Fertilizer Industry In India

Group Members:

Sumeet RattanShalabh AggarwalKunal AbhishekShirish Jain

Group No. : 8

Present Status of Fertilizer Industry India being the third largest producer and consumer of fertilizers

in the world with an installed capacity of Nitrogen (N) and Phosphate (P) nutrients at 14 million tonnes p.a.

Urea, a nitrogenous type of fertilizer, is most widely consumed in India. Currently the urea capacity is 20.2 million tonnes while consumption is 21.7 million tonnes.

Fertilizer production is highly energy intensive with cost of feedstock and fuel alone accounting for between 55 to 80 per cent of the cost of production. Plants in India are based primarily on three feedstock -- naphtha, fuel oil and natural gas with a significant proportion of domestic capacity of urea plants based on naphtha or fuel oil which cost more than natural gas. High cost feedstock and increased production / consumption have caused a steady increase in fertilizer subsidy.

Installed capacity is 20.8 million MT in the year 2003-04

Fertilizer consumption in India vis-à-vis neighbouring countries

Per hectare fertiliser consumption (Kg/ha) in neighbouring countries during 2001-02

China – 225.1 Bangladesh – 159.7 Sri Lanka – 122.7 Pakistan – 131.9 India – 91.5 World – 89.9 India is the third largest producer and consumer of

fertilizers in the world after China and USA and it contributes to 12% of world production of N & P nutrients and 12.6% of world consumption of NPK nutrients.

Different grades of Fertilisers

Based on consumption pattern in 2001-02:

Nitrogen (N) comes from – Urea (81%), DAP (9.8%), Complexes (7.6%) and

Others (1.6%)

Phosphate (P2O5) comes from –

DAP (64.9%), Complexes (25.3%), SSP (9.5%) and Others (0.3%)

Potash (K) comes from – MOP (71.6%), Complexes (27.8%) and Others (0.6%)

Table –Production and Consumption of Urea

(‘000 MT) (‘000 MT)1998-99 19292 203961999-00 19808 202772000-01 19624 191862001-02 19003 199172002-03 18621 184932003-04 19038 19623

Nitrogenous Fertilizers

Urea

Price movement of urea

196

31

964

196

51

966

196

71

968

196

91

970

197

11

972

197

31

974

197

51

976

197

71

978

197

91

980

198

11

982

198

31

984

198

51

986

198

71

988

198

91

990

199

11

992

199

31

994

199

51

996

199

71

998

199

92

000

200

12

002

200

32

004

Y ear

0

50

100

150

200

250

300

350

Pri

ce $

/MT

FO

B

Urea Price

Till Oct 2004

Other Nitrogenous Fertilizers

The other nitrogenous fertilizers — CAN, ammonium sulphate (AS)

and ammonium chloride (AC) — were decontrolled in 1991. The total installed capacity of CAN in the country is 942,500 tonnes

per annum (tpa). The major CAN producers in the country are NFL, Steel Authority of

India Ltd. (SAIL) and Gujarat Narmada Valley Fertilizers Company Ltd.

The total installed capacity of AS is 864,500 tpa.

PHOSPHATIC FERTILIZERS

DAP has a domestic production of 4 m.t. The total installed capacity of SSP in the country

is 6.48 m.t. per annum.

DAP (64.9%), Complexes (25.3%), SSP (9.5%) and Others (0.3%)

POTASSIC FERTLIZERS

The major potassic fertilizer consumed in the country is Muriate of Potash (MOP).

ENHANCEMENT IN FERTILIZER

AVAILABILITY Economic Reforms and Its Impact Investment in fertilizer industry -Public, Private

and Cooperative sectors Imports of fertilizers Distribution of fertilizers Fertilizer promotion Quality Control of Fertilizer

Quality Control Measures

Raw material quality

Process Control

Product Quality Control

Quality Control during Storage

Field level Quality Control

Agencies involved in Quality Control of Fertilisers

Department of Fertilisers

Central Fertiliser Quality Control & Trg Institute, Faridabad

Regional Fertiliser Control Laboratories (Chennai, Kalyani

(Kolkata), Mumbai)

State Agricultural Departments

State Govt Quality Control Laboratories

Policy Initiatives

Pricing policy Fertilizer subsidy Fiscal concessions Transport infrastructure Setting-up New Capacities

Addition to Domestic capacities Joint ventures abroad

UREA IMPORT BY CHINA AND ITS IMPLICATIONS FOR INDIA

China and India have emerged as dominant forces in the world fertiliser market.

The two countries together have accounted for more than one-third of the world imports of urea.

Political factors contributed to skews in demand of urea in the two countries.

Fertiliser import policy has been governed, more often than not, by short-term and ad hoc considerations.

Recently China has embarked upon a strategy of achieving self-sufficiency in fertiliser production.

World capacity for the production of urea in 1995 was 102 million mts. This capacity is expected to rise to half a billion mts by the year 2010

Government Pricing Policy and Competitiveness:

Input prices are either internationally determined or fixed Input prices are either internationally determined or fixed

by GOIby GOI

Output prices fixed by GOIOutput prices fixed by GOI

Industry lacks flexibility and autonomy in decision Industry lacks flexibility and autonomy in decision

makingmaking

So, it is the So, it is the Pricing policy of GOIPricing policy of GOI which determines the which determines the

competitiveness.competitiveness.

 Government Pricing Policy and Competitiveness: Urea: The Group Concession Scheme

Introduced to enhance competitiveness of the industry by :-

a) Encouraging efficiency parameters of international standards;

b) Stimulating the use of the most efficient feed stock and latest technology.

c) Phased decontrol of movement, distribution and sale of urea

Zuari - Chambal The Group:

• Zuari Chambal is part of the K.K. Birla Group.

• Turnover of Rs. 5,000 crores and an asset base of Rs. 4,500 crores.

• It is a professionally managed, diversified Conglomerate having investments in fertilisers, cement, hybrid seeds, biotechnology, ready-to-assemble furniture, chemicals, software, investments, home finance and engineering services.

International Collaborations

Zuari-Chambal has several reputed International Groups as Joint Venture partners. These include Office Cherifien des Phosphates (OCP), Morocco - Largest producers of phosphoric acid in the world

COMPANY PROFILE

Chambal Fertilisers and Chemicals Limited was promoted by Zuari Industries Ltd. in 1985.

It is located at Gadepan, 35 kms. from Kota, on the Kota - Baran National Highway, Kota is the hub of industrial activity in the state of Rajasthan.

Manufacturing Chambal operates two hi-tech nitrogenous fertilizer plants and is the largest fertilizer

complex in private sector in India. The two mega fertilizer plants having a total re-assessed capacity of 1.7292 million tons

of urea per annum. Both Gadepan-I & Gadepan-II phases represent a total investment of over Rs. 2,500

Crores. Gadepan-I was commissioned in December 1993 and its commercial production commenced in January 1994.

Technological Advancements

Gadepan-I is designed to produce 1,350 MT of Ammonia by Haldor Topsoe, Denmark technology and 2,348 MT per day urea based on Snamprogetti, Italy process.

Gadepan-II Ammonia plant is based on Kellog (USA) technology and the Urea Plant is based on ACES process of TEC, Japan. The Ammonia Plant is a single stream, having a design capacity of 1,350 MT ammonia per day. The Urea Plant is designed to have twin streams, each with the design capacity of 1,175 tons of urea per day.

Gadepan-I is based on natural gas as the feed stock while the fuel demand is met by naphtha. Gadepan-II is designed both for naphtha and natural gas as feed stock..

MANUFACTURING PROCESS

Manufacturing process for organic compound fertilizer made from composted livestock manure

Manufacturing process for organic compound fertilizer

Operations and Supply Chain Management

Chambal Fertilisers and Chemicals Limited caters to the Northern and Western regions of India and supplies urea to nine states.

The company markets urea under the brand name ‘Uttam Veer’.

With ten regional offices, Chambal has a 1,000-strong dealer network and 14,000 village level outlets to assist distribution.

Besides urea, other agri-inputs as other fertilisers, plant protection chemicals, seeds and bio-fertilisers are being made available to the farmers under the ‘single window’ concept.

These products are being sourced from reputed suppliers and sold under the ‘Uttam’ umbrella brand.Extensive promotion activities are undertaken to promote ‘Uttam Veer’ by the dedicated team of field officers. Today, Chambal is India’s largest urea unit in the private sector. The soil testing facilities at Sri Ganga Nagar and Agra use sophisticated testing tools.

Chambal has a website dedicated to the Indian farmer. It is both area and crop specific and is an endeavour to help improve farm productivity by providing online information on various agricultural practices. It answers queries that a farmer may have and provides information on market prices of farm produce as also the weather forecast. In order to assist the farmers access it, the company has set up kiosks and has an arrangement with Agriculture Universities, Agriculture Research Stations and Krishi Vigyan Kendras.

Environmental Protection

Chambal is deeply committed to environmental protection, pollution control and maintenance of ecological balance. A corporate conscious of its responsibilities, the Company have consistently taken upon itself major environmental projects. Zero affluent discharge, (the first in the fertiliser industry), afforestation programme to transform large stretches of barren terrain into strips of green, wild life protection are a part of its enterprise. Chambal Fertilisers has been certified as an ISO14001 Company as a result of its environmental practices.

Awards

•Fertilisers have helped transform the agriculture sector in India - from being dependent on food grain imports before independence, India is now self sufficient. •Fertiliser consumption has increased 20 fold since independence. •This remains one of the few highly regulated industries in India •Prices (retention pricing), subsidies, distribution restrictions, imports and even choice of technology,      feedstock  are all controlled / regulated by the government.  There are signs that the fertiliser pricing mechanism is being reviewed, imports liberalised, tariff rates revised and  measures being debated to lower fertiliser subsidies