Fertilizers and Chemicals - Quick Overview

                   Chambal Fertilizers

Chambal Fertilizers and Chemicals
India’s low per capita consumption of fertiliser, production deficit, and higher dependence on imports has meant continuous emphasis on agriculture to improve production and farm efficiencies benefitting players such as Chambal Fertilisers.

The company is the largest private sector manufacturer of urea (fertiliser) having about 1,500 dealers and 20,000 retail outlets spread in over ten states. Besides fertilisers, the company also has presence in the areas of agri-inputs such as pesticides, micro nutrients, seeds and other imported fertilisers enabling diversification and capturing related opportunities in the sector.

Chambal has been benefiting out of its JV (holds 33.3 per cent stake) with IMACID and Tata Chemicals. This JV manufacturers phosphoric acid (raw material to produce diammonium phosphate or DAP) and has been a key beneficiary of high phosphoric acid prices. Although phosphoric acid prices, which had risen to over $1,400 and have now corrected to about $750-760 per tonne, they are relatively on the higher side.

On the urea front, the approval of new urea policy (in August 2008), where the prices for future expanded capacity has been partly de-con trolled, should help companies like Chambal. The gains would accrue in the form of improving profitability and return on equity, through de-bottlenecking and expansion of capacities.

On these lines, Chambal is debottlenecking its urea capacity of 1.72 million tonne by 140,000 tonne by April 2009. This, along with the availability of cheap feedstock would mean higher profits. The company has also signed a MoU with Reliance Industries for the supply of the gas from KG basin.
Though its fertiliser business remains on a strong footing in the near term, its other businesses (about 20 per cent of total revenues) - shipping and textile---could be the dampeners to its prospects. Overall, considering that Chambal is a leading player with sizable operation and presence across segments, it should emerge as a key beneficiary of the increased focus on agriculture in the long run.
source - businessstandard

(updated - Mar 2009)

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