New Delhi, October 9 (IANS). Complex fertilizers volumes in India are estimated to grow by 2-4 per cent in the current financial year, compared to a strong growth of 9 per cent last year amid import availability issues, geopolitical disruptions and a high base.
The credit profile of fertilizer manufacturers will remain stable due to stable profitability, expected additional subsidy allocation and timely disbursement, CRISIL Ratings report said.
The report said the increase in subsidy allocation by the government will keep the working capital requirement of complex fertilizer manufacturers stable and provide support to their credit profile.
Analysts have indicated that rising raw material prices due to supply disruptions could increase subsidy requirements.
This slow pace is due to heavy dependence on imports for di-ammonium phosphate (DAP) and key raw materials.
About 60 percent of DAP requirements are met through imports, while another major fertilizer, Nitrogen Phosphorus Potassium (NPK), is produced locally.
Complex fertilizers account for one-third of the total domestic fertilizer consumption, of which NPK grade accounts for 55 percent and DAP the rest.
DAP volumes declined by about 12 per cent last year, while NPK increased by about 28 per cent, as domestic producers focused on NPK due to higher prices of imported DAP.
In the last financial year, geopolitical uncertainties affected the availability of DApps globally.
The rating agency has estimated NPK volumes to grow by 4-6 per cent this fiscal due to adequate monsoon, while DAP volumes are expected to remain unchanged due to higher prices, although availability is expected to improve.
Crisil Ratings Director Anand Kulkarni said additional special compensation for DAP imports by the government, alternative arrangements like long-term agreement with Saudi Arabia and reduction in trade tensions with China will support the availability of DAP.
He said that in the remaining period of this financial year, demand for NPK is expected to normalize as the declining trend of DAP will reverse as availability increases.
–IANS
SKT/
