India Ratings & Research (Ind-Ra) has assigned Nagarjuna Fertilizers and Chemicals (NFCL) a long-term issuer rating of 'BB-'. The outlook is stable.

The ratings are constrained by NFCL's tight liquidity due to delays in release of subsidy (Rs 9.8 billion). The company's financial profile was weak in FY14 due to forex-related losses of Rs 1.4 billion due to the drastic rupee depreciation during 1HFY14.

This, along with the fall in production of urea due to lower gas supply, resulted in lower EBITDA margins of 3% in FY14 (FY13: 9.4%). Consequently, there were a few irregularities in servicing debt. However, the liquidity improved in 1QFY15 as the pending subsidy was released in 1QFY15.