Published on February 10, 2014

Compared to the fertilizer industry around the world, the domestic fertilizer industry has by and large achieved the level of capacity utilization.

In the coming fiscal year, India Ratings & Research (Ind-Ra) anticipate constrict in operating profit of Urea companies. Under the new urea investment policy in 2014-15, it has lined out the prospects of commencement of the implementation of Greenfield and Brownfield urea projects. In the first half of the Fiscal year 2013, the sales of fertilizers witnessed a y-o-y decline of 15%, whereas, the volume of urea had continued to remain comparatively stable.

In the budget of 2014, the government will provide Rs 70,585 crore as fertilizer subsidy. For 2014-15, the inter-ministerial committee is not probable to propose any hike in phosphatic and potassium (P&K) fertiliser subsidy on NBS, due to unchanged prices of nutrients in global markets. According to the market industry, the business of fertilizer is suffering due to subsidy payment arrears by the government.

According to the industry outlook, in near future the urea segment is expected to report steady returns, whereas, the marginal upside relics in case of any updating of pricing policy if executed. On the other hand, the presentation of P&K sector is comparatively more susceptible to subsidy levels as well as economic variables. Due to fear of timely payments of subsidies, delay in commencement of key policy reforms and domestic gas pricing and availability, the India Ratings & Research (Ind-Ra) has a stable to negative outlook on the fertilizer industry for the fiscal year of 2015.