Rupee plunge to push up prices of non-urea fertilisers - Daily News & Analysis

Non-urea fertilisers are set to see a massive hike in prices in the next 2-3 months as the over 10% rupee fall is hitting the companies concerned hard. Satish Chander, chairman of Fertiliser Corporation of India said a price rise is inevitable. By when? It is a difficult call to take, he said. Non-urea fertilisers, such as di-ammonium phosphate (DAP) and muriate of potash (MoP) which are based on a combination of nutrients such as phosphorus, nitrogen and potassium, and their raw materials are largely imported in India. Out of these, DAP is consumed the most – it has a 25% share of the overall fertiliser market. "With the rupee coming down to almost Rs 60 against the dollar, companies importing DAP are seeing their procurement costs soar by almost Rs 2,000 per tonne," said Rakesh Kapur, joint MD and director of finance at IFFCO, India's biggest fertiliser firm. He said IFFCO, which leads the fertiliser industry in fixing prices, has not taken any decision so far, but a loss of Rs 2,000 per tonne cannot be sustained for long. In the first week of April, the government asked fertiliser companies not to effect unreasonable price hikes lest they risk losing their subsidy payments. This led to a cut in the price of DAP from Rs 24,000 per tonne to Rs 22,500 per tonne. "The companies are now looking to revise the price again by Rs 1,500 per tonne back to the pre-April level to offset some part of the loss at least," said an industry insider. This will take some time as a lot of factors have to be considered before a decision is taken. With every Rs 1 drop against the dollar, DAP price increases by Rs 550 per tonne. With the rupee having fallen by over Rs 4 now, the loss is actually more than Rs 2,000 per tonne. "The situation is more or less like last year when the rupee fell from Rs 51 to Rs 55 and then it was passed on. But this time, the industry is stuck due to government's hard stand on the companies regarding unreasonable price hikes," said an analyst with a domestic brokerage. via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNG6Qnm65tTSmgfQrnWzkSO5FNQC9A&url=http://www.dnaindia.com/money/1854725/report-rupee-plunge-to-push-up-prices-of-non-urea-fertilisers

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