday, Feb. 11, 2026

 

MUMBAI – India's complex fertiliser manufacturing sector will add around 4 million tonne per annum of capacity in the next three years over the current base of about 16 million tonne per annum, Crisil Ratings said in a report. Capacity utilisation in the fertiliser sector has shot up due to negligible capacity addition over the past seven years amid steadily rising demand, Crisil Ratings said. The additional capacity is expected to keep the country's import dependency in check, it said.

 

Complex fertilisers, accounting for a third of the overall domestic fertiliser consumption, provide balanced soil nutrition. Around one-third of India's complex fertiliser requirements are met through imports — mainly diammonium phosphate (DAP). Nitrogen phosphorous potassium (NPK) is largely indigenously produced. The share of NPK grades in overall complex fertilisers increased to 60% in 2024-25, compared with 53% on average in the previous five fiscals, on account of prioritisation of NPK production by domestic manufacturers due to better cost economics, the rating agency said

 

Despite the capital expenditure, credit profiles of fertiliser manufacturers will remain comfortable, supported by healthy profitability amid improving backward integration and limited reliance on debt, it said. The government's track record of timely subsidy disbursements also supports manufacturers' working capital cycles, it said.

 

Healthy demand and limited capacity growth led to capacity utilisation reaching 95% this fiscal, it said. The capacity of complex fertilisers increased by 500,000 tonnes per annum over the last seven years. "The planned capacity addition will not only provide a growth avenue but also help in keeping import dependency at 30-32%, which otherwise would have increased by 10-11% by fiscal 2029," Anand Kulkarni, director of Crisil Ratings, said. The new capacities will have minimal offtake risk given the high import dependency, the report said. 

 

Additionally, the industry will add sulphuric and phosphoric acid capacities, which are key intermediaries for complex fertilisers. This is expected to improve backward integration to 60% from 50% in 2024-25. Such integrated capacities will lead to stable profitability given the inherent higher volatility in prices of intermediaries compared with raw materials, while also reducing import dependency for these intermediaries, it said.

 

Manufacturers of complex fertilisers are expected to invest INR 120 billion-INR 130 billion over the next three financial years. A large part of the planned capex is likely to be funded out of healthy accruals from existing capacities, leading to low reliance on external debt. These will keep the leverage — defined as the gross debt-to-earnings before interest, taxes, depreciation and amortisation ratio — largely stable at 2.0–2.2 times over the next two financial years, the rating agency said.  End

 

Reported by Taniva Singha Roy

Edited by Saji George Titus

 

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