Credit Rating- Revision

August 19, 2026 The Manager (Listing/Compliance) The Manager (DCS/Compliance) National Stock Exchange of India Limited BSE Limited, Exchange Plaza, Bandra-Kurla Complex, Phiroze Jeejeebhoy Towers, Bandra (East), MUMBAI- 400 001 Dalal Street, MUMBAI- 400 001 NSE Symbol : KHAICHEM BSE Scrip Code : 507794 Dear Sir/Madam, Sub: Intimation of Credit Rating. Pursuant to Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, we are attaching herewith Credit Rating issued by India Ratings and Research. The rating is IND BBB-/Stable/IND This is for your information and further dissemination. Thanking you, Yours faithfully, For KHAITAN CHEMICALS AND FERTILIZERS LIMITED Sejal Maheshwari (Company Secretary & Compliance Officer) Membership No- F13942 Title India Ratings Affirms Khaitan Chemicals and Fertilizers’ Bank Loan Facilities at ‘IND BBB-’/Stable; Off Rating Watch with Developing Implications Brief India Ratings and Research (Ind-Ra) has affirmed Khaitan Chemicals and Fertilizers Limited's (KCFL) bank loan facilities’ rating at ‘IND BBB-’/Stable while resolving the Rating Watch with Developing Implications, as follows: Details of Instruments Instrument Regulator of Date of Coupon Maturity Size of Rating Assigned along Rating Description Instrument Issuance Rate (%) Date Issue (INR with Watch/Outlook Action million) Bank loan RBI 5,363.1 IND BBB-/Stable/IND Affirmed; facilities A3 Off Rating Watch Analytical Approach Ind-Ra continues to take a standalone view of KCFL to arrive at the rating Detailed Rationale of the Rating Action The affirmation and resolution of the Rating Watch with Developing Implications reflects: (i) generation of positive EBITDA from single super phosphate (SSP) sales despite high sulphur prices, owing to the use of spent sulphuric acid (SA) in SSP manufacturing, (ii) improved profitability in (SA) sales, driven by elevated prices and a healthy spread between the cost of spent SA and the price of 99% SA sold by KCFL, and (iii) enhanced liquidity, following the sanction of an additional INR400.7 million under the ECLGS 5.0 scheme in FY27. The EBITDA per tonne from SSP sales is estimated to have remained positive but declined to INR993/tonne in 1QFY27 (FY26: INR1,563/tonne), primarily due to higher raw material costs. At the same time, profitability from SA sales improved significantly, with EBITDA per tonne increasing to INR5,280/tonne in 1QFY27 (FY26: INR3,395/tonne; FY25: INR1,977/tonne). Given the favourable economics of SA sales, the company increasingly relies on externally procured spent SA for SSP production. The rating action also considers the company's stable operating performance, with EBITDA of INR243 million in 1QFY27 (1QFY26: INR317 million; FY26: INR1,130 million; FY25: INR231 million), supported by higher-than-expected earnings from SA sales. Ind-Ra understands that raw material price volatility may persist due to ongoing geopolitical uncertainties. Nevertheless, cash flows from SA sales, together with the use of spent SA in SSP manufacturing, are likely to provide additional financial support to KCFL. Furthermore, the contribution of the fertiliser segment to overall profitability decreased during 1QFY27, making the segment's earnings contribution a key monitorable. While profitability from SA sales is robust at present, it has historically been modest and remains susceptible to volatility in sulphur prices. List of Key Rating Drivers Strengths Established operations and market presence in SSP segment EBITDA Supported By SA Business Credit metrics improved during FY26 Weaknesses Regulated nature of fertiliser industry Profitability exposed to volatility in input prices on account of Middle East conflict Detailed Description of Key Rating Drivers Established Operations and Market Presence in SSP Segment: KCFL has an established market position in the SSP segment, with a market share of around 8.0% over FY23-FY26. The company operates six manufacturing plants, with a total manufacturing capacity of 1.13 million tonnes per annum (mtpa) across Gujarat, Rajasthan, Chhattisgarh, Uttar Pradesh and Madhya Pradesh, through which it caters to the markets of several states, with over 3,000 distributors and a strong dealership network. KCFL also has a diversified product mix of SSP fertilisers (1QFY27: 51% of operating revenue; FY26: 82%; FY25: 88%), SA and its derivatives (49%; 18%; 12%). KCFL has an in-house production capacity of 0.27mtpa for SA, which enables backward integration for SSP manufacturing. Furthermore, the company uses steam, a by-product of the manufacturing process, to operate a power unit of 4.32MW, leading to savings in power expenses. EBITDA Supported By SA Business: Despite a sharp increase in raw material prices, particularly sulphur, KCFL's EBITDA remained healthy at INR243 million in 1QFY27 (1QFY26: INR317 million; FY26: INR1,130 million; FY25: INR231 million), supported by strong profitability from SA sales. The EBITDA from SA sales increased to INR190 million in 1QFY27 (FY26: INR435 million; FY25: INR248 million), largely offsetting the lower earnings generated from SSP sales during the quarter. Profitability from SSP sales remained under pressure due to elevated sulphur prices and the inadequate pass-through of cost increases through revisions in nutrient-based subsidy (NBS) rates. Ind-Ra notes that sulphur prices have been on an upward trajectory since February-March 2025. Average sulphur prices increased to USD500-600/tonne during 4QFY26 from around USD150-160/tonne in FY25, and rose further to USD800-900/tonne during 1QFY27, following the escalation of geopolitical tensions in the Middle East. The increase in raw material costs was partially mitigated through higher NBS subsidy rates and improved market realisations. The impact of sulphur price volatility and raw material availability on the profitability of SSP operations will remain a key monitorable. While the current profitability of SA sales has supported overall earnings, the sustainability of profitability across both the fertiliser and chemicals segments will be critical for maintaining stable credit metrics. Improved Capacity Utilisation in FY26: KCFL's SSP sales volumes improved to 0.45mt during FY26 (FY25: 0.44mt; FY24: 0.34mt). The company’s overall capacity utilisation increased to 39% in FY26 (FY25: 33%; FY24: 39%). Ind-Ra will continue to monitor sales volume for SSP, given the increase in retail prices to partially offset the rise in raw material prices. The company has stopped SSP production at its Jhansi, Malwan and Rajnandgoan production facilities due to increased sulphur prices and higher freight costs, which resulted in unfavourable landed prices of sulphur. However, Ind-Ra believes that closure of facilities will not impact KCFL’s overall production volumes, as production at the remaining sites can be adequately ramped up to maintain production volumes. Credit Metrics Improved during FY26: Despite an increase in the total debt (FYE26: INR3.7 billion; FYE25: INR3.6 billion; FYE24: INR3.3 billion), KCFL's credit metrics improved in FY26 due to the increase in the EBITDA. The net leverage improved to 3.3x during FY26 (FY25: 15.8x) and the interest coverage (operating EBIDTA/gross interest expense) improved to 3.44x ( 0.77x). In FY26, the total debt comprised long-term borrowings of INR83 million (FY25: INR167 million; FY24: INR243 million); working capital borrowings of INR2.7 billion (INR2.7 billion; INR2.8 billion) and letters of credit acceptances of INR0.6 billion (INR0.5 billion; INR0.2 billion). The total debt includes outstanding borrowings of INR0.22 billion from related parties. Ind-Ra believes the leverage during FY27 will remain dependent on the SSP segment’s profitability in an environment of high sulphur prices. Ind-Ra will continue to monitor SSP business;s EBITDA contribution in overall EBITDA of the company Regulated Nature of Fertiliser [Showing first 8,000 characters — download PDF for full document]