Finding Solution for XYZ Fertilizers

On a sharp Monday morning, with bright sunshine coming from window and a hot cup of
coffee in his hand, Mr. A was in a thirst of new ideas for selling Gypsum in Agriculture. He was
also recalling his previous meeting with the company soil scientist about the possibilities of
usage and benefits of Gypsum (PhosphoGypsum) in soil as well as crops. He has also been
part of discussions on multiple forums about the product (Gypsum) acting as a conditioner
plus reclaimant for soil and secondary nutrient for plants. Hence, it can be considered as
fertilizer-cum-soil-reclaimant. Mr. X is heading the commercial and Gypsum business of the
ABC company, which produces nearly 20 Lakh MT of Gypsum every year.

Mr. X- He was a business leader with decades of experience in selling different industrial
products ranging from Sulfuric acid, Gypsum, copper slag, Fly Ash, etc. and worked across
several leading MNCs before joining ABC company. He is a man of high moral standards and
never looked for any shortcuts in life either at personal or professional level. He wants to sell
the Gypsum in Agriculture, seeing huge potential and serving the farmers in the same line.

ABC is a leading fertilizer company based out of Hyderabad and sales a range of products from
complex fertilizers, Organic & Specialty Nutrients, Water soluble and a range of
Agrochemicals. They have a significant market share in AP, TG, MH, Karnataka, MP, etc. and
having its presence pan India. ABC produces PhosphoGypsum around 20 Lakh-MT from its
two- plant based at Rajmundry (nearly 12-15 Lakh MT) and Ranipet (near Chennai, 3-5 Lakh
MT). At present, nearly 95% of PhosphoGypsum sold by the company, is to construction
industry.

Gypsum: It is a chemical compound named as Calcium Sulphate Dihydrate (CaSO4.2H2O). The

main sources of Gypsum include mined Gypsum, FGD (Flue Gas Desulfurized) Gypsum and
PhosphoGypsum. ABC is into production of PhosphoGypsum, which is produced by the
reacting of Rock Phosphate and sulfuric acid. The reaction produces Phosphatic fertilizer and
precipitates Gypsum as a byproduct. Since the origin of rock is phosphate, it is popularly
known as PhosphoGypsum. PhosphoGypsum have nearly 22% Calcium and 16% Sulfur and
nearly 1% residual P 2O5 (Phosphorus) which can be added advantage for its usage in
Agriculture. PhosphoGypsum can be considered the cheapest source of Sulfur and Calcium
among any other alternatives.

PhosphoGypsum usage in the world- Gypsum Usage across the globe, in countries like Brazil,
more than 1/3rd of the industrial Gypsum produced (generally PhosphoGypsum) is used in
Agriculture specially for the crops like Coffee, Sugarcane, etc. Similarly African countries use
huge quantity of Gypsum for soil reclamation and nutrient purposes. In many countries,
efforts are being made in mixing with different composts and organic manures for supporting
soil health, but the product performance and cost economics is something which needs to be
worked out. China is also a large producer of PhosphoGypsum and with its new rule of zero
waste (manufacturing companies in China must utilize all the byproduct the same year and
cannot keep any previous year’s overdue), might be coming out with some innovative usage
in Agriculture.
PhosphoGypsum usage in India- It is used in Groundnut crop as a nutrient for Ca & S. Indian
Institute of Oil Seed Research (IIOR) and Directorate of Groundnut Research (DGR), both are
recommending Gypsum application in Groundnut @400-500 Kg/ha. Gypsum can be used in
Sulfur loving crops and Calcium loving crops for improving the product quality and yield. One
of the potential usages of Gypsum can be in reclamation of saline and sodic soil where the
ICAR-Central Soil Salinity Research Institute (ICAR-CSSRI) has come up with a dedicated
Gypsum technology for reclamation of such soils using Gypsum, applying Gypsum
@2-12MT/ha (depending on the severity of the problem). PhosphoGypsum is also widely
used in value addition with secondary nutrients like Magnesium and many micronutrients and
granulating it and selling at a better price than normally powdered PhosphoGypsum.

New opportunity with Gypsum: Many research agencies is also reaching Mr. X, proposing
new product developments like mixing with Poultry manure, Pressmud, Neem cake, etc. and
developing a separate market but they are yet to be explored further for positioning in the
market, ROI to farmers and pricing. Horticulture usage of Gypsum is also one of the areas
which he is positive about and waiting for the same parameters to come in before entering in
the market. There is a good opportunity with Gypsum in providing loose Gypsum and thus ,
reducing the cost to farmers (see Exhibit 4 for a comparison of bagged vs. loose Gypsum).

Challenges with PhosphoGypsum: The PhosphoGypsum is not included under FCO (Fertilizer
Control Order) hence, subsidy is not given on this product for Ca & S nutrients. It is also
exempted from any freight subsidy by Railways which is possible for N-P-K based complexes
and Urea. Many states Govt. are also providing subsidized Gypsum in their respective states
(limited quantity for usage as a Sulfur nutrient for Groundnut crop, which creates direct
competition and disrupts the company price in the market). Since, farmers consider
agriculture as an enterprise wherein adding a cost, to the already existing cost of production,
is a decision which they will take only if there is an additional benefit. With rising fuel charges,
it is very cautious to transport Gypsum to distant destinations and the company must face
tough competition with the other companies in their nearby geography.

Mr. X is brainstorming potential innovative ideas for selling Gypsum in Agriculture and
strategy with an action plan targeting a sale of 20 Lakh-MT of Gypsum in next 5 years.
Consider yourself as Mr. X, who will be presenting the detailed idea, execution strategy,
costing, marketing strategy, etc. to the next board meeting, in front of the directors for getting
all the needed support.

Please work on the following given questions:

1) A detailed sales strategy for selling 3 Lakh-MT of Gypsum per year (with respect to the
sources of PhsphoGypsum and quantity from each source of Gypsum mentioned in the
case)?
2) Any new innovative idea, and a plan of action for utilization of Gypsum for Agriculture
usage with detailed Market entry strategy? The marketing strategy must include
target area, target crops, target volume, competitor analysis, target revenue and
 profits. You can also offer a mix of traditional plus new market segment as identified
by you.
3) Any marketing and promotional strategy recommended must be backed by its ROI
(Return on Investment) by taking reasonable assumptions of cost from the market
practices.

Note: Please take the market average cost for products and freight charges for your
calculations for those areas where it is not explicitly mentioned.

Exhibit 1:
Value added Gypsum Brand of different companies:

Sl. Company Brand Composition Dosage

No. recommendation
1 PPL (Paradeep Zypmite - Not mentioned
Phosphate Limited)
2 MCFL (Mangalore Mangal Ca-15%, Based on soil PH from 1-
Chemicals & SETRIGHT for Mg-3%, 4 bags/acre
Fertilizer Limited) Alkaline Soils S-5%
3 MCFL (Mangalore Mangal Ca-15%, 1-2 bags/acre
Chemicals & SETRIGHT for Mg-3%,
Fertilizer Limited) Acidic Soils S-5%
4 GFL (Greenstar KEERTHI Ca-15%, 1-2 bags/acre
Fertilizer Limited) Mg-03-05%,
S-10%
5 CIL (Coromandel Godavari - Gypsum (3Bags/acre for
International TRIGOLD & Oil seeds, 2 bags/acre for
Limited) CAM Super other crops)
6 GSFC (Gujrat State NUTRI+ Ca- 16.5%, NUTRI+ (2-10 bags/ha)
Fertilizers and granules S-13%,
Chemicals Limited) Mg-0.15%,
Zn-0.2%,
B-0.12%,
P2O5(0.25%)

Note: The above information is taken from the respective websites of each companies.
Exhibit: 2

Companies putting Gypsum and value-added Gypsum in different categories:

Sl. No. Company Category

1 Paradeep Phosphate Limited General Products

2 Mangalore Chemicals & Fertilizer Limited Soil Conditioners

3 Greenstar Fertilizer Limited Secondary Nutrients

4 The Fertilizers and Chemicals Travancore Both under Fertilizer
Products & By-product
5 Gujrat State Fertilizers and Chemicals Soil Conditioner
Limited
Note: The above information is taken from the respective websites of each companies.

Exhibit: 3

Landed Cost of different produce for your Assumption:

Product & Form Landed cost to farmers Minimum Quantity taken for
Landed cost
Bagged Gypsum (50 INR 200/bag 2 Bags
Kg Bag)
Loose Gypsum/Bulk 2500/MT 10MT
Gypsum
Note- Assumption for the calculation purpose in solving the case.

Exhibit: 4

Other complimentary/competitive/Alternative products of PhosphoGypsum in Agriculture

Product Other Potential Soil reclaimant/Conditioner

PhosphoGypsum Lime, Sulfur, Press-mud, Organic fertilizers, Green Manures, FYM
(Farm Yard Manure), etc.

Other complimentary/competitive/Alternative products of PhosphoGypsum in Agriculture

Product Other Fertilizers (sources of Ca & S)

PhosphoGypsum SSP (Single Super Phosphate), Elemental Sulfur, Calcium
fertilizers, etc.
Exhibit: 5

Classification of Soil.

Type of Soil PH Ece(dSm-1) ESP

Saline Soil <8.5 >4 <15
Saline-Sodic soil Variable >4 >15
Sodic Soil >8.5 <4 >15

Exhibit: 6
Types of market in bulk fertilizer industry can be considered in two different classifications:

Market Type Features

Primary Market It is considered for the estate in which fertilizer
production plant exists and border touching areas
Secondary Market It is considered for the first neighboring states or
second neighbor states.

Note: It may not be a standard practice, mentioned here for your understanding only.