P&K players may come under pressure

Source: The Hitavada      Date: 12 Dec 2018 10:03:26


The domestic urea industry is likely to be stable, however the projected performance of the P&K (phosphorous and potash) players may come under pressure in this fiscal following increased raw material prices and weak rupee, a report said.
The phosphorous and potash) manufacturers are entirely dependent on imports to meet their raw material needs.

and the recent currency depreciation and increase in phosphoric acid prices have resulted in a rise in input costs, which they have passed on to the farmers, rating agency Icra said. “However, owing to weaker monsoon in certain pockets several players have had to pass on higher discounts to the dealers. Also, a lag in passing on the price rise has resulted in a negative impact on the profitability. P&K manufacturers who are operating in regions where monsoon has been adequate are expected to face a lower impact on their profitability,” it added. Meanwhile, urea demand is expected to grow at 2-3 per cent in-line with the long-term growth rate.

However, the industry continued to suffer infrequent revisions in the policy parameters particularly the fixed costs for urea units, freight subsidy rates among others, which result in under-recoveries for fertiliser players. Timely intervention on the revised fixed cost issue will, therefore, remain a key monitorable in the near-term as the actual cash pay-out to urea players (Rs 4,500 crore as on March 31, 2018) is pending since April 2014. This would result in significant improvement in the financial profile of several of them, the report noted.