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INDIAN

FERTILIZER

INDUSTRY
Submitted By:

Sunil K. Deore

Roll No.-0143
INRTODUCTION:-
India is primarily an agriculture based economy. The agricultural sector and its other
associated spheres provide employment to a large section of the country's population and
contribute about 25% to the GDP.

Fertilizers are the chemical compounds which are used for increasing plant production
efficiency, production quality, & for maintaining soil fertility over the period.

The Indian Fertilizer Industry is one of the allied sectors of the agricultural sphere. India has
emerged as the third largest producer of nitrogenous fertilizers. The adoption of back to back
Five Year plans has paved the way for self sufficiency in the production of food grains. In fact
production has gone up to an extent that there is scope for the export of food grains. This
surplus has been facilitated by the use of chemical fertilizers.

The large scale use of chemical fertilizers has been instrumental in bringing about the green
revolution in India. The fertilizer industry in India began its journey way back in 1906.
During this period the first Single Super Phosphate (SSP) factory was established in Ranipet in
Chennai. It had a capacity of producing 6000 MT annually. In the pre and post independence
era a couple of large scale fertilizer units were established namely the Fertilizer Corporation of
India in Sindri, Bihar and the Fertilizer & Chemicals Travancore of India Ltd in Cochin, Kerala

The Indian government has devised policies conducive to the manufacture and consumption
of fertilizers. Numerous committees have been formed by the Indian government to formulate
and determine fertilizer policies. The dramatic development of the fertilizer industry and the
rise in its production capacity has largely been attributed to the favourable policies. This has
resulted in large scale investments in all three sectors viz. public, private and co-operative.

At present there are 57 large scale fertilizer units. These manufacture an extensive range of
phosphatic, nitrogenous and complex fertilizers. 29 of these 57 units are engaged in the
manufacturing of urea, while 13 of them produce Calcium Ammonium Nitrate and
Ammonium Sulphate. The remaining 20 fertilizer plants manufacture complex fertilizers and
DAP. There are also a number of medium and small scale industries in operation, about 72 of
them.
INDIAN FERTILIZER COMPANIES

PUBLIC SECTOR
National Fertilizers Limited
Fertilisers and Chemicals Travancore Ltd.
Rashtriya Chemicals & Fertilizers Limited
Madras Fertilizers Limited
Paradeep Phosphates Limited
Pyrites, Phosphates & Chemicals Limited
Fertilizer Corporation of India Limited
Projects & Development India Limited
COOPERATIVE SECTOR
Indian Farmers Fertiliser Cooperative Ltd
Krishak Bharati Cooperative Limited
PRIVATE SECTOR
Gujarat State Fertilizer Company Limited
Coromondel Fertilisers Limited
Shriram Fertilisers & Chemicals Limited
Zuari Industries Limited
Southern Petrochemicals Inds. Corpn. Ltd.
Mangalore Chemicals & Fertilizers Limited
Gujarat Narmada Valley Fertilisers Co. Ltd.
Duncans Industries Limited
Deepak Fertilizers & Petrochemicals Ltd.
Indo-Gulf Fertlizers & Chemicals Corpn. Ltd.
Godavari Fertilizers & Chemicals Limited
Nagarjuna Fertilizers & Chemicals Limited
Chambal Fertilizers & Chemicals Limited
Tata Chemicals Limited
Oswal Chemicals & Fertilizers Limited
PORTERS FIVE FORCES FOR INDIAN FERTILIZER
INDUSTRY
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1) THREAT OF NEW ENTRANTS (MODERATE) :-
 Fertilizer production is capital intensive and presently the cost of
Production of indigenous material is high and returns on investment are
low.
 Lack of availability of natural gas
 Potential entrants in this sector are various companies like Monsanto and Syngenta
who feel that rural markets are still not penetrated to a considerable extent.
 India does not have potential rock phosphate reserve, it is completely dependent on
import of either rock phosphate or phosphoric acid or Di Ammonium Phosphate.
 Second set of potential entrants are retailers like GODREJ ADHAR and HARYALI.
 Limited availability of domestic natural gas for production of urea.
 Government policies for new entrants in fertilizers industry.
 Present public & co-operative fertilizer industries captured almost full rural market
giving fertilizer subsidies from government so it is difficult for new entrants to
maintain low price with high production cost.
 Agriculture in India is in rural sector so it is very hard to maintain supply chain in
rural India throughout the year.
 Processing of the raw material requires very large of machinery & high processing
cost, so it is not easy for new entrant to cope up with these high investment.

2) BARGAINING POWER OF SUPPLIERS (HIGH):-


 Main source of the raw material for fertilizers production are the natural products.
 Natural gas suppliers are very few & mostly outside the country so it is difficult to
cope up with the prices of Natural gas for the production of Urea, as it is the main
fertilizer used in large quantity by farmers.
 For production of phosphatic fertilizers , in India there are very few sources of rock
phosphate & phosphoric acid available so this production completely dependent on
import of rock phosphate.
 Production of fertilizers requires lot of energy supply so it is completely dependent
on the private energy suppliers.
3) BARGAINING POWER OF BUYERS (LOW):-
 In India about 70% population depends on Agriculture so there is always high
demand for fertilizers.
 India is having different climatic conditions over different areas, so all over the year
there is high demand for fertilizers from different localities.
 Very high demand & low productivity.
 Very high differentiation of crops grown , area of production , climatic variations so
very it is difficult to provide optimum supply of all fertilizers
 Poor transport facilities & high road taxes.
 Lack of infrastructure & supply chain for rural India.
 Power of retailers in supply.
 Lack of government support in distribution channels.
 Low availability in high demand season.
 High cost of fertilizers

4) THREAT OF SUBSTITUTES(HIGH):-
 Bio fertilizers
 Organic fertilizers
 Manures (cattle dung, FYM)
 Green Manures
 Vermicompost
 Biotech fertilizers
 Fertilizers given through leaves provided by pesticides , herbicides companies.
5) RIVALRY AMONG EXISTING COMPETITORS (HIGH):-
 Major market captured by public & co-operative companies.
 Private companies trying to capture rural market.
 Cost competitiveness between private and public players.
 Public players are provided with different subsidies so their price is always lowers
than private players so there is always competition for market.
 Rural market is still mostly untapped in India so major private players concentrating
on improving supply chain by developing retail network with local retail shops
owned by local people.
 Different suppliers of raw material used by different companies leads to cost
competitiveness & quality of products.
 Companies come up with different products such as completely water soluble
fertilizers , spray fertilizers, fertilizers with micro nutrients so by use these fertilizers
less wastage & more efficiency of fertilizers increases .
 Improved techniques & high yielding varieties which require less fertilizers used by
farmers so high competition for sale between different companies.
ATTRACTIVENESS OF INDUSTRY

 As we all know India is fully agriculture dependant country, 70% of Indian


population depends on agriculture.
 Due to improved cultural practices & improved varieties developed by
Agricultural Universities leads to increase in area of cultivation.
 Increase in income from farm produce so young generation is attracting
towards agriculture.
 Continuously high demand for agril. produce in market so very high potential
of cropping required.
 Inflation in food products from almost last 2 years due to natural calamities or
less management of produce.
 Most of rural area is still untapped in many states of India so there is very high
scope for the supply of fertilizers.
 Indian fertilizer companies still lacking infrastructural facilities, transport
facilities so new player can come up with high potential of all this.
 Indian climate is variable over the year all over the country so there is nothing
called slack season for this industry.
 Always peak demand for all kind of fertilizers
 Less competitors in the country only around 59 companies supply fertilizers
all over the country.
 Increasing purchase power of farmers due to increase in income.
 Increase in export potential of farm produce so it requires quality products &
it requires fertilizers supply over the full growth of crop so increasing demand
by big farmers in large quantity.
ALTERNATIVE STRATEGIES
 Concentration on rural market which is still lacking supply of fertilizers.
 Development of retail network
 Continuous supply throughout the year with quality fertilizers & in abundant
quantity.
 Supply with the help of local leaders so it will initiate peoples to purchase fertilizers
 Research and development facilities for methods of reducing cost, improving quality,
reducing time for processing & mainly developing process for fixing nitrogen &
phosphorus from sources in a very cost effective way as they are in very short of
supply.
 Marketing of products in rural areas.

RECOMMENDED STRATEGIES
 Improvement of sales force in rural areas by using local youth power by training
them.
 Marketing of fertilizers throughout the year by giving demonstrations, free samples
to farmers.
 Marketing research of different localities for customers demand & their needs.
 Research based production approach by the company for innovations of different
processes.
 Marketing of products by using local leaders as in rural area effect of sarpanch,
talathi, political leaders is always more on general farmers so it can be beneficial for
company to capture market.
 Start producing organic as well as bio fertilizers with the same brand as many of
farmers now knows the values of organic farming.
 Developing Retail chain network.
 Improving extension services to educate people of rural areas with latest innovations.

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