Fertiliser cos see good sales growth in Kharif season

Fertiliser sales through the Kharif season between April and July outstripped sales during the same period in the previous year but an inventory build-up with dealers could affect sales through the Rabi season.

“Good rainfall distribution early in the monsoon had ensured increased demand. Hence, companies’ sales increased. Since late July there has been a build-up of excess stock with dealers and this will probably cause slower sales in the Rabi season,” said a senior industry official.

Sales refer to the movement of fertilisers from manufacturers to dealers, who then sell them to farmers.

With more inventory, offtake from manufacturers is likely to be lower in the coming season.

Fertiliser Association of India data showed that domestic sales of urea touched 9.97 million tonnes (mt) in the four-month period — around 9.4 per cent more than during the same time last year.

Only the maximum retail price of urea, the most widely applied fertiliser, is fixed by the Centre.

The difference between the cost of production and the MRP — ₹5,360/tonne — is paid to manufacturers as a subsidy. Between April and August, urea imports also increased to 3.06 mt against 2.13 mt during the corresponding period last year. Sales of diammonium phosphate (DAP) rose 56.3 per cent over the year to touch 3.02 mt while NP/NPK fertiliser sales recorded a 20.7 per cent increase to 2.43 mt.

Only Muriate of Potash (MOP) sales for direct application registered a decline, of 7.5 per cent to 0.68 mt. Data for sales in August are expected next week. “Through June and early-July, rainfall spread and quantity was good, which saw greater sowing. This anticipation of a good monsoon saw demand increasing and more sales,” the official said.

According to Agriculture Ministry data, the Kharif acreage as of September 11 stood at 10.12 million hectares, about 1.8 per cent more than at the same time last year. However, sowing had been higher by as much as 58 per cent between June and the first week of July compared to the same period the previous year.

This was due to a promising start to the monsoon with June receiving 16 per cent surplus rainfall.

That divergence, however, narrowed to about 9 per cent by July-end and to 1.1 per cent by the end of August with rainfall deficits pegged at 17 per cent and 22 per cent in July and August, respectively. Sales of agro-chemicals such as pesticides and insecticides are likely to slide due to the poor monsoon, which, as of Tuesday, is 16 per cent deficient.

“The weak monsoon will impact the sector due to lower consumption across Maharashtra, Karnataka, Andhra Pradesh, Telangana and parts of Gujarat. These areas account for 50 per cent of total sales,” said MK Dhanuka, Managing Director, Dhanuka Agritech.

While a drop in sales was difficult to quantify at the moment, Dhanuka said that steady rains over the southern peninsula and Maharashtra’s vegetable belt could help recover some of the sales lost through the season.

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