The Hindu Business Line : Announcement of higher subsidy lifts fertiliser stocks

Mumbai, May 27 Shares of fertiliser stocks got a boost on Tuesday after the Chemical and Fertiliser Minister, Mr Ram Vilas Paswan, announced that the Government’s Fertiliser Subsidy Bill is likely to increase this financial year.

Shares of fertiliser firms such as Tata Chemicals, was up 1.88 per cent, Nagarjuna Fertilisers and Chemicals (3.71 per cent), Rashtriya Chemicals and Fertilisers (1.04 per cent) and Chambal Fertilisers and Chemicals (6.85 per cent).

Mr Paswan announced today that the Fertiliser Subsidy Bill is likely to increase to Rs 95,000 crore. This amount is much higher than the earlier budget estimate of Rs 31,000 crore. The subsidy last year was Rs 40,340 crore.

“This amount is more than double of what was estimated in the budget. This is part of the strategy of the Government to safeguard farmers from the increasing global prices,” said the head of research of a stock broking firm.

The Fertiliser Secretary, Mr J.S. Sarma, said that the new fertiliser investment policy would be finalised in the next two to three weeks. Mr Sarma also said that in order to encourage fresh investments in the sector, the new policy will aim at linking production cost of new fertiliser units to the international prices. He also added that the existing companies will continue to get subsidy on a “cost plus” method based on the average cost of production.

“The Petroleum Ministry is making sure that the fertiliser firms get adequate supply of natural gas from this year. This should encourage higher investment in this sector. Such Government incentives have attracted quiet a bit of investors’ interest towards stocks in the fertiliser sector,” said an analyst at a stock broking firm.

With the help of Government incentives, new players can now enter this sector feels Ms Anita Gandhi, Head of Institutional Business, Arihant Capital Market Ltd. “The capacity of the existing players hasn’t been increasing for some time now and they are running at rather high costs. The Government incentives such as these would give a much-needed boost to this sector,” added Ms Gandhi.

More Stories on : Fertilisers | Stocks | Policy

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page