The Hindu Business Line : Joint ventures fail to stop price rise sting

Establishing overseas joint ventures to manufacture phosphoric acid has seemingly not helped insulate Indian companies from volatile international prices of this key fertiliser intermediate.

Currently, Coromandel Fertilisers has a 15 per cent stake in Foskor Ltd, a state-owned company in South Africa with a capacity of produce 10 lakh tonnes (lt) of phosphoric acid annually. Tata Chemicals and Zuari Industries (Chambal Fertilisers) hold 33 per cent each in a four-lt-tonne facility at Morocco in partnership with the OCP Group.

Iffco has a stake of 75 per cent in ICS, Senegal, for 3.5 lt, while Southern Petrochemical Industries Corporation owns 52 per cent in Indo-Jordan Chemicals Company, manufacturing 2.5 lt.

All of them have a combined production capacity almost equal to the 22-25 lt of phosphoric acid annually imported. Yet, these have not really helped in securing favourable prices. “The joint ventures have only helped us in securing supplies but not protecting against adverse price movements,” an industry official admitted.

According to him, the foreign partners in most of these ventures – mostly State-owned concerns – were not willing to make any concessions on pricing. “They say even if we import at a loss, we can recoup it through higher dividends accruing from our shareholding,” he added.

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