Mahua Venkatesh / BUSINESS STANDARD Apr 07, 2003, 00:00 IST
Fertiliser companies have said the government’s decision to decontrol the marketing and distribution of 25 per cent of the urea produced during the kharif months will hit their profits.
Ajay S Shriram, chairman and senior managing director, DCM Shriram Consolidated Ltd (DSCL), said the decision to decontrol along with the reduction in freight subsidy by Rs 100 per tonne would put the fertiliser companies under pressure.
The government is also planning to decontrol the movement and distribution of 50 per cent of the urea produced during the Rabi months, depending on the outcome of the entire exercise during the kharif season.
There could also be a severe shortage of fertilisers in some regions with companies avoiding distant markets due to the reduction in freight subsidy, P S Grewal, chairman and managing director, National Fertilisers Ltd, said.
Officials at the Fertiliser Association of India, however, said the move would lead to competition forcing companies to focus on their marketing. Shriram also said the free-sale strategy would lead to an intensive branding exercise by fertilisers firms.
A senior government official said the new pricing policy for urea units would boost production, encourage the adoption of international production practices in the industry, reduce the burden of urea subsidy by about Rs 650 crore per annum in the first phase, and promote greater transparency.
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