Fertiliser sector eyes faster clearance of overdue subsidy payments: Report

The domestic fertiliser sector expects faster clearance of overdue subsidy payments to help companies tide over their liquidity problem during the second tenure of the NDA government, rating agency Icra said in a report here.

Faster clearance of the overdue subsidy payments, including through 'Special Banking Arrangement', will help the fertiliser companies tide over the liquidity problem, Icra Senior Vice President and Group Head - Corporate Ratings - K Ravichandran said.

"The domestic fertiliser sector requires the urgent attention of the new NDA government, as the industry is reeling under severe liquidity crisis, due to delayed subsidy payments," he added.

The Narendra Modi-led National Democratic Alliance (NDA) is all set to form the government at the Centre for a second consecutive term after having swept the Lok Sabha polls.

Icra observed that there was significant rise in the working capital borrowings of the fertiliser companies over the last 3-4 months, due to subsidy delays and weaker collections from the retail market following poor monsoons in some of the key agricultural states.

This has strained the profitability and key credit metrics of the major players in the sector, the rating agency added.

Faster clearance of the overdue subsidy payments will help the companies tide over their liquidity problem, even as the country face an uncertain monsoon scenario in 2019-20, it added.