PRESENTATION ON FERTILISER PRESENTATION ON FERTILISER INDUSTRY OF INDIAINDUSTRY OF INDIA

Presentation outlinePresentation outline

IntroductionIntroduction Global production and consumption of fertilizersGlobal production and consumption of fertilizers Indian fertilizer industryIndian fertilizer industry Indian production ,consumption & import trend.Indian production ,consumption & import trend. Major companiesMajor companies Policies (subsidies & regulations)Policies (subsidies & regulations) Strategies for industry expansionStrategies for industry expansion

INTRODUCTIONINTRODUCTION India is the third largest producer and consumer of fertilizer India is the third largest producer and consumer of fertilizer

in the world.in the world.

Indian fertilizer industry started in 1906 with SSP production Indian fertilizer industry started in 1906 with SSP production facility at Ranipet near Chennaifacility at Ranipet near Chennai

Started operating in a big scale since 1940s, when the Started operating in a big scale since 1940s, when the

Fertilizer & Chemicals Travancore of India Ltd. and the Fertilizer & Chemicals Travancore of India Ltd. and the Fertilizers Corporation of India were set up in Kerala and Fertilizers Corporation of India were set up in Kerala and BiharBihar

The private sector produced 44.73 % of nitrogenous The private sector produced 44.73 % of nitrogenous fertilizers and 62.08 % of phosphatic fertilizers in 2006-07. fertilizers and 62.08 % of phosphatic fertilizers in 2006-07.

Total production of fertilizers in india-206.5mt .Total production of fertilizers in india-206.5mt .

Contd….Contd…. The production of urea in India has reached The production of urea in India has reached

near self-sufficiency. The requirement of the near self-sufficiency. The requirement of the nitrogenous fertilizers is met through the nitrogenous fertilizers is met through the indigenous industryindigenous industry

In the case of phosphatic fertilizers, the raw In the case of phosphatic fertilizers, the raw materials and intermediates are imported in materials and intermediates are imported in large scale. large scale.

. The requirement of potash (K) is met entirely . The requirement of potash (K) is met entirely through imports. No fertilizer unit of India has through imports. No fertilizer unit of India has any reserve of potash.any reserve of potash.

Global production & Global production & consumption of fertilizersconsumption of fertilizers

Indian fertilizer industryIndian fertilizer industry

65 large-sized fertilizer plants in India . .32 units-urea32 units-urea20 units-DAP & complex fertilizers 20 units-DAP & complex fertilizers 13 units-ammonium phosphate & CAN13 units-ammonium phosphate & CANNitrogenous fertilizers-88% urea ,10% Nitrogenous fertilizers-88% urea ,10%

DAP & 2% ammonium fertilizers. DAP & 2% ammonium fertilizers.

co2 emmission from fertilizers

0.7, 42%

0.95, 58%

india

global average

Indian production, Indian production, consumption & import consumption & import trendtrend

Fertilizer use and crop production Fertilizer use and crop production in Indiain India

24%8%3%9%5%3%4%

2.00%5%

Rice 37%Wheat 24%Food Grains 8%Pulses 3%Oil Seeds 9%Sugarcane 5%Cotton 3%Vegetables 4%

Figure 2: Crops wise consumption of Fertilizer in India

Rice37%

Wheat24%

Food Grains8%

Pulses3%

Oil Seeds9%

Sugarcane5%

Cotton3%

Vegetables4%

Fruits2%

Others5%

Rice

Wheat

Food Grains

Pulses

Oil Seeds

Sugarcane

Cotton

Vegetables

Fruits

Others

PRODUCTION AND IMPORT OF FERTILISERS(IN '000'T)

0

2000

4000

6000

8000

10000

12000

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

YEARS

PR

OD

UC

TIO

N A

ND

IM

PO

RT

(IN

'0

00

TO

NN

ES

) N Production

N Imports

P2O2 Production

P2O2 Import

K2O Production

K2O Import

CONSUMPTION OF CHEMICAL FERTILISER( LAKH TON)

020406080

100120140160

1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

YEAR

CO

NS

UM

PT

ION

IN

LA

KH

T

ON

Nitrogenous(N)

Phosphatic(P)

Potassic(K)

"N" consumption

0500

10001500200025003000

state

s

andh

ra p

rade

sh

punj

ab

tam

ilnad

u

hary

ana

utta

r pra

desh

bihar

karn

atak

a

mah

aras

htra

gujra

t

mad

hyap

rade

sh

rajas

than

west b

enga

l

states

"00

0"

ton

ne

s

2006-07

2007-08

p consumption

0100200300400500600700800900

states

p co

nsum

ptio

n (0

00 to

nnes

)

p2o5(2006-07)

P2O5(2007-08)

"k" fertilizer consumption

0100200300400500600700800900

states

"000

" to

nnes

2006-07

2007-08

consumption of N,P,K(kg/ha)

020406080

100120140

1951

-52

1957

-58

1961

-62

1965

-66

1969

-70

1973

-74

1977

-78

1981

-82

1985

-86

1989

-90

1993

-94

1997

-98

2001

-02

2005

-06

(P)

years

cons

umpt

ion

of

N,P

,K(k

g/ha

)

consumption of N,P,K(kg/ha)

% shares of consumption of fertilizers in 2006-07

12%

8%

6%

6%

19%5%

7%

11%

7%

6%

5%

7%1%

andhra pradesh

punjab

tamilnadu

haryana

uttar pradesh

bihar

karnataka

maharashtra

gujrat

madhyapradesh

rajasthan

west bengal

assam

% shares of states in fertilizer consumption in 2007-08

13%

8%

5%

6%

17%6%

7%

11%

8%

6%

5%7% 1%

andhra pradesh 2667.58

punjab 1697.76

tamilnadu 1075.65

haryana 1230.36

uttar pradesh 3755.92

bihar 1205.64

karnataka 1507.38

maharashtra 2325.85

gujrat 1623.26

madhyapradesh 1301.7

rajasthan 986.7

west bengal 1374.74

assam 213.94

MAJOR PLAYERS:MAJOR PLAYERS: The public sector companies in Indian fertilizer market are The public sector companies in Indian fertilizer market are

listed below:listed below: · Fertilizer Corporation of India Limited (FCIL) · Fertilizer Corporation of India Limited (FCIL) · Hindustan Fertilizer Corporation Limited (HFC) · Hindustan Fertilizer Corporation Limited (HFC) · Pyrites, Phosphates & Chemicals Limited · Pyrites, Phosphates & Chemicals Limited · Rashtriya Chemicals and Fertilizers Limited (RCF) · Rashtriya Chemicals and Fertilizers Limited (RCF) · National Fertilizers Limited (NFL) · National Fertilizers Limited (NFL) · Projects &Development India Limited (PDIL) · Projects &Development India Limited (PDIL) · The Fertilizers and Chemicals Travancore Limited (FACT) · The Fertilizers and Chemicals Travancore Limited (FACT) · Madras Fertilizers Limited (MFL) · Madras Fertilizers Limited (MFL) · FCI Aravali Gypsum & Minerals India Limited, Jodhpur · FCI Aravali Gypsum & Minerals India Limited, Jodhpur

Some Private fertilizer CompaniesSome Private fertilizer Companies

The Scientific Fertilizer Co Pvt Ltd The Scientific Fertilizer Co Pvt Ltd Coromandel Fertilizers Coromandel Fertilizers Deepak Fertilizers and Petrochemicals Corporation Limited Deepak Fertilizers and Petrochemicals Corporation Limited Apratim International Apratim International Aries AgroVet Aries AgroVet Devidayal Agro ChemicalsDevidayal Agro Chemicals DSCLDSCL Gujarat State Fertilizers &Chemicals LimitedGujarat State Fertilizers &Chemicals Limited Tata Chemicals LimitedTata Chemicals Limited Chambal FertilizersChambal Fertilizers Nagarjuna Fertilizers and chemicals limitedNagarjuna Fertilizers and chemicals limited Godavari Fertilizers and Chemicals limitedGodavari Fertilizers and Chemicals limited Zuari Industries limitedZuari Industries limited

CHALLENGES IN FERTILISER CHALLENGES IN FERTILISER INDUSTRYINDUSTRY

Gap between demand and supplyGap between demand and supply Greater dependency of country on imports( also Greater dependency of country on imports( also

feedstock)feedstock) Unable reduce burden of government in Unable reduce burden of government in

subsidiary ratessubsidiary rates Infrastructural bottlenecksInfrastructural bottlenecks Uncertainties in government policiesUncertainties in government policies Small size of older plantsSmall size of older plants

CURRENT SCENERIOCURRENT SCENERIO

Most companies are expecting approval for their Most companies are expecting approval for their huge capital expenditure plans from department huge capital expenditure plans from department of fertilizer and industryof fertilizer and industry

Indian fertilizer companies joined hands with Indian fertilizer companies joined hands with Jordan, Senegal, Oman, Morocco, Egypt etcJordan, Senegal, Oman, Morocco, Egypt etc

The demand for fertilizer has increased by 5% The demand for fertilizer has increased by 5% (21 June 2010, Rashtriya Chemicals and (21 June 2010, Rashtriya Chemicals and fertilizer)fertilizer)

10% increase in Urea price in April 201010% increase in Urea price in April 2010 Fertilizer subsidy has taken largest share for Fertilizer subsidy has taken largest share for

58.7% of total subsidies in 2008-0958.7% of total subsidies in 2008-09

projected production of urea

0

10

20

30

40

years

prod

uctio

n M

T/an

num

production million MT/annum

Fertilizer subsidyFertilizer subsidy

In both developed and developing countries. In both developed and developing countries.

Objectives-Objectives- Self sufficiencySelf sufficiency making available fertilizers to farmers at making available fertilizers to farmers at

affordable prices and to promote balanced affordable prices and to promote balanced application of three main fertilizer nutrients viz. application of three main fertilizer nutrients viz. nitrogen, phosphorus and potash.nitrogen, phosphorus and potash.

To encourage domestic production by allowing To encourage domestic production by allowing fertilizer producer a reasonable returns.fertilizer producer a reasonable returns.

Trends in fertilizer subsidiesTrends in fertilizer subsidies

Retention price cum subsidy schemeRetention price cum subsidy schemeFertilizer control order,1985Fertilizer control order,1985 Nov 1977-nitrogenous fertilizersNov 1977-nitrogenous fertilizers Feb 1979-complex fertilizersFeb 1979-complex fertilizers To encourage green revolutionTo encourage green revolution Subsidy=retention price*-notified sale priceSubsidy=retention price*-notified sale price Retention price-normative cost of production of Retention price-normative cost of production of

the urea as determined by the Government plus the urea as determined by the Government plus 12 per-cent post tax return on net worth.12 per-cent post tax return on net worth.

Freight subsidyFreight subsidy

Farm gate price of urea is amongst the lowest in Farm gate price of urea is amongst the lowest in the region and is heavily subsidised. the region and is heavily subsidised.

Retention price of controlled fertilizers is fixed in Retention price of controlled fertilizers is fixed in every 3 years.every 3 years.

1992-govt. decontrolled import of complex 1992-govt. decontrolled import of complex fertilizers (DAP & MOP).fertilizers (DAP & MOP).

For each decontrolled fertilizer, the Maximum For each decontrolled fertilizer, the Maximum Retail Price (MRP) is indicated by Central Retail Price (MRP) is indicated by Central Government except for Single Super Phosphate, Government except for Single Super Phosphate, the MRP of which is indicated by each State/UT the MRP of which is indicated by each State/UT Government.Government.

New fertilizer pricing policyNew fertilizer pricing policy

Started from 1 April 2003Started from 1 April 2003 Objective-Objective-encouraging efficiency based fertilizer pricingencouraging efficiency based fertilizer pricing High Powered Fertilizer Pricing Policy Review High Powered Fertilizer Pricing Policy Review

Committee (HPC) Committee (HPC) At present, the maximum retail price (MRP) of urea is At present, the maximum retail price (MRP) of urea is

Rs. 483 a quintal, while DAP costs Rs. 935 a quintal and Rs. 483 a quintal, while DAP costs Rs. 935 a quintal and MOP Rs. 445.50 a quintal.MOP Rs. 445.50 a quintal.

First 2 stages-prices was decided on the basis of energy First 2 stages-prices was decided on the basis of energy consumptionconsumption

Third stage(2006-10)-conversion of all farms into natural Third stage(2006-10)-conversion of all farms into natural feed stock.feed stock.

LIST OF RECENT POLICIESLIST OF RECENT POLICIES

1. concession scheme for SSP,DAP,MOP,SSP,TSP & indigenous Ammonium Sulphate.

2. Policy for encouraging production and availability of fortified and coated fertilizers.

3. Nutrient based pricing of subsidized fertilizers 4. Policy on P & K fertilizers 5. Policy for uniform freight subsidy on all fertilizers 6. Policy for new investments in urea sector and long term off take of urea from joint ventures abroad

NUTRIENT BASED SUBSIDYNUTRIENT BASED SUBSIDY

NBS policy on decontrolled Phosphoric and Potassic NBS policy on decontrolled Phosphoric and Potassic fertilizer w.e.f 1fertilizer w.e.f 1stst April ,2010. April ,2010.

Fix subsidy on N,P,K,S for 2010-11 Fix subsidy on N,P,K,S for 2010-11 Additional per ton subsidy for subsidized fertilizer Additional per ton subsidy for subsidized fertilizer

carrying other secondary nutrients and micronutrients.eg carrying other secondary nutrients and micronutrients.eg in Zn,Boron.in Zn,Boron.

Constitute an Inter Ministerial Committee under Constitute an Inter Ministerial Committee under chairmanship of Secretary of fertilizer.chairmanship of Secretary of fertilizer.

Retail prices fixed by companies at farm gate levelRetail prices fixed by companies at farm gate level 10% increase in price of urea (Rs 4830 to Rs 5310)10% increase in price of urea (Rs 4830 to Rs 5310)

source-government of Indiasource-government of India

% shares of major states in total fertilizer subsidy in india

0

5

10

15

20

25

utta

r pra

desh

andh

rapr

ades

h

mah

aras

htra

mad

hya

prad

esh

punja

b

gujar

at

karn

atak

a

west b

enga

l

bihar

hary

ana

tam

ilnad

u

raja

sthan

oriss

a

assa

mke

rala

othe

rs

jamm

u ka

shm

ir

himac

hal p

rade

sh

states

% s

ha

res

in f

ert

ilize

r s

ub

sid

y

1992-93

1999-00

2007-08

state wise fertilizer use /ha of gross cropped area by size of holding,2001-02

0

2040

6080

100120

140160

180

punjab madhyapradesh

maharashtra rajasthan w est bengal A.P.

major states

fertili

zer u

se/ha

of gr

oss

cropp

ed ar

ea

marginal

small

semi medium

medium

large

all household

concentration of fertilizer subsidy on major crops in india

0

5000

10000

15000

20000

major crops

tota

l fer

tiliz

er

used

(000

to

nnes

)

total fertilizer use

% share in total subsidy

32%

20%6%6%

3%3%2%2%

26%

paddy

wheat

sugarcane

cotton

ground nut

jowar

bajra

maize

others

Source-department of Source-department of fertilizers (government of fertilizers (government of India)India)

subsidies on indegenous and imported fertilizers

0100020003000400050006000700080009000

10000

year

1986

-87

1988

-89

1990

-91

1992

-93

1994

-95

1996

-97

1998

-99

2000

-200

1

years

su

bs

idie

s in

cro

re r

up

ee

s

Total Subsidy Subsidy on Indigenous fertilizers

Total Subsidy subsidy onimported fertilizers

Total Subsidy on fertilizers

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

year

1985

-86

1986

-87

1987

-88

1988

-89

1989

-90

1990

-91

1991

-92

1992

-93

1993

-94

1994

-95

1995

-96

1996

-97

1997

-98

1998

-99

1999

-200

0

2000

-200

1

years

su

sid

y i

n c

rore

ru

pe

es

Total Subsidy

Fertilizer regulations:Fertilizer regulations:

Fertilizer control orderFertilizer control order Compulsory registration of fertilizer makers, importers Compulsory registration of fertilizer makers, importers

and sellers.and sellers. Specifications for all fertilizers produced, imported or Specifications for all fertilizers produced, imported or

sold in India.sold in India. A set of regulations on the manufacture of fertilizer A set of regulations on the manufacture of fertilizer

mixtures.mixtures. Packing and labelling of fertilizer bags.Packing and labelling of fertilizer bags. Appointment of enforcement agencies and creation of Appointment of enforcement agencies and creation of

quality control laboratories.quality control laboratories. Banning of the manufacture or import and sale of non-Banning of the manufacture or import and sale of non-

standard, spurious or adulterated fertilizers.standard, spurious or adulterated fertilizers.

Central fertilizer quality control and Central fertilizer quality control and training institutetraining institute

Undertaking inspection and analysis of imported Undertaking inspection and analysis of imported and indigenous fertilizersand indigenous fertilizers

Standardization and development of method of Standardization and development of method of analysisanalysis

Training of fertilizer enforcement officers and Training of fertilizer enforcement officers and analysts.analysts.

Acting as a referee laboratoryActing as a referee laboratory Providing technical guidance to the Central and Providing technical guidance to the Central and

State governments on Fertilizer Quality Control State governments on Fertilizer Quality Control Laboratories.Laboratories.

Fertilizer movement control order(1973)Fertilizer movement control order(1973)

STRATEGIES FOR INDUSTRY STRATEGIES FOR INDUSTRY EXPANSIONEXPANSION

Modernization and revamping of existing Modernization and revamping of existing fertilizer units.fertilizer units.

Reviving some of the closed fertilizer unitsReviving some of the closed fertilizer unitsAlternative sources for urea productionAlternative sources for urea productionEstablishment of joint ventures where Establishment of joint ventures where

cheaper raw materials can be procuredcheaper raw materials can be procuredJoint ventures for phosphoric acid Joint ventures for phosphoric acid

procurementprocurement

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