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University of Delaware have discovered unique behavior of nano particle based fertilizer.  MOU signed between NFL & DOF for the fiscal year 2015-16.  Beware of GAIL: Company raises Rs 53 crore demand on Zuari under "take or pay" provisions.  ICRA gives Kribhco a thumbs-up-I: Gets an "AA" rating on its debt .  ICRA gives Kribhco a thumbs-up-II: No clarity yet on Rs 1000 crore DAP-NPK plant at Krishnapatnam .  Fertilizer stocks: Buy them, says stock broking houses .  There is a lot of scope to innovate in the fertilizer sector, says Amit Roy, CEO of IDFC.  Tata Chemicals: Unhappy with the bids received?.  Rajathan's draft Mineral Policy: Ample scope for units based on gypsum, rock phosphate and potash.  Matix eyes coal gasification route to make urea.  Subsidy bills-II: Processing of balance claims of urea units amount to Rs 2000 crore yet to begin.  Subsidy bills-I: Allocation for indigenous urea will get over by October, 2015.  Scathing indictment of NBS policy by CAG-II: Rs 5555 crore lost because benchmark price for DAP was not fixed in 2011-12.  Scathing indictment of NBS policy by CAG-VII: Auditor comes out with a series of recommendations, wants cost data verified from 2010.  Rashtriya Chemicals and Fertilizers to invest around Rs 14,000 crore over next five years.  Scathing indictment of NBS policy by CAG-VI: Companies raised MRPs disproportionately, claims CAG.  Scathing indictment of NBS policy by CAG-V: Unreasonable loading of costs by IFFCO highlighted.  Scathing indictment of NBS policy by CAG-IV: DOF machinations led to Rs 653 crore loss, says auditor.  Scathing indictment of NBS policy by CAG-III: Auditor castigates non-recovery of lower ammonia cost from P&K producers.  Scathing indictment of NBS policy by CAG-I: Policy failed to produce results, says auditor.  
University of Delaware have discovered unique behavior of nano particle based fertilizer
Sep 04: Researchers at the University of Delaware at Newark in United State have discovered unique behaviors of Hydroxy Apatite Nano particles (HANPs) that show promise as a phosphorus nano fertilizer and could be used to help slow the release of phosphorous in soil.
 8The nano particle based fertilizer has three major advantages over conventional phosphorous fertilizers.
 -It does not release phosphorous as quickly as the conventional fertilizers.
 -It does not change the soil pH upon phosphorus release and the loss of phosphorous from soil is low.
 -The slow and steady release of phosphorus allows plants to continuously take up the nutrient as they grow.
 Click on our Report section for more
MOU signed between NFL & DOF for the fiscal year 2015-16
Sep 04: National Fertilizers Limited (NFL) has signed Memorandum of Understanding (MOU) with the Department of Fertilizers (DOF) for the fiscal year 2015-16.
8The MOU was entered into between Shri Jugal Kishore Mohapatra, Secretary (Fertilizers) and Shri Heera Lal Samariya, C&MD, NFL.
8Senior officials of the Department of Fertilizers (DOF) and NFL Directors were also present on the occasion. Under the MOU: 2015- 16.
8The company has targeted production of 36.50 Lakh MT of Urea and sales turnover of Rs. 8,842 crores.
8The MOU lays stress on Financial Performance, R&D for sustained and continuous innovation, Projects Implementation, Energy Conservation, Human Resource Development, Corporate Social Responsibility and Sustainable Development.
8The Company, at present, operates Five Gas Based Urea plants located at Nangal / Bathinda, in Punjab, Panipat in Haryana and two Plants at Vijaipur in the Guna district of Madhya Pradesh.
8After modernization and revamp of its plants, NFL, presently, has an aggregate production capacity of 35.68 lakh tonnes of Urea.
  
Beware of GAIL: Company raises Rs 53 crore demand on Zuari under "take or pay" provisions
Sep 03: Zuari Agro Chemicals is reeling from a Rs 52.93 crore demand from GAIL for its inability to offtake gas under the take or pay obligation in a gas supply agreement with the public sector gas major.
8Zuari has sought a reduction of the annual contracted quantity of gas supplied by GAIL but the request was turned down.
8The fertilizer producer is now saying that the take or pay amount be utilized for future "make up" gas supplies.
8Zuari however has made no provisions under Contingent Liability for this demand.
Supplier dumps Zuari with sub-standard fertilizers
8Then again, Zuari has a made a claim of Rs 27 crore as loss suffered against supply of  fertilizers that did not meet with the specifications of the FCO.
8The company's finances are weak, making a net profit of just Rs two crorein the first quarter of 2015-16. Incidentally this was the quarter in which MFCL has become a subsidiary of Zuari.
8The measly profit last quarter compares well with a loss of Rs 37.88 crore recorded for the same quarter in the previous year.
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ICRA gives Kribhco a thumbs-up-I: Gets an "AA" rating on its debt
Sep 03: There are some who believe that Krishak Bharati Cooperative Ltd (Kribhco) might have swallowed more that what it could chew when it took over Abhey Oswal Shajahanpur fertilizer plant. It paid more for it than it should have and there was a feeling that the cooperative is still struggling with the takeover.
 
8But that is not status you get from the 'AA" rating the ICRA has bestowed on a Rs 2.300 crore long term fund based facilitiy that the company is planning to take out. It has also been given a A1+ rating for its Rs 700 crore non-fund based limits.
 
8The ratings factor in the society’s established position as the third largest manufacturer and second largest marketer of urea in India with a ~13% market share, with strong brand recall due to its long track record of close to three decades, stable cash flow from urea operations and ownership by cooperatives, who are engaged in distribution of fertilisers, leading to an established pan-India market presence and reach to farmers.
 
8Both the new urea policy and the pooling of gas prices will be beneficial for the cooperative, ICRA has asserted.
ICRA gives Kribhco a thumbs-up-II: No clarity yet on Rs 1000 crore DAP-NPK plant at Krishnapatnam
Sep 03: ICRA did however say that some aspects of Kribhco's plans are not fully clear.
 
8The rating agency has not taken into account the risks of the coopertive;s plans to set up a a 0.45 MMTPA imported phosphoric acid-based DAP-NPK complex fertiliser plant in Krishnapatnam (Andhra Pradesh) at an estimated investment of around Rs. 1,000 crore, Plans are at a preliminary stage.
 
8The funding pattern and the projected debt tie-up for the project is not yet clear
 
8Then again, Kribhco has high contingent liabilities, primarily on account of corporate guarantees for the debt of subsidiaries KSFL and Kribhco Infrastructure Limited (KRIL). Nevertheless, ICRA takes comfort from the fact that KSFL is engaged in manufacture of urea, which is marketed by Kribhco, and the Shahjahanpur plant of KSFL is one of the most energy efficient gas-based plants in the country with healthy capacity utilisation levels. KRIL’s debt levels are relatively smaller vis-a-vis Kribhco’s net worth.
  
Fertilizer stocks: Buy them, says stock broking houses
Sep 02: Fertilizer stocks are looking up these days.
 
8This is evident from more and more "buy" recommendations being taken out by stock broking houses.
 
8A case at point is that of Chambal Fertilizers. The recommendation is to buy the stock on the basis of the following financial parameters:
 --At the current market price of Rs. 61.50, the stock P/E ratio is at 5.74 x FY16E and 4.95 x FY17E respectively.
 --Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs. 10.71 and Rs.12.43 respectively.
 --Net Sales and PAT of the company are expected to grow at a CAGR of 11% and 14% over 2014 to 2017E respectively.
 --On the basis of EV/EBITDA, the stock trades at 6.16 x for FY16E and 5.35 x for FY17E.
 --Price to Book Value of the stock is expected to be at 0.95 x and 0.83 x respectively for FY16E and FY17E.
 Click on Reports for more
There is a lot of scope to innovate in the fertilizer sector, says Amit Roy, CEO of IDFC
Sep 02: Innovation is the only way to go for the fertilizer industry, says Amit Roy, the CEO of the prestigious US-headquartered International Fertilizer Development Center (IFDC).
 
8A time has come to develop new technologies as the world has to go beyond products developed particularly in the US over 30 years ago.
 
8“N and P fertilizers are absolutely necessary to produce more food, but the critical question is how to improve the uptake of these nutrients and at the same time reduce external impacts, says Roy. There is work going on looking at the fundamental aspects of nutrient uptake and also at product development. “Even if we could improve uptake efficiency of the current nitrogen products substantially we would still be losing 40% or so in run off and wastage,” he said.
 
8IDFC has been instrumental in developing what is called the Urea Deep Placement (UDP) model through which prilled urea is compacted to create larger briquettes of fertilizer, which are then implanted deeper into the soil than usual, at around 7-10cm depth. The technology has been used successfully in rice farming in Bangladesh, with one application in a growing season allowing nitrogen consumption to be reduced by 30-35% and rice yields to be increased by 15-18%.
 
8Roy says the technology is now being tested and scaled up for use in Africa and across Asia.
 IDFC has now set up a Virtual Fertilizer Research Center (VFRC) designed to foster the creation of the next generation of fertilizers and production technologies by bringing together research institutes from across the world.  So far however industry and academic collaboration has been sporadic and not systematic.
 Click on Details for more
  Details
Tata Chemicals: Unhappy with the bids received?
Sep 01: There is no news yet from Tata Chemicals and its banker Kotak Mahindra on the non-binding bids submitted for the company's fertilizer assets.
8"There is complete silence on their side and in all likelihood they don't seem to be happy with the bids that had been submitted," one of the bidders who refused to be named told this website.
8The call is finally on the Tatas on whether to go ahead with the bidding process or call a halt to it.
8In case they are interested in going ahead, bidders will be allowed to do adequate due diligence before they are asked to submit their bids.
8For the Tatas, the sale of fertilizer assets is not a distress sale. "We can continue to run the division should we want to," a Tata source told this website.
8Which way the wind is going to blow will become clear in the coming days, sources said.
Click on Details for more on what the website said about the price tag for the Tata asset.
  Details
Rajathan's draft Mineral Policy: Ample scope for units based on gypsum, rock phosphate and potash
Sep 01: The website carries here the draft Mineral Policy of Rajasthan.
 
8The policy is important for the fertilizer sector as the state has recoverable deposits of rock phosphate.
 
8Rajasthan also has 82% of the total gypsum deposits in India. The state's deposit amount to around one billion tonnes
 
8The state has reasonable deposits of potash as well.
 
8The mineral policy says that there is ample scope for establishing fertilizer units in the state based on gypsum, rock phosphate and potash.
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Matix eyes coal gasification route to make urea
Sep 01: Matix Fertilizers and Chemicals Ltd has its hands full trying to commission its long delayed ammonia-urea complex based on CBM but the company is now eying the coal gasification route to produce urea.
 
8In a presentation, Matix claims that given coal gasification is now a proven technology and a success in China, and must be put to use.
 
8The company says that the high ash content in India coal will be required to be blended with imported coal to get the right mix that will be required for gasification.
 
8Matix says that coal allocation must also be made to the fertilizer sector in addition to allocations made to power, steel and cement.
 
8The company is of the view that “Make In India” urea would be cheap and cost competitive in comparison to gas based urea.
 Click on Reports for more.
Subsidy bills-II: Processing of balance claims of urea units amount to Rs 2000 crore yet to begin
Aug 31: While current dues, except for freight subsidy, are getting cleared, the following is the status on payment of dues from the past
 
8As the deeming provision for quality certificates from states (Proforma B2) notified via NBS notification dated 25/06/2015 has been interpreted as prospective by DoF, the balance claim bills for November 2012 onwards are being processed for P&K fertiliser only for states which have issued B2 certificates.
 
8It is learnt that FICC will make provisional payments for beyond 100% production, amounting to around Rs.3,200 crore in September, besides on account claims for indigenous urea for the month of July.
 
8However FICC is yet to start processing of balance claims of indigenous urea units for the months November 2012 and beyond valued about Rs.2,000 crore.
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Subsidy bills-I: Allocation for indigenous urea will get over by October, 2015
Aug 31: For reference purposes, the website carries here the fertilizer subsidy utilization figure up to August 20, 2015
 
8The data shows that the budget for imported urea has been utilized only to the extent of 31% of the total of Rs 12,300 crore. There is therefore ample scope for imports still left under the existing budget.
 
8The imported decontrolled fertilizer subsidy budget utilization is also about 31% only. On account bills upto June have been paid. Balance claims are being processed wherever quality certification from concerned state governments are available.
 
8For indigenous P&K, the budget utilization is about 47% and the subsidy will run out by December, 2015.
 
8The indigenous fertilizer subsidy budget is likely get over by October, 2015. Payments of June on account claims have been cleared, and there are indications that July on account shall be paid in Sep-15. Processing of balance claims is yet to be taken up by FICC.
 
8As for freight subsidy budget on indigenous fertilizers, freight bills upto January, 2015 have only been cleared and budget is almost exhausted.
 
8Overall however, the subsidy budget is only 56% over as on August 20.
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Scathing indictment of NBS policy by CAG-II: Rs 5555 crore lost because benchmark price for DAP was not fixed in 2011-12
Aug 31: The CAG has highlighted the following anomalies in the processing of subsidies for decontrolled fertilizers:
 DOF lost opportunity to save Rs 5555 crore in subsidies
 
8The benchmark price considered for fixation of subsidy on DAP for 2011-12 in November 2010, was lower than the prevailing import/procurement rates because of which the fertilizer companies were not able to finalize contracts with international fertilizer suppliers. The landed price for DAP rose and the benchmark price was finally fixed at US$ 612 per metric tonne (PMT) in May 2011, which was 35 per cent higher than the benchmark price fixed in November 2010. By not fixing the benchmark price at reasonable level in November 2010, the DOF lost an opportunity of saving subsidy of Rs 5555 crore. Fixation of benchmark price at a reasonable level needs to be ensured by DoF which would allow fertilizer companies to finalize contracts with international suppliers timely.
 Heavy tendency of Proformae ‘B’
 
8There was huge pendency of Proformae ‘B’, which was the basic reconciliation tool for cross verification of information pertaining to quantity and quality of fertilizers supplied by fertilizer companies with information provided in the mobile FMS by the State Government. As many as 4112 Proformae ‘B’ were pending in respect of P&K fertilizers, pertaining to the period 2007-08 to 2013-14, as of 31 October 2014. Out of these, 3899 related to the period when NBS Policy was in force. Thus, there was a need for DoF to frame a time-bound action plan to clear the pendency.
 Rs 25 crore extra subsidy for SSP
 
8On the recommendation of Inter Ministerial Committee (November 2010), subsidy on Single Super Phosphate (SSP) was reduced by Rs 104 PMT as secondary freight element was withdrawn
  and lump sum freight of Rs 200 PMT was allowed as compensation for this withdrawal. This resulted in additional financial burden of Rs 25.74 crore on DoF.
 Click on our Reports section for more
  
Scathing indictment of NBS policy by CAG-VII: Auditor comes out with a series of recommendations, wants cost data verified from 2010
Aug 31: Some of the major recommendations to correct the anomalies made by the CAG are:
 
8A well-defined road-map for achieving each objective of the Policy, which may, inter alia, indicate quantifiable deliverables and specific timelines for achieving the objectives, needs to be laid down.
 
8DoF may put in place specific well coordinated measures including a critical review of pricing of Urea and extending to farmers the benefits of balanced usage of fertilizers through a dedicated strategy of publicity.
 
8DoF may factor in the impact of movement of international prices, while fixing benchmark price before start of financial year, which would enable fertilizer companies to enter into contracts with international suppliers for timely procurement of their requirements.
 
8DoF may establish a mechanism to ensure that requirement of fertilizers is assessed in advance based on month-wise and State-wise demand of fertilizers projected by DAC and co-ordinate the arrangements for supplying the required quantities of fertilizers. Necessity for having an MSP for SSP and modalities for same may also be worked out by DoF in close co-ordination with DAC.
 
8As NBS Policy left MRPs open for being fixed by fertilizer companies at a reasonable level, DoF may critically review adequacy of measures to assure itself that prices are actually fixed by companies at a reasonable level. For this, cost accounting firms already appointed by DoF may be instructed to submit their reports in a timely manner, so that action could be taken by DoF against fertilizer companies loading their cost with irrelevant components. Further, DoF may also consider extending verification of cost data of fertilizer companies from April 2010 onwards i.e. with effect from the date of introduction of NBS Policy instead of getting cost data examined only from 2012-13.
 Click on our Reports section for more
  
Rashtriya Chemicals and Fertilizers to invest around Rs 14,000 crore over next five years
Aug 31: State-run Rashtriya Chemicals and Fertilizers Ltd (RCF) today said it will invest around Rs 14,000 crore over the next five years for expansion and charting a growth path for the public sector unit. "We are investing around Rs 14,000 crore for expansion plans over the next five years, which includes expanding our urea capacity at Thal unit (Raigad district) at a cost of Rs 5,458 crore and fertiliser complex at Talcher (Odisha) for Rs 8,000 crore," RCF Chairman and Managing Director R G Rajan told reporters here. 
8"We are expanding the capacity of urea at Thal by setting up one single stream ammonia plant of 2200 MTPD capacity and another plant of 3850 MTPD capacity at the existing site. "The company has already received pre-PIB (Public Investment Board) clearance. We now expect PIB and Cabinet clearance in the next 3-4 months period, Rajan said, adding that the project is expected to go on stream by 2018. RCF along with Coal India, GAIL (India) and Fertilizer Corporation of India (FCIL) is contemplating to set up a fertilizer complex at Talcher comprising 2200 MTPD ammonia plant, 3850 MTPD urea plant through coal gasification route.This project will utilize state-of-the-art coal gasification technology.The pre-project activities are under way, he said. 
8The `mini ratna' PSU is also putting up a sewage treatment plant (STP) at Trombay (Mumbai). Recognising the need of sufficient water supply for its Trombay plant operations, RCF has lined up a contract to set up a new STP adjacent to the existing plant at a cost of Rs 198 crore, Rajan said. A part of treated water will be supplied to BPCL, which will share the financial cost of the project, which will be commissioned in October 2016, the CMD said. 
Scathing indictment of NBS policy by CAG-VI: Companies raised MRPs disproportionately, claims CAG
Aug 31: Purchase cost of DAP by some companies was less than the benchmark price of US$ 500 PMT considered by DoF for fixation of subsidy for the year 2010-11. In the absence of any cost sheet of the calculation of MRPs for such products and no separate verification mechanism in DoF, Audit could not verify whether the benefit of such lower cost of purchase was passed on to farmers through a reduction in MRP.
 
8Partial modification in NBS Policy for payment of secondary freight subsidy in line with ‘Uniform Freight’ w.e.f 1 January 2011, resulted in withdrawal of inbuilt freight subsidy by Rs 300 PMT in the case of DAP. It was, however, observed that subsequent to the said notification, Chambal Fertilizer and Chemicals Ltd. (CFCL), Indian Potash Limited (IPL) and IFFCO increased their MRP for DAP by `Rs800 PMT. Though no specific reasons were available for such increase of MRP by IFFCO and IPL, CFCL had cited withdrawal of inbuilt secondary freight subsidy as the reason.
 Click on our Reports section for more
Scathing indictment of NBS policy by CAG-V: Unreasonable loading of costs by IFFCO highlighted
Aug 31: DoF had not laid down any guidelines for assessing and enforcing the reasonableness of MRPs fixed by the fertilizer companies.
 The CAG observed the following instances of unreasonable loading of costs in MRP were found:
 
8FFCO added `142 PMT as ‘loss on sale of fertilizer bond’ as a component of cost for fixing MRP of DAP (imported) during 23 September 2011 to 30 May 2012. Financial impact of above loading was Rs 9.89 crore.
 
8Increased subsidy on opening stock of imported DAP as on 1 April 2011, amounting to `4.41 lakh, was recovered by DoF from IFFCO which in turn, added Rs 40 PMT as ‘loss on mopping up of subsidy’ as a cost component for fixing MRP of imported DAP. This resulted in undue profit of Rs 2.59 crore to the Company.
Scathing indictment of NBS policy by CAG-IV: DOF machinations led to Rs 653 crore loss, says auditor
Aug 31: The Monthly Supply Plan (MSP) in respect of decontrolled P&K Fertilizers, as issued to fertilizer companies as well as to states, was not based on realistic assessment of requirements. 8Quantity actually supplied by the companies was being regularized without any link with the quantity mentioned in MSP. Further, no MSP was being prepared for SSP.
 
8DoF decided (8 February 2012) that DAP (MAP/TSP/DAP Lite), NPK (all grades) and MOP Fertilizers except Urea arriving in February 2012 and March 2012 would not be dispatched from ports to any state till further orders. DoF, however, reversed (28 February 2012) the decision despite the fact that the month’s requirements could have been met through indigenous production and the stock carried over from the previous month. As substantial reduction in the rate for NBS of DAP was recommended by IMC for 2012-13 (7 February 2012), the decision of DoF to resume supply of imported DAP enabled fertilizer companies to dispatch the imported DAP to district level and claim subsidy at higher rates of 2011-12.
 
8Resultantly, DoF had to bear avoidable burden of Rs 653 crore on additional quantity of imported fertilizers, despite there being no immediate requirement.
 Click on our Reports section for more
Scathing indictment of NBS policy by CAG-III: Auditor castigates non-recovery of lower ammonia cost from P&K producers
Aug 31: Cost of production of Ammonia using domestic/APM gas was cheaper as compared to use of imported Ammonia for production of complex fertilizers.
 
8The Empowered Group of Ministers (EGoM) directed (February 2012) the DoF to finalize guidelines for effecting recovery of undue benefits that had accrued to P&K manufacturing fertilizer companies which used domestic gas.
 
8Further, Minister of State for Chemicals & Fertilizers directed (November 2013) that pending finalization of guidelines, DoF should initiate ‘adhoc’ recovery which was notified in January 2014. 8However, DoF neither finalized the guidelines to effect such recovery from fertilizer companies nor made ‘adhoc’ recoveries even after expiry of two years from the direction of EGoM.
 
8Financial impact on account of this non-recovery could not be worked out by the CAG due to non-availability of data on use of Ammonia for production of Urea vis-à-vis P&K fertilizers.
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Scathing indictment of NBS policy by CAG-I: Policy failed to produce results, says auditor
Aug 31: The CAG in its review of the policy on decontrolled fertilizers (up to the year March, 2014) has come out with a scathing indictment of the procedures followed by the DOF.
 The following observations were made:
 
8DoF records did not reveal a clear road-map or timelines or monitoring mechanism for implementation of NBS Policy with respect to achievement of laid down objectives.
 
8Preferred proportion of usage of NPK nutrients is 4:2:1. ‘N’ which was at 4.3 in 2009-10, jumped to 8.2 in 2012-13, as farmers preferred Urea, containing ‘N’, because it was cheaper than P&K fertilizers. Such a practice had an adverse effect on soil fertility. Thus, NBS Policy did not promote balanced fertilization.
 
8Despite stated objective of NBS Policy to improve growth of indigenous fertilizer industry, production of P&K Fertilizers by the indigenous fertilizer industry declined.
 
8There was a need for a critical review of the utilization of 78 Fertilizer Quality Control Laboratories (FQCLs) in the country as capacity of some FQCLs was overutilized while some remained underutilized.
 Click on our Reports section for more

Aug 30: Modi government's new oil & gas model-VII: Model equates domestic prices to imported gas prices in 2022.   Details
Aug 30: Modi government's new oil & gas model-VI: Cost estimate scenarios can be built too  Details
Aug 30: Modi government's new oil & gas model-V: Update on India's unconventional plays  Details
Aug 30: Modi government's new oil & gas model-IV: User can play around with demand side estimates  Details
Aug 30: Modi government's new oil & gas model-III: Policy framework will be target oriented  Details
Aug 30: Modi government's new oil & gas model-II: Raising recovery factor seems to be the new focus  Details
 
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