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Low raw material cost and bountiful rains across South India have given public sector FACT a shot in the arm by way of better sales this year.
“Things have turned favourable for the fertiliser company on the raw material front by way of lower prices for fuel, sulphur, rock phosphate and phosphoric acid. Besides, the spread of north-east monsoon in Tamil Nadu and extended south-west monsoon in Karnataka will be a boost for production compared to the diminishing sales last year due to drought in these regions,” said D Nanda Kumar, Director (Marketing), FACT.
The decline in raw material prices has enabled the company to pass on the benefits to farmers by reducing the prices of Factomfos by around ₹200 per tonne. This will help increase volume in the second quarter. The company is hopeful of repeating this performance in Q3.
“However, the rising crude prices are a concern, but we are optimistic,” he told BusinessLine .
Posts profitIt may be recalled that FACT posted an operating profit of ₹5.85 crore in Q2 after several years, with better production, marketing and sales.
Nanda Kumar said the sluggish sales due to drought in South India also resulted in piling up inventories, as the company has not curtailed production.
Factomfos production till date was 4.17 lakh tonnes against a sale of 3.9 lakh tonnes, while ammonium sulphate was 1.13 lakh tonnes against one lakh tonnes of sales. The inventory at present is nearly 80,000 tonnes.
DBT advantageHe termed the Direct Benefit Transfer (DBT) a game-changer in the fertilizer sector, saying that the subsidy could reach the intended beneficiary by not diverting fertilizers for industrial use. FACT has been identified as Lead Fertilizer Supplier and also entrusted to implement the scheme in Kerala.
According to him, FACT plans to set up another stream of 1000 tonnes per day (TPD) Factamfos unit in Cochin Division at an investment of ₹300 crore, when the proceeds of monetizing the land in the division comes.
New unit commissioningThis is expected to be commissioned in 2020 and will add another three lakh tonnes to the capacity, making it a million tonnes of Factamfos.
The company has also entered into a long-term agreement with BPCL-Kochi Refinery to procure sulphur, a primary raw material which the fertilizer company usually imports.
Initially, 1.2 lakh tonnes per annum would be sourced from the refinery, thereby helping the company to reduce the input cost, he added.
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