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| Edited By: Promit Mukherjee |Source: DNA |Updated: Mar 30, 2018, 04:09 AM IST
Rashtriya Chemicals and Fertilisers (RCF), one of the biggest public sector fertiliser companies in India, is making a foray into newer territory of fertilisers so far dominated by Coromandel International and a handful of smaller players.
The company is planning to enter the single super phosphate (SSP) fertiliser sector, a category of complex fertiliser which is growing at a much slower rate as compared with much sought after categories such as di-ammonium phosphate (DAP) and muriate of potash (MOP).
According to sources, it plans to have a total cumulative capacity of one million tonne of SSP in the next couple of years, through one plant or a number of smaller plants. RCF is currently looking for joint venture partners.
“RCF is primarily looking at players who have rock phosphate mining licence with whom it can form a joint venture with equity participation,” said the source. He said such plants are likely to come up near mines so that transportation cost is minimised.
Experts are, however, sceptical about the SSP plant move.
“RCF is a company which is almost on a par with established players such as Coromandel International and Tata Chemicals, and while these companies are looking at entering value-added fertilisers, RCF should also be moving in the same direction,” said Satish Mishra, a fertiliser analyst with brokerage firm PINC Research.
Mishra has also worked in the fertiliser industry earlier.
He said RCF should have rather strengthen its current portfolio of complex fertilisers than go for SSP as the subsidy-regime promotes more use of a combination of nutrients.
Company officials were not available for comment.
RCF produces two grades of complex fertilisers at its Trombay unit. They are commonly known as ‘Suphala’ which has a combination of nitrogen, potash and phosphate.
From the financial year 2010-11, the government has shifted to a nutrient-based subsidy regime wherein subsidies are given to fertiliser manufacturing companies on the basis of the nutrient and its quantity used in the final product. SSP also has subsidy, but according to the subsidy scheme of the ministry of chemicals and fertilisers, the subsidy on DAP and MOP is much higher than on SSP.
“Currently, the policy is such that it promotes balanced use of nutrients in fertilisers and a company with a balanced portfolio, enjoys better subsidies,” Mishra said.
According to ministry of chemicals and fertilisers data, while current subsidy on DAP is `12,960 per metric tonne and on MOP `12,831 per metric tonne, the subsidy on SSP is just `3,378 metric tonne.
Sageraj Bariya, fertiliser analyst with Angel Broking, said another reason why RCF’s move is unconvincing is that currently there is overcapacity in SSP. “India consumes 2.6-2.7 million tonnes while the installed capacity is 7.6 million tonnes. So fertiliser companies are using these plants to make DAP,” Bariya said.
Besides, while the growth in MOP consumption had been 10-11% and DAP consumption of 6-7%, the growth in the consumption of SSP had been very less, added Bariya.
In fact, both Mishra and Bariya said the total size of the fertiliser industry in the country is currently around 50 million tonnes out of which urea is of 26-27 million tonnes. Out of the remaining, DAP is 13-14 million tonnes and MOP is close to 6 million tonnes. SSP is a mere 3.7 million tonnes while a mix of nutrients forming the chunk of complex fertilisers hold 10-11 million tonnes.
THE INDIAN FERTILISER INDUSTRY
