Fertiliser stocks gain as Cabinet clears new urea policy

MUMBAI: Stocks of fertiliser companies surged up to 5 per cent after the government approved a new policy to raise urea production by 2 million tonnes and reduce subsidy bill by over Rs 4,800 crore annually.

Shares of state-run National Fertilizers gained 4.63 per cent, Rashtriya Chemicals and Fertilizers rose by 3.88 per cent, Gujarat State Fertilizers & Chemicals (1.95) and Chambal Fertilisers & Chemicals (1.11 pc) on the BSE.

Zuari Agro Chemicals was up 0.48 per cent and Gujarat Narmada Valley Fertilizers & Chemicals rose by 0.44 per cent.

" Shares of fertiliser companies were seen in action today on formulation of new policy," said Rakesh Goyal, Senior Vice President, Bonanza Portfolio Ltd.

The government approved a new urea policy aiming to increase domestic production by 2 million tonnes and reduce its subsidy bill by over Rs 4,800 crore annually, but decided not to raise retail prices of urea keeping it untouched at Rs 268 per bag of 50 kgs, excluding local taxes.

Farmers would have to pay an additional Rs 14 per bag for neem-coated urea.

The approved comprehensive New Urea Policy 2015 will be applicable for the next four fiscals with multiple objectives of maximising indigenous urea production and promoting energy efficiency in urea units to reduce the subsidy burden, the Fertiliser Ministry said in a statement.

Government also announced the subsidy rates for decontrolled phosphoric and potassic fertilisers keeping it at unchanged at the last year's level.