Fertiliser players cheer on early monsoon, demand to rise

Widespread monsoon across the country in past few days has given a ray of hope for the fertilisers makers to clear their piled up inventory. With sowing picking up in most parts of the country, demand for di-ammonium phosphate (DAP) fertilisers, and urea has increased by about 7-8 per cent so far over last year.

“We are witnessing sharp rise in fertiliser demand from Gujarat and Maharashtra markets. Also, Rajasthan and Madhya Pradesh are slowly picking up with increase in sowing,” said a senior official of a public sector fertilisers maker. The demand for different fertilisers is expected to be higher by around 7-8 per cent as compared to last year, the official claimed.

Industry insiders maintained that rise in demand for urea will lead to increase in imports this year. According to industry estimates, urea imports may increase by about 4-5 per cent in 2013-14. India imported 8 million tonnes of urea in 2012-13.

According to the data provided by the department of fertilisers, urea imports in the first two months of 2013-14 stood at 650,000 tonnes, which was 350,000 tonnes in the corresponding period of 2012-13.

The India Meteorological Department (IMD) had stated that the southwest monsoon this year, had covered the entire country almost a month ahead of schedule – earliest ever. This has boosted sowing activity in most of the states.

Agriculture ministry data for kharif sowing showed that crops have been sown on 8 million hectares of land till June 13 out of the total kharif sowing of 75 million hectares.

“The fertiliser industry had an inventory of around 4-4.5 million tonnes including about 2.5 million tonnes of DAP by the end of March. But looking at the demand due to increased sowing activity, we expect the entire inventory to get cleared by June-end,” informed an official of Gujarat State Fertilisers and Chemicals (GSFC).

Last year, fertiliser industry faced stock accumulation due to delayed and weak monsoon in most of the parts of the country. “We are seeing heavy rush for fertilisers at our 180 retail depots. Farmers are rushing to buy fertilisers,” said the GSFC official. While urea prices are fixed by the government at the uniform rate of Rs 5360 per tonne (excluding taxes), the price for potassium and phosphate (P&K) ranges between Rs 14,000 per tonne to Rs 23,000 tonne for different grades depending on the nutrient content.

Most of the fertilisers makers witnessed a decline in the net profit for the year ended 2012-13. GSFC posted net profit of Rs 518 crore in fiscal 2012-13 as against Rs 758 crore for the previous financial year, showing a fall of 31 per cent on year-on-year basis. Similarly, National Fertilisers Ltd (NFL) posted net loss of Rs 170.73 crore, as against net profit of Rs 126.73 crore in 2011-12.