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Market Research Report : Fertilizer Market in India 2012
 

Market Research Report : Fertilizer Market in India 2012

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For the complete report, get in touch with us at : info@netscribes.com ...

For the complete report, get in touch with us at : info@netscribes.com

The report begins with an introduction of different types of fertilizers produced in India categorized as organic, bio and chemical fertilizers. Chemical fertilizer is the focus of the report, which also includes water soluble fertilizers. The market overview section provides details about the domestic fertilizer production, consumption, demand and import levels. The production overview section entails production of fertilizers both nutrient-wise, as well as product-wise, while the consumption overview section includes nutrient-wise and zone-wise consumption of fertilizers. India’s fertilizer consumption has grown at a CAGR of 6.9% from 2006-07 to 2009-10. The demand overview section provides a clear idea about the demand-supply situation of the fertilizer market, including product-wise demand, availability and sales of fertilizers in the country. The import overview section comprises product-wise import of fertilizers along with the installed capacity of fertilizers both nutrient-wise, as well as product-wise.

Furthermore, the report provides a detailed description of the fertilizer sales in South Zone covering states such as Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Pondicherry and Andaman & Nicobar Islands. Andhra Pradesh and Karnataka are the key sales hub in Southern India. Porter’s Five Forces analysis depicts an overall market scenario.

A brief description of the drivers that helps the sector to prosper includes large subsidies, capitalization of opportunity presented by low consumption, increase in food grain production and appropriate monsoon. Cost of production of fertilizers is high owing to its inputs like naptha or even natural gas. Fertilizers manufacturing is a tedious process that usually ends up having high costs. In order to prevent reduced profitability due to high input costs, players hike prices transferring the increased cost burden to end consumers. This has a negative impact on the domestic fertilizer market as small farmers face acute affordability issues. The Indian Government witnessed this trend and offered large subsidies to the players in a bid to keep the prices moderate and result in off-takes. It has insulated the farmers from price hikes even in times of price rise in raw materials thereby keeping it more within the reach of them. Even though India has witnessed a rise in fertilizer consumption over the period of time, it is still low against the global average. Countries including China, Malaysia and Bangladesh rank above India in terms of fertilizer consumption. Low usage poses as opportunity that can be capitalized by the players both from the perspective of production and consumption. Fertilizers find its usage in enhancing food productivity and thereby as food grain production increases, fertilizers also witness an upward movement. Finally, good monsoon acts as a potential stimulant for the growth,

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    Market Research Report : Fertilizer Market in India 2012 Market Research Report : Fertilizer Market in India 2012 Presentation Transcript

    • Fertilizers Market – India May 2012
    • Executive Summary  India is the ‐‐ largest nitrogenous fertilizer producer in the world after country 1 and the country 2Market  Production of fertilizers (nutrient‐wise) has grown at a CAGR of a1% to ‐‐ mn tonnes in 20‐‐  Consumption of fertilizers (nutrient‐wise) has grown at a CAGR of a2% to ‐‐ mn tonnes in 20‐‐ Drivers: Challenges: ‐ Large subsidies  ‐ Increased prices of raw materialsDrivers &  ‐ Capitalization of opportunity presented by low  ‐ Price hike in natural gasChallenges consumption  ‐ Environmental degradation by fertilizers ‐ Increase in food grain production ‐ Good monsoon  Department of FertilizersGovernment   Nutrient Based SubsidyInitiatives  Government Schemes  Water soluble fertilizers (WSF)  Shift to gas based fertilizer unitsTrends  Increasing joint ventures Major PlayersCompetition Rashtriya  Indian Farmers  Coromandel  National  FCI Aravali Gypsum &  Chemicals &  Fertilizer  International Fertilizers Minerals India Fertilizers Cooperative  FERTILIZERS MARKET IN INDIA 2012.PPT 2
    • •Introduction •Market Overview•Drivers & Challenges•Government Regulations•Trends•Competition•Key Developments•Strategic Recommendations•Appendix FERTILIZERS MARKET IN INDIA 2012.PPT 3
    • Chemical fertilizers are the most widely used fertilizers in India since they supply the primary nutrients for crops• Fertilizers are soil amendments applied to promote plant growth, the main nutrients added in fertilizers are nitrogen, phosphorus,  potassium while other nutrients are added in smaller amounts• Main nutrients vital to plants by weight are called macronutrients, including: nitrogen (N), phosphorus (P), and potassium (K) (i.e. N‐P‐ K);  Sulphur (S) is also being used however its consumption is not widespread F1 Derived from plant, animal & human residues F2 Derived from plant, animal & human residues F3 Available in double & multi nutrient combinations and are 100% water solubleFertilizer They are inorganic or synthetic organic materials that are concentrated in  F4 nature and derived from plant, animal & human residues Primary Fertilizers Complex Fertilizers F5 F6 Focus Area of the Report FERTILIZERS MARKET IN INDIA 2012.PPT 4
    • Nitrogenous fertilizers dominate the overall production whereas potassic fertilizers are completely importedProduction – Overview   Production of Fertilizers (Nutrient‐wise)• India is the ‐ largest nitrogenous fertilizer producer in  K P N the world after c1 and the c2 mn tonnes t1  Production of fertilizers (Nutrient‐wise) amounted to ‐‐ mn  H E tonnes in 20‐‐, growing at CAGR of c3% from ‐‐ mn tonnes  F G 28.1% 26.6% in 20‐‐ 25.9% 24.2%• Increase in domestic production of fertilizers is  71.9% 74.1% 75.8% 73.4% required for reducing the rising dependency on  imports as global fertilizer markets are highly  unstable and imperfect 20‐‐ 20‐‐ 20‐‐ 20‐‐• Among various types of fertilizers produced, urea  Production of Fertilizers (Product‐wise)   continues to hold the largest share of c4% with ~‐‐ mn tonnes during 20‐‐, followed by the production of  DAP Complex Fertilizers Urea Complex fertilizers and DAP mn tonnes t2% – Major companies like IFFCO, National Fertilizers Ltd., Rashtriya I L J K Chemicals & Fertilizers and Chambal Fertilizers are the leading  14.9% 12.7% 14.1% 10.1% producers of Urea in India 22.9% 23.0% 24.1% 19.6%  According to the Fertilizer Ministry, production of  fertilizers is expected to reach ‐‐ mn tonnes in 20‐‐, up by  62.3% 66.4% 66.9% 63.2% c5% from ‐‐ mn tonnes in 20‐‐ – Urea output is expected to increase to ‐‐ mn tonnes in 20‐‐ from ‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ mn tonnes in 20‐‐ FERTILIZERS MARKET IN INDIA 2012.PPT 5
    • Imbalances in demand and supply  have been inducing higher imports over the past years Import – Overview   Import of Fertilizers (Product‐wise) • India is self sufficient in terms of production of  Urea MOP DAP nitrogenous fertilizers and it has also achieved adequate  mn tonnes t3% production capacity of phosphatic fertilizers O  However, in the absence of domestic commercially exploitable  P N sources, complete requirement of potash is met through  32.3% 31.8% imports M 48.3% – Installed capacity for both N and P fertilizers have gone up to ‐‐ mn  42.7% 32.4% 32.3% tonnes and ‐‐ mn tonnes, representing c6% and c7% respectively 31.2% 30.8%• Import of fertilizers have grown at a CAGR of c8% from ‐‐ 35.3% 35.9% mn tonnes in 20‐‐ to ‐‐ mn tonnes in  20‐‐ 26.0% 20.9%  Government allows the production of urea beyond reassessed  20‐‐ 20‐‐ 20‐‐ 20‐‐ capacity to substitute or minimize importsInstalled Capacity (Product‐wise) Installed Capacity (Nutrient‐wise) Installed Capacity No. of Units P N unitsmn tonnes 80.0 mn tonnes t4% Q 80 U V 60 30.9% 31.9% 31.0 S 40 R T 19.0 12.0 20 69.1% 68.1% 0 Urea* DAP Complexes SSP 20‐‐ 20‐‐ FERTILIZERS MARKET IN INDIA 2012.PPT 6
    • V Zone Fertilizer Sales – State‐wise  P Q R u%mn tonnes C1 D1 mn tonnes A2 mn tonnes v% D3 9.6% 10.2% 5.1% C3 15.6% B1 17.7% 15.0% 14.5% A1 B3 13.9% 11.7% A3 21.6% 12.3% 27.0% 30.8% 34.0% 17.2% 24.8% 3 15.7% 19.6% 27.5% 18.6% 21.8% 23.1% 26.1% 69.1% 68.7% 45.7% 44.0% 46.5% 35.2% 58.1% 61.0% 38.1% 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ S  T Umn tonnes mn tonnes mn tonnes x% w% D4 C6 D6 C4 A5 12.2% 5.6% 15.6% 8.0% 5.9% 28.2% 7.8% A6 B6 21.2% 31.6% 23.0% 39.2% 22.9% 19.7% A4 B4 13.5% 25.4% 8.6% 28.3% 21.7% 26.5% 6.2% 27.1% 47.4% 50.1% 47.1% 55.3% 53.8% 47.9% 41.3% 33.3% 37.9% 44.0% 43.7% 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ MOP DAP NPK Urea FERTILIZERS MARKET IN INDIA 2012.PPT 7
    • Drivers & Challenges – Summary   Challenges Drivers Increased prices of raw materials Large subsidies Price hike in natural gas Capitalization of opportunity  Environmental degradation by  presented by low consumption fertilizers Increase in food grain production Good monsoon FERTILIZERS MARKET IN INDIA 2012.PPT 8
    • Creation of opportunity for players as India still features low in terms of fertilizer consumption on a global platformCapitalization of opportunity presented by low consumption   Impact• Though fertilizers have been a chief component in augmenting food production in India, usage  of fertilizers is skewed in India• While fertilizer usage in high in certain states with adequate irrigation facilities, it is dismally low  in certain other states• Added to it there is an imbalanced usage of N, P and K fertilizers across the country• Efforts are being channelized to increase usage of f1 fertilizers in rice along with development of  f2• Even though fertilizer consumption shows a northward trend, yet it is still considered to be low  compared to other nations  Low usage poses as opportunity for the entire sector as it still has room for further growth both in terms of  production and consumption Fertilizer usage in India Fertilizer consumption in India is  China registered a  estimated at ‐‐ kg per hectare land consumption of  ‐‐ kg /ha Low consumption  Low consumption  UK has a consumption  s% presents the sector  level of ‐‐ kg /ha Kg /ha presents the sector  B C with opportunities  with opportunities  Malaysia has a  A for further growth for further growth consumption level of ‐‐ kg /ha Bangladesh registered a  20‐‐ 20‐‐ 20‐‐ consumption of ‐‐ kg/ha FERTILIZERS MARKET IN INDIA 2012.PPT 9
    • Government Participation – Summary Department of Fertilizers Initiatives Government Schemes Nutrient Based Subsidy FERTILIZERS MARKET IN INDIA 2012.PPT 10
    • The Government has a separate department devoted completely to regulate the fertilizer sectorDepartment of Fertilizers • This body comes under the ambit of Ministry of Chemicals & Fertilizers which is headed by a Cabinet Minister • Its primary objective is to ensure adequate and timely availability of fertilizers at affordable prices in order to maximize  the agricultural outputs in the country • The department is broadly divided into 5 Wings and are handled by 1 Additional Secretary & Financial Advisor, 3 joint  secretaries and 1 Economic Advisor • Y1 • Y2 Primary  activities • Y3 • Y4 • This department has 1 attached office called fertilizer Industry Coordination Committee headed by Executive  FICC Director • Constituted in 1977, this body looks after the retention Price Cum Subsidy scheme which eventually got  replaced by New Pricing Scheme FERTILIZERS MARKET IN INDIA 2012.PPT 11
    • Trends – Summary Water soluble fertilizers  (WSF) Trends Shift to gas based fertilizer  Increasing joint ventures units FERTILIZERS MARKET IN INDIA 2012.PPT 12
    • Water efficiency with improved quality and appearance of crops makes WSF attain immense popularity in IndiaWater soluble fertilizers (WSF)• Water soluble fertilizers are increasingly gaining popularity owing to its beneficial attributes• As of 20‐‐, domestic market size of water soluble fertilizers stood at ‐‐ tonnes; majority of it  Use of WSF is  increasing crop  being imported productivity • In 20‐‐, India’s first water soluble fertilizer plant in b1  C1 was put into operation with a capacity of b2 tonne Use of   It is a 50:50 JV between India’s b3 and Chile based fertilizer  Water  manufacturer b4, which will provide the raw material for  Results C2 Soluble  production of b5 in IndiaFertilizers  There are plans of investing INR ‐‐ mn to double the capacity by  C3 20‐‐  b6 is usually priced in the range of INR ‐‐ to INR ‐‐ per tonne  based on quality grade  Characteristics  of Water Soluble Fertilizers Fertiliser use efficiency Comparison• 100% water solubility Nutrient   Conventional Fertilisers (%) WSF (%)• Available in double and multi nutrient combinations which  Z1 Z4 Z7 may or may not have secondary elements or micronutrients• Available in the powder or liquid form Z2 Z5 Z8• Can be used for fertigation and foliar application Z3 Z6 Z9 FERTILIZERS MARKET IN INDIA 2012.PPT 13
    • Public: Domestic Company – Company 1Company Information Offices and Centres – India  Corporate Address Place 1Tel No. 123456Fax No. 123456 Place Website www.abc.comYear of Incorporation 19‐‐Ticker Symbol ‐‐Stock Exchange ‐‐Products and Services Head Office Category Products/ServicesC1 P1 Key PeopleC2 P2 Name DesignationC3 P3 Person 1 D1 Person 2 D2 Person 3 D3 Person 4 D4 FERTILIZERS MARKET IN INDIA 2012.PPT 14
    • Public: Domestic Company – Company 1Financial Snapshot Key Ratios y‐o‐y change  Particulars  2011 2010 2009 2008 Total Income (2011‐10)Total Income ProfitINR mn Profit / Loss INR mn  Profitability Ratios S Q R Operating Margin ‐1.19 3.54% 4.73% 3.55% 4.15% P Net Margin ‐0.96 2.38% 3.33% 1.88% 2.59% Profit Before Tax Margin ‐1.55 3.50% 5.05% 3.00% 3.71% Return on Equity ‐2.56 8.28% 10.84% 6.63% 7.72% Return on Capital Employed ‐3.70 10.58% 14.29% 11.61% 11.18% Return on Working Capital 2.88 19.91% 17.04% 11.68% 14.77% 2008 2009 2010 2011 Return on Assets ‐1.81 4.11% 5.92% 3.56% 3.75%Financial Summary  Return on Fixed Assets ‐13.66 11.06% 24.72% 12.97% 14.13% Cost Ratios• The company earned a net profit of INR 1,385 mn in FY 2011, as  Operating costs (% of Sales) 1.21 96.45% 95.24% 96.41% 95.81% compared to a net profit of INR 1,715.1 mn in FY 2010 Administration costs (% of  ‐0.61 12.22% 12.83% 12.27% 14.19%• The company reported total Income of  INR 58,249.6 mn in FY 2011,  Sales) registering an increase of 13.23% over FY 2010 Interest costs (% of Sales) ‐0.05 0.13% 0.18% 0.74% 0.33% Liquidity Ratios• The company reported an operating margin of3.54% in FY 2011, a  Current Ratio ‐19.08% 1.49 1.84 1.73 1.55 decrease of 1.19 percentage points over FY 2010 Cash Ratio ‐96.95% 0.02 0.68 0.49 0.59• The company reported debt to equity ratio of 1.01 in FY 2011, an Leverage Ratios increase of 21.93% over FY 2010 Debt to Equity Ratio 21.93% 1.01 0.83 0.86 1.06 Debt to Capital Ratio 32.11% 0.27 0.20 0.15 0.27Financial Summary  Interest Coverage Ratio 0.42% 27.28 27.17 4.83 12.67 Indicators Value (30/04/2012) Efficiency RatiosMarket Capitalization (INR) A Fixed Asset Turnover ‐36.93% 4.64 7.36 6.82 5.40Total Enterprise Value (INR) Asset Turnover ‐2.06% 1.72 1.76 1.87 1.43 B Current Asset Turnover 18.56% 2.75 2.32 2.58 2.00EPS (INR) C Working Capital Turnover 64.75% 8.35 5.07 6.14 5.64PE Ratio (Abs) (3/05/2012) D Capital Employed Turnover 7.69% 3.47 3.23 3.49 2.95 Improved Decline FERTILIZERS MARKET IN INDIA 2012.PPT 15
    • Public: Domestic Company – Company 1Key Business Segments Key Geographic Segments P1 P2 Country 1 3% 2% 5% 4% 100% 97% 98% 95% 96% 50% 0% 2008 2009 2010 2011 2011Key Recent Developments Description  NewsOverview • The company produces and markets m1, m2 and m3 in India  It has earned its reputation primarily on the basis of quality of the nitrogenous fertilizers that it manufacturesProduction  • Company has produced ‐ mn tonnes of urea (m4% of installed capacity) during 20‐‐, up by m5% y‐o‐yPerformance  Production of Neem coated urea increased to m6 tonnes from m7 tonnes during 20‐‐ – It is the first company in India to get permission from the Government to produce and market m8Expansion plans • Company needs additional gas capacities and is planning to float an open tender for it in 20‐‐  ‐ mscmd of gas is required for transforming its three non‐gas plants to gas‐based units, at m9, m10 and m11 FERTILIZERS MARKET IN INDIA 2012.PPT 16
    • Private: Domestic Company – Company 1Company Information Offices and Centres – India Registered Address Place Tel No. 123456 Place  Fax No. 123456Website www.abc.com/Year of Incorporation 19‐‐ Registered  AddressProducts and Services Category Products/ServicesC1 P1 Key People Name Designation Person 1 D1 Person 2 D2 Person 3 D3 Person 4 D4 FERTILIZERS MARKET IN INDIA 2012.PPT 17
    • Private: Domestic Company – Company 1Financial Snapshot Key Ratios y‐o‐y change  Particulars  2011 2010 2009 2008Total Income Total Income Profit (2011‐10) INR mn Profit / Loss INR mn  Profitability Ratios S Operating Margin 3.15 28.58% 25.43% 25.68% 22.41% Net Margin 1.54 18.90% 17.36% 20.30% 14.25% R Profit Before Tax Margin 3.15 28.58% 25.43% 25.68% 22.41% Q Return on Equity 3.81 19.44% 15.63% 17.45% 9.63% P Return on Capital Employed 7.40 47.56% 40.16% 40.08% 27.11% Return on Working Capital 4.80 24.99% 20.19% 21.88% 11.98% Return on Assets 3.87 19.44% 15.57% 17.36% 9.55% Return on Fixed Assets 25.87 98.22% 72.35% 91.83% 47.83% Cost Ratios 2008 2009 2010 2011 Operating costs (% of Sales) ‐3.15 71.42% 74.57% 74.32% 77.59% Liquidity RatiosFinancial Summary  Current Ratio 9.03% 3.04 2.78 2.76 2.79 Cash Ratio 30.19% 2.09 1.61 1.83 1.94• Company incurred a net profit of INR 210.2 mn in FY  Efficiency Ratios 2011, as compared to a net profit of INR 144.8 mn in FY  Fixed Asset Turnover 24.68% 5.20 4.17 4.52 3.36 2010 Asset Turnover 14.67% 1.03 0.90 0.86 0.67 Current Asset Turnover 18.97% 0.89 0.75 0.69 0.54• It reported total Income of  INR 1,112 mn in FY 2011,  Working Capital Turnover 13.69% 1.32 1.16 1.08 0.84 registering an increase of 33.31% over FY 2010 Capital Employed Turnover 14.21% 1.03 0.90 0.86 0.68• The company reported an operating margin of 28.58% in  FY 2011,  an increase of 3.15 percentage points over FY  2010 Improved Decline FERTILIZERS MARKET IN INDIA 2012.PPT 18
    • Private: Domestic Company – Company 1Key Recent Developments Description  News • Operates as a premier design engineering and consultancy organization associated with  varied fields ranging across fertilizers, chemicals, Oil and Gas sector, refineries, power  plants, offsites and utilitiesOverview • Is certified by ISO 9001:2008 and equipped with state‐of‐the‐art computer‐aided design  (CAD) software in facilities at q1 and q2 • Has also been granted the status of “q3” by Ministry of Chemicals and Fertilizers • Has been roped in by Oil and Natural Gas Corp (ONGC) to carry out a detailed feasibility  study for its upcoming gas‐based ammonia plant in q4 • Secured an order for q5 services from q6 for their feedstock changeover project for its 3  plants • Q7 Ltd has roped in q8 to carry out the designing and engineering work for its sulphuricProjects   acid and ammonium bi‐carobonate plants • Has also prepared a q9 report for setting up the 4th unit of an q10 plant of q11 • Has won a contract from q12 for feedstock conversion job and feasibility study at the  company’s ammonia plant • It is also providing PMC services for q13 at q14 in Algeria for q15 • Has also received the contract for preparing q16 for q17 for its coal based ammonia plant FERTILIZERS MARKET IN INDIA 2012.PPT 19
    • Thank you for the attentionThe Fertilizer Market in India report is part of Netscribes’ Agriculture Industry Series.For more detailed information or customized research requirements please contact:Phone: +91 33 4064 6214E‐Mail: sales@netscribes.comFollow us:About NetscribesNetscribes is a knowledge‐consulting and solutions firm with clientele across the globe. The company’s expertise spans areas of investment & business research, business & corporate intelligence, content‐management services, and knowledge‐software services. At its core lies a true value proposition that draws upon a vast knowledge base. Netscribes is a one‐stop shop designed to fulfil clients’ profitability and growth objectives.Disclaimer: This report is published for general information only. Although high standards have been used in the preparation of this report,Netscribes (India) Pvt. Ltd. or “Netscribes” is not responsible for any loss or damage arising from use of this document. This document is the sole property of Netscribes (India) Pvt. Ltd. and prior permission is required for guidelines on reproduction. FERTILIZERS MARKET IN INDIA 2012.PPT 20