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STRATEGIC ANALYSIS OF INDIAN FERTILISER INDUSTRY

By Bidhu Bhushan Binit (group leader) Group No:05

Course: Agri-Input Marketing PGDM(2011-2013) Indian Institute of Plantation Management, Bangalore.

FERTILIZERS
• India is the third largest producer and consumer of fertilizer in the world.
Introduction
Industry Analysis Major Challenges

• Indian fertilizer industry started in 1906 with SSP production facility at Ranipet near Chennai. • Started operating in a big scale since 1940s, when the Fertilizer & Chemicals Travancore of India Ltd. and the Fertilizers Corporation of India were set up in Kerala and Bihar • The private sector produced 44.73 % of nitrogenous fertilizers and 62.08 % of phosphatic fertilizers in 2006-07. • Total production of fertilizers in india-206.5mt . • The production of urea in India has reached near selfsufficiency. The requirement of the nitrogenous fertilizers is met through the indigenous industry • In the case of phosphatic fertilizers, the raw materials and intermediates are imported in large scale. • The requirement of potash (K) is met entirely through imports. No fertilizer unit of India has any reserve of potash.

Current scenario
SWOT Analysis

Main fertlizers produced in India Introduction Industry Analysis Major Challenges • Urea •Di-ammonium Phospahte •Complexes •Single Super Phosphate Current scenario SWOT Analysis .

Porter's Model on Fertilizers Introduction Industry Analysis Major Challenges Current scenario SWOT Analysis .

LOW Entry barriers are high 1.It is high. Supply side economies of scale. When farmers are using any fertilizer. Customer switching costs. They communicate to each other the results of fertilizers. Current scenario SWOT Analysis . Hence always has tendency to buy what others are buying. they can get it on credit basis also.e. 3. 2.Porter Analysis Introduction Industry Analysis Major Challenges THREAT OF NEW ENTRANTS:. also for that fertilizers they have tie up with the o-operative societies. farmers are having faith on the fertilizers they are using. Hence for new entrant it is difficult to break this attachment.Present fertilizer industries both public and private sector enjoy the benefit of scale economies of scale. they are well known about the results. The cost per unit is low. Demand side benefits of scale-the buyers i.

Porter Analysis Introduction Industry Analysis Major Challenges RIVALRY – Current scenario SWOT Analysis • High fixed costs • Negligible perceived differences between the brands • Prices fixed – price competition impossible • FFBL has sole DAP production facility • Engro imports and sells DAP • A little competition between these two .

Porter Analysis Introduction POWER OF SUPPLIERS-LOW Industry Analysis Major Challenges Current scenario SWOT Analysis • Gas subsidies given by government • Long term agreements • Firms can’t influence market prices • Hence supplier power is very low .

Porter Analysis Introduction Industry Analysis Major Challenges THREAT OF SUBSTITUTES-LOW Current scenario SWOT Analysis • No proper substitutes • Natural fertilizers can be used but not as effective • Animal manure not suitable for commercial production .

Porter Analysis Introduction Industry Analysis Major Challenges BARGAINING POWER OF BUYERS.VERY LOW Current scenario SWOT Analysis • No alternate for urea – have to buy it irrespective of prices • Urea used as an alternate for DAP • When DAP prices increase. urea sales increase and DAP sales fall .

Current scenario SWOT Analysis .10% DAP & 2% ammonium fertilizers.Industry Analysis Introduction Industry Analysis Major Challenges • 65 large-sized fertilizer plants in India • 32 units-urea • 20 units-DAP & complex fertilizers • 13 units-ammonium phosphate & CAN • Nitrogenous fertilizers-88% urea .

Industry Analysis Figure 2: Crops wise consumption of Fertilizer in India Others Introduction Industry Analysis Major Challenges 24% 5% 8% Fruits 3% 2% 9% Vegetables 5% 3%4% 4% Cotton 2.00% 3% 5% Rice 37% Rice Wheat Food Grains Pulses Oil Seeds Sugarcane Cotton Current scenario SWOT Analysis Sugarcane 5% Oil Seeds 9% Rice 37% Pulses Wheat 24% 3% Food Grains 8% Food Grains Pulses 3% 8% Oil Seeds 9% Sugarcane 5% Cotton 3% Vegetables 4% Vegetables Fruits Others Wheat 24% .

Industry Analysis Introduction Industry Analysis Major Challenges PRODUCTION AND IMPORT(IN '000 TONNES) PRODUCTION AND IMPORT OF FERTILISERS(IN '000'T) 12000 10000 8000 6000 4000 2000 0 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 YEARS N Production N Imports P2O2 Production P2O2 Import K2O Production K2O Import Current scenario SWOT Analysis .

Phosphates & Chemicals Limited Rashtriya Chemicals and Fertilizers Limited (RCF) National Fertilizers Limited (NFL) Current scenario SWOT Analysis    Projects &Development India Limited (PDIL) The Fertilizers and Chemicals Travancore Limited (FACT) Madras Fertilizers Limited (MFL)  FCI Aravali Gypsum & Minerals India Limited. Jodhpur .Major Players of Public Sector Introduction Industry Analysis Major Challenges The public sector companies in Indian fertilizer market are listed below:  Fertilizer Corporation of India Limited (FCIL)     Hindustan Fertilizer Corporation Limited (HFC) Pyrites.

Private Companies Introduction Industry Analysis Major Challenges  The Scientific Fertilizer Co Pvt Ltd  Coromandel Fertilizers  Deepak Fertilizers and Petrochemicals Corporation Limited  Devidayal Agro Chemicals  DSCL  Gujarat State Fertilizers &Chemicals Limited Current scenario SWOT Analysis  Tata Chemicals Limited  Chambal Fertilizers  Nagarjuna Fertilizers and chemicals limited  Godavari Fertilizers and Chemicals limited  Zuari Industries limited .

Major Challenges Introduction Industry Analysis Major Challenges Current Scenario SWOT Analysis • Gap between demand and supply • Greater dependency of country on imports( also feedstock) • Unable reduce burden of government in subsidiary rates • Infrastructural bottlenecks • Uncertainties in government policies • Small size of older plants .

7% of total subsidies in 2008-09 . Morocco. Egypt etc with Current Scenario SWOT Analysis • The demand for fertilizer has increased by 5% (21 June 2010. Oman. Senegal.Current Scenario Introduction Industry Analysis Major Challenges • Most companies are expecting approval for their huge capital expenditure plans from department of fertilizer and industry • Indian fertilizer companies joined hands Jordan. Rashtriya Chemicals and fertilizer) • 10% increase in Urea price in April 2010 • Fertilizer subsidy has taken largest share for 58.

OF THE FARMERS.About IFFCO Introduction Industry Analysis Major Challenges Current Scenario & IIFCO COMPANY OVERVIEW FOR THE FARMERS. IFFCO. is a leading player in India's fertilizer industry and is making substantial contribution to the efforts of Indian Government to increase food grain production in the country.1967 as a Multi-unit Cooperative Society. SWOT Analysis . BY THE FARMERS. the Society is deemed to be registered as a Multistate Co-operative Society. Indian Farmers Fertilizer Co-operative Limited (IFFCO) was registered on November 3.operative Societies act 1984 & 2002. to day. The Society is primarily engaged in production and distribution of fertilizers. On the enactment of the Multistate Co.

2008. 3.SWOT Analysis . 4. Over the years. Current Scenario SWOT Analysis . Technology: Technology innovation has increased the company’s productivity and distributional channels because of the company adoption of modern technology. who is well accomplished to deliver in the dynamic economic scenario for gaining competitive advantage. 2. Growth: IFFCO is one the most leading companies of India. This industry is expected to grow at significant rate and internal strength is quite strong and good management as well.Strengths Introduction Industry Analysis Major Challenges 1. The society derives strength from the invaluable contribution made by its talented and dedicated employees. IFFCO has grown in strength from a modest membership of 57societies in 1967-68 to 33260 as on March 31.

i. Insufficient production: as per demand of the fertilizer in the country. produce only fertilizers. company is not able to provide in full fledged way. 3.SWOT Analysis . Gas supply: company has to depend on other companies for the use of production Current Scenario SWOT Analysis 2. . If both are not good it will directly affected to the use of fertilizers. 4. The use of fertilizers is depending only on rain and irrigation facilities. IFFCO are going only straight forward direction.Weakness Introduction Industry Analysis Major Challenges 1.e.

Company has opportunity to expand its Harrison by structuring new plant at kalol unit because of to meet demand of the market.SWOT Analysis . Expand the market by globalization. bio-fertilizer. IFFCO has a good distribution network by which he will sale pesticides. Continuous improvements quality and international exposure has helped open up new doors to crossover audience (farmers) and offers immense potential for development. research seeds etc40 . 4. Current Analysis SWOT Analysis 3. 2.Opportunités Introduction Industry Analysis Major challenges 1.

Threats Introduction Industry Analysis Major challenges 1. Current scenario SWOT Analysis . 2. Sometime lack of quality may generate disloyal market.SWOT Analysis . Many competitors are coming to crash the strengths of the company in the market for example GSFC.

Introduction Industry Analysis Major challenges Current scenario SWOT Analysis THANK YOU .

Introduction Industry Analysis Current scenario SWOT Analysis ? Questions .