Fertiliser industry for direct payment of subsidy to farmers

NEW DELHI: Industry body of fertiliser firms FAI today said the companies have not made any "windfall gain" in subsidy payments by the government as reported as sector is operating on a very low margin.

"Indian fertiliser industry has no vested interest in subsidy. The Industry has been pleading for total decontrol and direct payment of subsidy to the farmers," Fertiliser Association of India (FAI) Chairman R G Rajan told reporters.

Echoing similar views, FAI Director General Satish Chander said "In fact, the operating margins in the industry are very thin compared to any other solid bulk commodity like cement, steel, etc."

Elaborating on his argument, Chander added during 2012-13 on an average fertiliser firms imported di-ammonium phosphate (DAP) at about USD 580 per tonne and muriate of potash (MoP) at USD 490 per tonne.

The total delivered cost of DAP works out to Rs 38,240 per tonne and MOP Rs 31,106 per tonne, which also includes cost of various components like freight, port charge, wages, insurance, etc, he said.

As against this, the subsidy component is only Rs 14,350 per tonne for DAP and Rs 14,400 per tonne for MOP. The balance amount has to be recovered through MRP. MRP of DAP was Rs 24,000 per tonne and MOP Rs 16,800 per tonne during the period, Chander added.

"This data can give a fair idea to anyone about the margins on which we work and if there are any avenues for one to draw huge profits here," he claimed.

Paradeep Phosphates Managing Director S S Nandurdikar said working margins in the sector are so thin that one cannot expect to make windfall profits.

The total turnover of the industry (excluding subsidy on imported urea) is about Rs 1,17,000 crore and the total net profit of the whole industry is approximately Rs 2,500 crore for fertiliser operation," Nandurdikar, who is also the Co-Chairman of FAI, added.

This net profit is only 2 per cent of the total turnover during the financial Year 2011-12 and compares unfavourably with similar other commodities, he said.

The fertiliser industry in its commitment to serve the Indian farmer has been ensuring adequate supply of quality fertilisers in every nook and corner of the country in time over the years, which is a humongous task given the scale and magnitude of the task, he said.