FERTILISER INDUSTRY OF

INDIA - 2000-2008

outline

Introduction

Global production and consumption of fertilizers

Indian fertilizer industry

Indian production ,consumption & import trend.

Major companies

Policies (subsidies & regulations)

Strategies for industry expansion

INTRODUCTION India is the third largest producer and consumer of

fertilizer in the world.

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

Started operating in a big scale since 1940s, when the Fertilizer & Chemicals Travancore of India Ltd. and the Fertilizers Corporation of India were set up in Kerala and Bihar

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

Total production of fertilizers in india-206.5mt .

Contd….

The production of urea in India has reached near self-sufficiency. The requirement of the nitrogenous fertilizers is met through the indigenous industry

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

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

Global production &

consumption of fertilizers

Indian fertilizer industry

65 large-sized fertilizer plants in India .

32 units-urea

20 units-DAP & complex fertilizers

13 units-ammonium phosphate & CAN

Nitrogenous fertilizers-88% urea ,10%

DAP & 2% ammonium fertilizers.

co2 emmission from fertilizers

0.7, 42%

0.95, 58%

india

global average

Indian production,

consumption & import

trend

Fertilizer use and crop production

in 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

Rice

37%

Wheat

24%

Food Grains

8%

Pulses

3%

Oil Seeds

9%

Sugarcane

5%

Cotton

3%

Vegetables

4%

Fruits

2%

Others

5%

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

'00

0 T

ON

NE

S) N Production

N Imports

P2O2 Production

P2O2 Import

K2O Production

K2O Import

CONSUMPTION OF CHEMICAL FERTILISER( LAKH TON)

0

20

40

60

80

100

120

140

160

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

TO

N

Nitrogenous(N)

Phosphatic(P)

Potassic(K)

"N" consumption

0500

10001500200025003000

stat

es

andh

ra p

rade

sh

punj

ab

tam

ilnad

u

hary

ana

utta

r pra

desh

biha

r

karn

atak

a

mah

aras

htra

gujra

t

mad

hyap

rade

sh

rajastha

n

wes

t ben

gal

states

"0

00

" t

on

ne

s

2006-07

2007-08

p consumption

0100200300400500600700800900

andh

ra prade

sh

punjab

tamiln

adu

haryan

a

uttar p

rade

sh

biha

r

karnatak

a

mah

aras

htra

gujra

t

mad

hyap

rade

sh

rajastha

n

wes

t ben

gal

assa

m

states

p c

on

su

mp

tio

n (

00

0 t

on

ne

s)

p2o5(2006-07)

P2O5(2007-08)

"k" fertilizer consumption

0100200300400500600700800900

andh

ra pra

desh

punjab

tam

ilnad

u

haryan

a

uttar p

rade

sh

biha

r

karn

atak

a

mah

aras

htra

gujra

t

mad

hyap

rade

sh

rajastha

n

wes

t ben

gal

assa

m

states

"000" t

on

nes

2006-07

2007-08

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

020406080

100120140

1951-5

2

1957-5

8

1961-6

2

1965-6

6

1969-7

0

1973-7

4

1977-7

8

1981-8

2

1985-8

6

1989-9

0

1993-9

4

1997-9

8

2001-0

2

2005-0

6 (

P)

years

co

nsu

mp

tio

n o

f

N,P

,K(k

g/h

a)

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:

The public sector companies in Indian fertilizer market are listed below:

· Fertilizer Corporation of India Limited (FCIL)

· Hindustan Fertilizer Corporation Limited (HFC)

· Pyrites, Phosphates & Chemicals Limited

· Rashtriya Chemicals and Fertilizers Limited (RCF)

· National Fertilizers Limited (NFL)

· Projects &Development India Limited (PDIL)

· The Fertilizers and Chemicals Travancore Limited (FACT)

· Madras Fertilizers Limited (MFL)

· FCI Aravali Gypsum & Minerals India Limited, Jodhpur

Some Private fertilizer Companies

The Scientific Fertilizer Co Pvt Ltd

Coromandel Fertilizers

Deepak Fertilizers and Petrochemicals Corporation Limited

Apratim International

Aries AgroVet

Devidayal Agro Chemicals

DSCL

Gujarat State Fertilizers &Chemicals Limited

Tata Chemicals Limited

Chambal Fertilizers

Nagarjuna Fertilizers and chemicals limited

Godavari Fertilizers and Chemicals limited

Zuari Industries limited

CHALLENGES IN FERTILISER

INDUSTRY

Gap between demand and supply

Greater dependency of country on imports( also

feedstock)

Unable reduce burden of government in

subsidiary rates

Infrastructural bottlenecks

Uncertainties in government policies

Small size of older plants

CURRENT SCENARIO

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

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

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

10% increase in Urea price in April 2010

Fertilizer subsidy has taken largest share for 58.7% of total subsidies in 2008-09

projected production of urea

0

10

20

30

40

2008

-09

2010

-11

2012

-13

2014

-15

2016

-17

2018

-19

2020

-21

2022

-23

2024

-25

2026

-27

2028

-29

years

pro

du

cti

on

MT

/an

nu

m

production million MT/annum

Fertilizer subsidy

In both developed and developing countries.

Objectives-

Self sufficiency

making available fertilizers to farmers at affordable prices and to promote balanced application of three main fertilizer nutrients viz. nitrogen, phosphorus and potash.

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

Trends in fertilizer subsidies

Retention price cum subsidy scheme Fertilizer control order,1985 Nov 1977-nitrogenous fertilizers

Feb 1979-complex fertilizers

To encourage green revolution

Subsidy=retention price*-notified sale price

Retention price-normative cost of production of the urea as determined by the Government plus 12 per-cent post tax return on net worth.

Freight subsidy

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

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

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

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

New fertilizer pricing policy

Started from 1 April 2003

Objective-encouraging efficiency based fertilizer pricing

High Powered Fertilizer Pricing Policy Review Committee (HPC)

At present, the maximum retail price (MRP) of urea is Rs. 483 a quintal, while DAP costs Rs. 935 a quintal and MOP Rs. 445.50 a quintal.

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

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

LIST 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 SUBSIDY

NBS policy on decontrolled Phosphoric and Potassic

fertilizer w.e.f 1st April ,2010.

Fix subsidy on N,P,K,S for 2010-11

Additional per ton subsidy for subsidized fertilizer

carrying other secondary nutrients and micronutrients.eg

in Zn,Boron.

Constitute an Inter Ministerial Committee under

chairmanship of Secretary of fertilizer.

Retail prices fixed by companies at farm gate level

10% increase in price of urea (Rs 4830 to Rs 5310)

source-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

punjab

gujara

t

karn

atak

a

wes

t ben

gal

biha

r

hary

ana

tam

ilnad

u

raja

stha

n

orissa

assa

m

kera

la

othe

rs

jam

mu

kash

mir

him

acha

l pra

desh

states

% s

ha

res

in

fe

rtiliz

er

su

bs

idy

1992-93

1999-00

2007-08

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

0

20

40

60

80

100

120

140

160

180

punjab madhya

pradesh

maharashtra rajasthan w est bengal A.P.

major states

fertilizer u

se/h

a o

f g

ro

ss

cro

pp

ed

area

marginal

small

semi medium

medium

large

all household

concentration of fertilizer subsidy on major crops in

india

0

5000

10000

15000

20000

padd

y

whe

at

suga

rcan

e

cotto

n

grou

nd nut

jowar

bajra

maize

othe

rs

all c

rops

major crops

tota

l fe

rtiliz

er

us

ed

(00

0

ton

ne

s)

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 fertilizers (government of 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 on

imported 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 control order

Compulsory registration of fertilizer makers, importers and sellers.

Specifications for all fertilizers produced, imported or sold in India.

A set of regulations on the manufacture of fertilizer mixtures.

Packing and labelling of fertilizer bags.

Appointment of enforcement agencies and creation of quality control laboratories.

Banning of the manufacture or import and sale of non-standard, spurious or adulterated fertilizers.

Central fertilizer quality control and

training institute Undertaking inspection and analysis of imported

and indigenous fertilizers

Standardization and development of method of analysis

Training of fertilizer enforcement officers and analysts.

Acting as a referee laboratory

Providing technical guidance to the Central and State governments on Fertilizer Quality Control Laboratories.

Fertilizer movement control order(1973)

STRATEGIES FOR INDUSTRY

EXPANSION

Modernization and revamping of existing

fertilizer units.

Reviving some of the closed fertilizer units

Alternative sources for urea production

Establishment of joint ventures where

cheaper raw materials can be procured

Joint ventures for phosphoric acid

procurement

THANK YOU