Market buoyancy helps phosphatic fertiliser makers to have a good H1
Nitrogenous fertiliser makers fail to benefit.
R. Balaji
Chennai, Nov. 8 Buoyed by market demand and prompt subsidy disbursements by the
Government, manufacturers of phosphatic fertilisers have had a good first half
in the current year.
According to Mr K.S. Raju, Chairman, Fertilisers Association of India,
manufacturers of phosphatic fertilisers would have turned in a buoyant
performance, while nitrogenous fertiliser manufacturers totally dependant on
subsidised pricing mechanism have not benefited from the buoyant market.
With the prices of phosphatic fertilisers linked more closely to market demand
and supply, and to the international market prices of raw materials,
manufacturers would have had the benefit of improved margins as prices have
been high.
Nitrogenous fertiliser manufacturers have done well in the international
market, but domestic players subject to subsidy regime have not had the benefit
of the buoyancy in the market, he said.
According to Mr P. Nagarajan, Chief Financial Officer, Coromandel Fertilisers,
a Murugappa Group company, the prompt disbursement of subsidy during the
current year and added compensation for the cost of sulphur in the complex
fertilisers, which was earlier not available, have contributed to the
bottomline for the manufacturers of complex and phosphatic fertilisers. The
seasonal demand for fertilisers has also been good and the tight supply
position has contributed to better prices, with sales on cash and carry basis
with no discounts or rebates, he said.
Raw material prices
While the retail price has been the same as that of last year, the raw material
prices have jumped significantly leading to a steep growth in subsidy for the
raw material cost.
For instance, the price of DAP which has been around Rs 9,350 a tonne, gets
five time more subsidy this year compared with last year. This was because the
price of the raw material phosphoric acid which was $560 a tonne (Rs 25,000)
last year had increased to over $2,200 (Rs 100,000) and sulphur prices had
jumped ten times to touch $800 (Rs 36,000). The prices of these raw materials
were now coming down.
This financial year, the Government has distributed subsidy in cash up to
September, an unprecedented move. This helped the domestic fertiliser
companies' revenue by over Rs 55,000 crore.
Demand driven
According to a representative from another leading manufacturer of fertilisers
and other agro inputs, demand in the South and West driven by sugarcane,
foodgrains and cotton have buoyed the market.
Companies with a diversified presence in fertilisers and agro inputs have
benefited from the buoyant demand in the market.
However, industry representatives declined to comment on whether the good times
would hold during the second half. It is likely that the Government would
continue with cash subsidy disbursement up to October, but subsequently, it is
likely to revert to issuing bonds because of fiscal pressure.
http://www.thehindubusinessline.com/2008/11/09/stories/2008110951030500.htm
"Some cause happiness wherever they go; others whenever they go."
- Oscar Wilde
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