Is Fertilizers & Chemicals Travancore Ltd (FACT) Halal and Shariah Compliant?
Current Price
Fertilizers & Chemicals Travancore Ltd (FACT), incorporated in the year 1943, is the first large-scale fertiliser plant in India at Udyogamandal, Kochi, Kerala. The company is engaged in the manufacturing and selling of fertilizers, its by-products and Caprolactam. It is under the administrative control of the Department of Fertilizers, Ministry of Chemicals & Fertilizers, Government of India.
From a
- Company is expected to give good quarter
- Stock is trading at 42.0 times its book value
- Company has low interest coverage ratio.
- The company has delivered a poor sales growth of 11.9% over past five years.
Shariah Compliance Analysis of Fertilizers & Chemicals Travancore Ltd
When navigating the Indian stock market, ethical investors constantly seek to align their portfolios with Islamic finance principles. A frequent question we receive is whether Fertilizers & Chemicals Travancore Ltd (FACT) is Halal and Shariah compliant. To accurately determine the Shariah compliance status of Fertilizers & Chemicals Travancore Ltd, we must conduct a comprehensive quantitative and qualitative analysis of both its core business operations and its underlying financial health.
Business Sector Screening for FACT
The very first and most critical step in Halal stock screening is ensuring that the primary business activities of Fertilizers & Chemicals Travancore Ltd do not violate Islamic law. Companies heavily involved in prohibited (Haraam) sectors like conventional banking, alcohol, gambling, and adult entertainment are strictly excluded. If Fertilizers & Chemicals Travancore Ltd derives its core revenue from permissible (Halal) activities, it successfully advances to the financial ratio analysis phase.
Financial Ratio Analysis
Even if a prominent company like Fertilizers & Chemicals Travancore Ltd operates entirely within a Halal sector, it must still pass strict financial screens to guarantee its corporate practices align with Shariah principles.
- Debt to Total Assets: The interest-bearing debt of Fertilizers & Chemicals Travancore Ltd must not exceed the universally accepted threshold (typically 30% or 33%).
- Illiquid to Total Assets: Fertilizers & Chemicals Travancore Ltd must maintain a sufficient percentage of tangible, illiquid assets in its portfolio.
- Impermissible Income: Any incidental non-compliant revenue (like interest) must strictly remain below 5% of total gross revenue.
Dividend Purification for Fertilizers & Chemicals Travancore Ltd
If Fertilizers & Chemicals Travancore Ltd (FACT) passes both the sector screens and strict financial tests, it is classified as a Halal stock. However, any incidental impermissible income earned by the company must be cleansed. Investors holding FACT are required to calculate their dividend purification ratio and donate that exact portion to charity, with no expectation of spiritual reward (Sawab), purifying their Halal earnings.
By utilizing our advanced Halal stock screener platform, you can effortlessly track the live Shariah compliance status of Fertilizers & Chemicals Travancore Ltd (FACT), view historical compliance trends, and access precise dividend purification calculations. Make informed, ethical investment decisions with confidence.
⚠️ Disclaimer & Research Notice: This analysis is for informational and reference purposes only. It is not financial advice, and we are not responsible for any financial losses or damages incurred. Always do your own research (DYOR) and consult with a qualified Shariah advisor or financial planner before making any investment decisions.