Agri Business

Amid spike in raw material cost, Govt to ensure ample fertiliser supplies for Rabi crop: FACT chief

V.Sajeev Kumar Kochi | Updated on October 06, 2021

Kishor Rungta, Chairman and Managing Director, FACT

Rising raw material prices, a concern for fertiliser PSUs

The Centre has taken all steps to ensure fertiliser availability in the ensuing Rabi season amidst shooting up of raw material prices and its shortage.

The Fertiliser Ministry monitors the situation closely and reviews weekly, as the emerging conditions have led to the rise in production cost of all PSU fertilisers companies. The rising raw material cost has facilitated the government to enhance the subsidy to all fertiliser firms to avoid any further hike in product prices, Kishore Rungta, Chairman and Managing Director, FACT told BusinesLine.

The prices of all raw materials such as phosphoric acid, sulphuric acid, sulphur have doubled in the last year, forcing companies to sell their products at lower margins or at a loss. However, the hike in subsidy to the tune of ₹8,000 per tonne for NPK and ₹12,000 for DAP has come as a relief to the manufacturers, he said.

The fertiliser demand in the Rabi crop season in the country is estimated at 21 million tonnes against 20 million tonnes in last year.

Rungta, who is also the chairman of Fertiliser Association of India (South Zone), said the way the raw material prices are moving is a concern as the country could not afford such a higher price regime. He attributed increased consumption of fertiliser in China and Brazil, forcing global fertiliser manufacturers to shift focus to these countries. The global firms in Morocco, Gulf nations are allotting comparatively lesser quantities to India because of the price parity. This coupled with the rising cost of ship charter hire, is also adding to the woes of domestic manufacturing companies.

FACT has also geared up to import 1.5 lakh tonnes of MoP / NPKS from November onwards , once the situation in the global market improves, he said.

Spike in Natural gas price

Asked about the recent spike in natural gas prices, the CMD said. “we have been insulated ourselves till August 2022 because of the contract signed with PSU oil companies based on the Gorgon gas price which is prevailing at $12-13/MMBtu, below the international rates”. He said that even the existing gas price is almost double compared to the availed rate at $6/MMBtu last year.

FACT, he said, is in the final stages of capacity expansion by adding 0.5 million tonnes from the present one million tonnes in the next two years. The project would involve setting up a new plant to produce various grades of fertiliser including DAP. Once it is commissioned, he said the turnover would touch around ₹7000 crore from the present ₹3,200 crore in 2020-21.

To a question on FACT's ‘Looking East’ initiative, Rungta said “there has been an overwhelming response from Bengal and Odisha while dispatching 20,000 tonnes of Factamfos and Ammonium Sulphate. The intention is to go for a pan India footprint before going for capacity expansion”.

Published on October 06, 2021

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