Though the demand for fertilizers in India looks promising, the industry faced quite a few challenges in the year 2013. It was a difficult year for the fertilizer industry, with demand getting affected on account of a delayed and deficient monsoon, and significant inflation following high input prices, decline in subsidy rates and currency fluctuations.
Sales of all fertilizers except urea declined in FY12-13, with the overall sales volumes declining by 11 per cent to 53.4 Million Metric Tonnes (MMT) from 59.9 MMT in FY12-13. In India there are 57 large fertilizers plants in the country producing urea, DAP, Complex fertilizer,Ammonium Sulphate (AS) and Calcium Ammonium Nitrate (CAN). For the next financial year, the demand scenario is expected to be better than it was in FY12-13.
The industry is awaiting approval of projects under the NUIP-2012, which are directly dependent on gas availability. Subsidies are expected to continue to be delayed in FY13-14 due to under-budgeting. This will in turn affect net profitability of the players due to reliance on short-term borrowings. While the demand scenario looks positive, gas pricing, subsidy delays and currency fluctuations will continue to remain the key challenges for the Indian Fertilizer Industry in the years to come.