Andhra Petrochemicals has announced a revision in its credit ratings assigned by ICRA, with downgrades affecting the majority of its credit facilities. The company communicated this development to The Bombay Stock Exchange through regulatory disclosures dated 7 February 2026 and 11 February 2026.

Credit Rating Revisions

The rating agency has made significant changes to the company's credit profile, affecting both long-term facilities while maintaining stability in short-term ratings. The revisions reflect ICRA's updated assessment of the company's creditworthiness across different facility categories.

ICRA's Rationale for Downgrade

ICRA provided detailed reasoning for the rating downgrade, citing multiple performance-related factors. The rating downgrade factors in subdued performance during 9 months FY 2026 and weaker-than-expected performance anticipated for FY 2026, driven by weak realizations resulting in compressed margins.

The operating margins declined in FY 2025 and 9 months FY 2026 as the spread between oxo-alcohols and feedstock narrowed owing to a decline in product prices. The pressure on margins is expected to continue in the near term. The performance was further impacted by the shutdown of the company's sole manufacturing facility from October 29, 2025 to February 03, 2026.

Manufacturing Facility Challenges

While the plant was initially shut for planned maintenance, the shutdown was subsequently prolonged owing to un-remunerative realizations for oxo-alcohols amid a surge in low-priced imports. The ratings remain constrained by the exposure of the company's profitability to fluctuation in the spread between oxo-alcohols and feedstock.

ICRA noted that the company is exposed to force majeure risk because of its dependence on a single supplier (HPCL) for the key raw material, propylene. However, the rating agency acknowledged that in the last three years, during times of requirement and healthy margins, the company procured raw material from BPCL-Kochi and Gas Authority of India Limited (GAIL)-Pata, though at higher cost, providing some diversification.

Company's Financial Position

In response to the downgrade, Andhra Petrochemicals clarified its strong financial position in its communication dated 11 February 2026. The company emphasized that it is debt-free, having fully paid its Project Term Loan of Rs.5.18 crores, and is not currently utilizing its Working Capital Limits.

The Working Capital limits are fully securitized by hypothecating Plant & Machinery, Stocks & Stores, and Book Debts worth Rs.300.00 crores, along with a lien on Fixed Deposits for the working capital limit of Rs.35.00 crores.

Regulatory Compliance

Both disclosures were made in compliance with regulatory requirements, with the company informing the stock exchange through its Chief Financial Officer and Company Secretary, G. Adinarayana. The communications referenced the company's equity code 500012 and were addressed to the Department of Corporate Services at The Bombay Stock Exchange.

Andhra Petrochemicals reported its unaudited financial results for the quarter and nine months ended 31st December 2025, showing mixed performance with reduced quarterly losses but increased nine-month losses. The company's operations were significantly impacted by plant shutdown for maintenance and challenging market conditions.

Quarterly Financial Performance

The company's financial performance for Q3FY26 showed improvement in loss reduction compared to the previous year:

Despite the significant revenue decline, the company managed to reduce its net loss by 28.9% compared to the corresponding quarter of the previous year.

Nine Months Performance Analysis

The nine months performance presented a contrasting picture with increased losses despite higher revenue:

Operational Challenges and Plant Shutdown

The company faced significant operational challenges during the quarter. The plant was shut down from 29th October 2025 for maintenance works relating to preventive and essential repairs, which were completed on 27th January 2026. However, due to decreased sales prices, increased input costs, and a huge gap between demand and supply, the Board and Management decided to continue the shutdown until 3rd February 2026, with operations resuming on 4th February 2026.

Cost Structure Analysis

The company's expense structure for Q3FY26 revealed several key components:

Legal Developments

The company continues to address the land lease renewal matter with Visakhapatnam Port Authority (VPA). Following the Hon'ble High Court of Andhra Pradesh judgment delivered on 3rd November 2025, the company has addressed a letter to VPA for issuing a tender as per Land Lease Policy guidelines 2015. Pending execution of the lease deed, the company has provisionally considered its bid amount for accounting of leases in accordance with Ind AS 116.

Board Approval and Compliance

The unaudited financial results were reviewed by the Audit Committee and approved by the Board of Directors at its meeting held on 4th February 2026. The statutory auditors conducted a limited review of the financial results, confirming compliance with applicable accounting standards and regulatory requirements. The company maintains a paid-up equity share capital of ₹8497.16 lakhs with face value of ₹10 per share.