Published on March 3, 2014
Fertilizer industry plays very vital role in raising agricultural productivity, increasing food security and increasing the livelihoods in rural as well as urban sector. But on same front this industry is facing challenges due to lack of investment and tedious investment policies.
2013 remained tough year for the fertilizer industry. Other than Urea, several important chemical demands are being catered by imports. Around 50% of chemical of this category are imported. In the year 2013, decline in the international prices of these chemical was negated by depreciation of Indian currency. Moreover the financial community has raised questions on the growth and development plan of this industry. They believe that decline in the cash flow and soaring prices of chemicals has reduced the profit margins of this industry. The problems are not over yet. For the year 2014, the budgetary allocation for subsidy payment has been restricted to Rs.660 billion, on contrary the actual requirement was of Rs. 1000 billion. Fertilizers producers have no other option but just to seek debt funding.
The fertilizer industry dealing in non urea fertilizers is heading for more usage of natural gas. They have shifted to natural gas for manufacturing of raw materials. Now the LNG prices are increasing in India. Price of natural gas will increase by many folds in the month of April thus adding to the cost of production. It is believe that road ahead for fertilizer industry is not so smooth and balance sheets of these industries will come up with edgy results.
