Fertilisers stocks in demand

Shares of six fertilisers companies rose by 0.18% to 2.20% at 11:06 IST on BSE on reports the Election Commission has ordered deferment of an increase in gas prices that was to take effect from 1 April 2014.

Chambal Fertilisers & Chemicals (up 2.20%), Tata Chemicals (up 1.90%), Rashtriya Chemicals and Fertilisers (up 1.55%), Deepak Fertilisers & Petrochemicals Corporation (up 1.52%), National Fertilizers (up 1.06%) and GSFC (up 0.18%), edged higher.

The S&P BSE Sensex was down 31.27 points, or 0.14% at 22,024.21.

Fertilisers companies use domestic gas for manufacturing urea and complex fertilizers. A rise in natural gas prices can have adverse financial implications for the fertilizer industry.

According to reports, the Election Commission ordered deferment of an increase in gas prices that was to take effect from 1 April 2014, saying that the decision should be left to the government that is formed after the general election.

Media reports quoted Oil Minister Veerappa Moily as saying that the Commission had taken a decision after a review of the proposal. Moily said he had done his duty as oil minister to the best of his ability and that the gas price revision was aimed at boosting exploration and production activity and making the sector more attractive to foreign investors.

According to reports, the commission also asked the oil secretary to put off the price increase because the matter is sub judice as there is a case related to it in the Supreme Court, which is scheduled to hear the matter from Tuesday, 25 March 2014.

On 27 June 2013, the Cabinet Committee for Economic Affairs (CCEA) approved the proposal to hike the natural gas price to $8.4 per million metric British thermal units (mmbtu) from 1 April 2014, based on a formula arrived at by the Rangarajan committee. The new price was proposed to applied uniformly to all producers. CCEA had noted that Rangarajan committee's formula for gas pricing would be valid for five years and gas prices were proposed to be revised quarterly from 1 April 2014 onwards.

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