4/20/2011

1

C Narasimha ReddyBusiness Unit Head

Jubilant Industries Ltd

FAI Management Development ProgrammeJAIPUR

16th April, 2011

Prospects of SSP under NBS

Indian Fertilizer Scenario

Single Super Phosphate (SSP) & Phosphatic Fertilizers

SSP History & Manufacturing process

Role of SSP in crops and soil

SSP Industry in India

Subsidy policy for fertilizers in India

Changes in Subsidy policies for SSP

Nutrient based subsidy policy (NBS)

Impact of NBS on SSP

Future prospects for SSP under NBS

Presentation Flow

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There are about 139 fertilizer plants in operation in India,

29 Urea

19 DAP and NP/NPK Complex

80 SSP

10 Ammonium Sulphate

1 Calcium Ammonium Nitrate Unit

Highest Consumption fertilizer in India is Urea (260 Lac MT), followed by DAP (94 Lac MT) and NPK Complex (70 Lac MT) & SSP (30 Lac MT)

Potash based fertilizers are not produced in India, all of it is imported (Consumption in 09-10 - 36 Lac Mt)

Total 268,120 Sale Points of which Private 78% and Institutional 22%

Indian Fertilizer Scenario

Indian Fertilizer Industry India is the 3rd largest fertilizer producer in the world.

The Indian fertilizer industry started operating in a big scale since 1940s, with

setting up of Fertilizer & Chemicals Travancore of India Ltd. (Kerala) and

Fertilizers corporation of India (Bihar).

The fertilizer industry in India grew to a considerably in 1970s and 1980s after

the emergence of the green revolution in the late sixties.

Under the administrative control of the Department of Fertilizers, there are 9

public sector undertakings & two Cooperative societies.

56 large size fertilizer units manufacture wide varieties of nitrogenous and

phosphatic/ complex fertilizers.

The private sector produces 44% of nitrogenous fertilizers and 62% of

phosphatic fertilizers.

SSP contributes to 6.6% of total phosphatic inputs in India.

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Products 2009-102010-11

Estimates

2013-14

Projection

Urea 26.5 27.5 30.0

DAP 10.0 11.2 11.5

Complex 8.6 9.2 10.0

SSP 2.6 3.2 3.5

Potash 4.2 4.8 6.0

Others 0.1 0.1 0.1

TOTAL 53.0 56.0 61.1

India contributes 16% of the Global Fertilizer consumption

Projected CAGR (in 13-14 over 09-10) in Urea (4%) , DAP (5%) & SSP (10%)

Indian fertilizer Market Size & Growth

Million MT

Source: FAI

SSP & yield of crops

Yields in select countries, depending on share of SSP

Country Share of Yield in Kilogram per Hectare

SSP Cereals Pulses Paddy

Egypt 92.8 7562 3146 10288

China 30.5 5315 1309 6422

Brazil 28.6 3553 834 3826

Uruguay 18.8 N.A. N.A. N.A.

Argentina 12.9 4352 1341 N.A.

India 6.6 2619 611 3303

World 13.5

Source: International Fertilizer Association data released in 2007

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Country wise total Phosphatic & SSP consumption

India is third largest SSP consumer in world after China & Brazil

Source: FAI

Share of SSP to Phosphatic fertilizers

0

20

40

60

80

100

1950-51 1970-71 1980-81 1990-91 1991-92 2009-10

100

44.8

23.4 28.5 18.66.6

% of SSP to Phosphatic consumption in India

% of SSP to Phosphatic consumption in India

0

0.2

0.4

0.6

0.8

1

92

.1%

30

.5%

28

.6%

18

.8%

13

.5%

12

.9%

6.6

%

5.7

%

4.2

%

4.2

%

4.0

%

3.4

%

3.3

%

% share of SSP to total P2O5 consumption

% share of SSP to total P2O5 consumption

Source: FAI

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Single Super Phosphate - History

1840 - Single Super Phosphate a fertilizer that contains P in water

soluble form was first produced by the scientists of Rothamsted

Experimental Station [UK] during the year 1840. Development of

more complex phosphatic fertilizers such as Di-ammonium

phosphate.

1906 - Single Super Phosphate (SSP) Fertilizer industry is the

pioneering fertilizer industry in India and the first SSP plant have

been established by EID Parry in the year 1906.

Today In India there are 80 SSP manufacturing units with an

installed capacity of 79 Lac Mt

SSP is produced by digesting grounded rock phosphate with diluted

Sulphuric Acid.

In this process, water insoluble tri-calcium phosphate {Ca3(PO4)2} of Rock

phosphate is converted into water soluble mono-calcium phosphate

{Ca(H2PO4)2}. Calcium fluoride (CaF2) is main impurity present in the rock

and also react with acid.

Following reactions explain the chemistry of Sulphuric acid reaction with

rock phosphate-

3Ca3(PO4)2 + CaF2 + 10H2SO4 6H3PO4 + 10CaSO4 + 2HF

3Ca3(PO4)2 + CaF2 + 14H3PO4 10Ca(H2PO4)2 + 2HF

H2SO4 + CaF2 CaSO4 + 2HF

4HF + SiO2 SiF4 + H2O

3SiF4 + 4H2O SiO2.2H2O + 2H2SiF6

S S P Manufacturing & Chemistry

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Steps in SSP Manufacturing

SSP Single Super Phosphate SSP is a phosphatic fertilizer containing

16% P2O5 present in water soluble for available to plant

Sulphur 11% available for plant utilization (one of the most critical

nutrient for Oilseeds, sugarcane & Potato for their quality output)

Improves lodging resistance (Calcium 21%)

Trace Minerals available (Mg, Fe, Zn, Cu & B)

These components improve root growth and chlorophyll synthesis in turn

improves tuber / product quality

Improves soil properties, sustained fertility

Helps improve immunity (insects/disease resistance)

Available in Powder and Granulated form to meet crop specific nutrient

requirement

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Roles of SSP components

13

Role of Phosphorus Role of Sulphur Role of Calcium

Plant growth

Quality & yield

improvement

Root development

Enhance crop

maturation

Chlorophyll & Protein

formation

Oil synthesis

Formation of enzymes and

vitamins

Promotes nodulation in

legumes for N-fixation

increases crop yield by 15-

25% in S deficient soils

Plant cell elongation

and stability

Improves lodging

resistance

Removes acidity

and restore soil

health

Remove soil

compaction

SSP - Nutritional Solutions to Sustainable Yields

India has acute Sulfur Malnutrition in soils leading to sluggish

Productivity

Sulfur demand of crops can be met by Using Fertilizers like Single

Super Phosphate

DAP is dependent of Global Phos Acid suppliers and availability

depends on global swings

SSP could easily meet P requirement while simultaneously supplying

S, Ca and micronutrients to Crops

SSP also helps to protect the soil from disintegration

SSP use in Sulphur deficient crops increases the crop yield by 15-

25%

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Location of SSP plants in India

Prim. KapPrim. Kap

16

Consumption increased by 8% over previous year

Production increased by 24% over previous year

(LAC MT)SSP - All India Production capacity and market size

Source: FAI

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Production during 2009-10 increased by 19% over previous year

Consumption during 09-10 remained static resulting in high carry

over stock in view of NBS policy

(LAC MT)

SSP - India Capacity, Production & Consumption

0

10

20

30

40

50

60

70

80

Production capacity Production Consumption

3220 18

47

118.6

Large consolidated Small fragmented

Source: FAI

FY 2009-10

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

UP MP MAH RAJ GUJ

3.3

6.9

5.4

1.7

0.8

2.5

5.7

4.7

8.8

2.0

Cons 2009-10 Prodn 09-10

Major SSP consuming States (09-10)

Above 5 states have 80% consumption of total SSP in the country

Rajasthan has excess production which caters to MP, MH, CG, PB, HR and UP markets due to RM availability in the state.

GUJ additional production goes to MP, MH

Lac MT

Source: FAI

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19

Top 10 SSP Companies (09-10)

0

1

2

3

4

5

6

7

8

9

KHAITAN LIBERTY

PHOSPHATE

RAMA

PHOSPHATE

JUBILANT B.E.C HLL/TCL JAYSHREE CHEM COROMANDAL TEESTA AGRO BASANT AGRO

8.4

7

6.2

4

4.2

9

4.2

9

2.0

1

1.6

1.6

1.3

2

1.3

2

1.2

3.3

3 4.3

4

3.2

2

2.5

4

1.7

9

0.8

9

0.7

6

1 0.9

9

0.7

3

Capacity (Lac MT) Production (Lac MT)

0%

20%

40%

60%

80%

100%

KHAITAN LIBERTY PHOSPHATE RAMA PHOSPHATE JUBILANT B.E.C HLL/TCL JAYSHREE CHEM COROMANDAL TEESTA AGRO BASANT AGRO

39%

70%75%

59%

89%

56%48%

76% 75%

61%

% Capacity Utilization

% Capacity Utilization

Source: FAI

Indian Fertilizer sector - Subsidy

Indian fertilizer industry is highly regulated and dependent on subsidy given by

Government of India (GoI) to maintain farm gate prices

The fertilizers are regulated by GoI under Fertilizer Control Order 1985

The MRP of each fertilizer product is fixed by the Government and the difference

of production cost or import cost is paid to companies in the form of subsidy.

Till 2009-10, the subsidy was fixed by the government on quarterly basis based

on the input cost/ Import cost to the manufacturer

A new subsidy policy, called Nutrient Based Policy (NBS) announced by GoI

for 2010-11, valid for 1 year. Same policy is being continued for another year

2011-12

Under NBS the subsidy amount for each fertilizer is fixed based on the nutrient

composition in the fertilizer.

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SSP subsidy process & documentation

Documents required to claim 85% subsidy:

License no & validity of dealer for state

Selling permission copy to manufacturer issued by state govt.

Monthly quality certificate issued by state of manufacturing

Auditors certificate verifying sales quantity

Signature of authorized signatory & auditor verified by Board of Company

Manufacturer

sells the

product to

dealer

Dealer

enters the

material in

his stock

register

Dealer submits

monthly sales

information to

district DoA

Dealer

confirms

the

quantity

received

Auditor

certificate

verifying sales

Manufacturer

submits the bills

to claim 85%

subsidy

Dist DoA

verifies the

sold quantity &

reports to DoA

state DoA sends

a report to GoI

for release of

balance 15%

subsidy

GoI releases

balance subsidy

amount to

manufacturer

DoA Department of AgricultureGoI Government of India

Subsidy on SSP is on sold quantity and not on dispatched quantity as in DAP & Urea

SSP subsidy policy 1993-2007

Concession Rs per MT

YEAR PERIOD SSP DAP SSP as % on DAP %

From To

1993 1993-94 to 95-96 340 1100 34.00%

2000-01 1st April 30th June 800 4450 18.00%

1st July 30th Sep 700 3700 18.90%

1st Oct 31st Dec 700 3900 17.90%

1st Jan 31st March 700 4100 17.10%

2002-03 1st April 30th June 650 2598 25.00%

1st July 30th Sep 650 2591 25.10%

1st Oct 31st Dec 650 2425 26.80%

1st Jan 27th Feb

12th March 31st March 650 2694 24.10%

28th Feb 11th March 650 2488 26.10%

2004-05 1st April 30th June 650 4215 15.40%

1st July 30th Sep 650 4250 15.30%

1st Oct 31st Dec 650 5420 12.00%

1st Jan 31st March 650 5417 12.00%

2006-07 1st April 31st March Gp 1 975 6875 14.20%

Gp 2 975 7292 13.40%

Source: FAI

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SSP Subsidy policies 2007 onwards

The discrimination of SSP subsidy policy, affected the stability of growth in

the production and despatches of SSP till 2007-08.

The year 2008-09 witnessed a major change in the policy, although

announced for a brief period, i.e., for one year and four months effective

from 1st May 2008.

Changed policy introduced fixation of uniform MRP by the Central Govt.

against earlier practice of MRP fixed by the State Govts.

The policy also provided for monthly revision in the concession rates to

reflect the variation in prices of raw materials vis--vis imported rock

phosphate and imported sulphur.

For the first time, the policy recognized sulphur content in SSP while fixing

The policy continued upto September, 2009. Consequently, the production

of SSP showed significant increase to the tune of 53% during Kharif 2009

over Kharif 2008.

W.e.f. 1st Oct 09, the concession policy revised with fixed subsidy of Rs.

2000 per ton and open selling price for SSP. However,.

The open MRP did not work as DAP prices remained controlled with

variable subsidy leaving a gap in farm gate price of SSP & DAP.

Increase in raw materials (particularly, sulphur) during the period resulted

in reduced production.

W.e.f. 1st May 2010, NBS policy for SSP announced recognizing SSP also as

key fertilizer.

SSP Subsidy policies 2007 onwards

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NBS Policy As per the Nutrient Based Subsidy, the Government is offering a Fixed per

Kg subsidy for application on N, P, K & S as well as micronutrients with

multi-fold objective

Increase availability of secondary and micronutrients in the soil by encouraging

the producers to innovate and experiment with customized fertilizers, leading to

higher demand due to higher response

Reduce the subsidy bill by decontrolling the prices.

NBS has brought the price parity to the farmers for P&K fertilizers based on

nutrient content

NBS was announced in March 2010 for 2010-11 and revised again in March

2011 for FY 2011-12 considering international prices of Urea & DAP

Sl No. NutrientsNBS (Rs per Kg of Nutrients) as on

16.3.2010NBS (Rs per Kg of Nutrients)

as on 09.03.2011

1 N 23.227 27.4812 P 26.276 29.4073 K 24.487 24.6284 S 1.784 1.692

NBS policy 2010-11 & 11-12

S No Product NBS Rs per MT (16.03.2010) NBS Rs per MT (09.03.11)

1 DAP 16268 18474

2 SSP 4400 4891

3 MOP 14692 14777

Fertilizer 2011-12 2010-11

MAP 16219 12770

TSP 16087 9340

MOP 14692 12831

16-20-0-13 9203 7431

20-20-0-13 10133 8236

23-23-0-0 11386 9295

10-26-26-0 15521 12850

12-32-16-0 15114 12332

14-28-14-0 14037 11495

14-35-14-0 15877 12916

15-15-15-0 11099 9270

Ammonium Sulphate 5195 4413

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Expected Effect of NBS on fertilizer sector

Nutrient based subsidy has enabled a level playing field for all fertilizers

based on their nutrient content

Farm gate price for a nutrient to be almost same irrespective of formulation/

type of fertilizer giving flexibility to customer for choosing product as per his

requirement

NBS encourages fertilizer companies to work at farmers level for branding

and promotion and move to open market scenario

Diversity in product mix expected to lead to differentiation and better

competition

Producers with lesser overheads will gain competitive situation in the market

As the P component is offered both by DAP & SSP, expected fillip is towards

SSP consumption due to price advantage

Pre NBS - Production of SSP (2000-01 to 2009-10)

Year Production '000

MTIncrease/ decrease over previous

year

Qty MT Percent

2000-01 2742 -791 -22.4

2001-02 2505 -238 -8.7

2002-03 2408 -97 -3.9

2003-04 2543 136 5.6

2004-05 2461 -82 -3.2

2005-06 2795 334 13.6

2006-07 2972 177 6.3

2007-08 2246 -726 -24.4

2008-09 2534 287 12.8

2009-10 3093 559 22.1

Almost stagnant growth in production of SSP during the current

decade up to 2007-08 with recovery in production from 2008-09.

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Impact of NBS - Change in SSP production

Zone Annual installed capacity Production Capacity Utilization %

09-10 10-11%

change09-10 10-11

%

change09-10 10-11

%

change

EAST ZONE 736.7 781.7 6% 258.3 390.1 51% 38.3 59.2 55%

NORTH

ZONE556 576 4% 230.2 254.5 11% 50.1 53.3 6%

SOUTH

ZONE871 871 0% 302.2 393.4 30% 37.8 50.6 34%

WEST ZONE 5775 5775 0% 2022.4 2163.5 7% 39.4 46.5 18%

TOTAL SSP 7938.7 8003.7 1% 2813.2 3201.5 14% 41.5 49.2 19%

Positive change in subsidy policy has resulted in higher production and capacity utilization

SSP status April-February 2010-11

Increase in production

Cumulative production of SSP increased by 13.8%, from a total of 2813.2

thousand tonnes during April-February 2009-10 to 3201.5 thousand tonnes

during April-February 2010-11

Capacity utilisation improved

All-India capacity utilisation of SSP went up from 41.5% during April-February

2009-10 to 49.2% during April-February 2010-11.

Increase in despatches

Despatches of SSP increased by 22.6%, from a total of 2588.7 thousand

tonnes during April-February 2009-10 to 3174.4 thousand tonnes during April-

February 2010-11.

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SSP - Future prospects

Acknowledging SSP as key Phophatic fertilizer at par with DAP on

nutrient content, it is expected:

Improved Productivity as soil will get the much desired Sulphur.

Farmer gets P at lower rate.

Government benefits due to lower subsidy bill.

Option with farmer at lower P price in SSP along with other

nutrients (S & Ca) availability without additional cost.

Employment creation by local SSP manufacture and value within

the country.

Win-win situation to ensure that the NBS is sustained.

SSP - Future prospects The NBS on SSP is expected to have impact on following:

New investment in the sector

Large fertilizer companies entering into the sector

Further increase in capacity utilization

Consolidation for economy of scale

Improved and assured quality

Better availability to farmers across the country as smaller plants are

located in multiple locations. This would also save precious saving in

fuel oil used for transportation.

Forex saving through utilization of indigenous Raw Material in SSP (local

rock phosphate and Sulphuric acid) against imported Phosphoric acid in

DAP.