GROUP-5

STRATEGIC ANALYSIS OF INDIAN FERTILISER

INDUSTRY

FERTILIZERS• India is the third largest producer and consumer of

fertilizer in the world.

• 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 2008-09.

• Total production of fertilizers in india-206.5mt .

• The production of urea in India has reached near self-sufficiency. 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.

Introduction

Industry Analysis

Major Challenges

Stock Performance

SWOT Analysis

Recommendation

Main Fertiliser produce in India

• Urea

•Di-ammonium Phospahte

•Complexes

•Single Super Phosphate

Introduction

Industry Analysis

Major Challenges

Stock Performance

SWOT Analysis

Recommendation

Porter's Model on Fertilizers

Introduction

Industry Analysis

Major Challenges

Stock Performance

SWOT Analysis

Recommendation

Porter Analysis

Introduction

Industry Analysis

Major Challenges

Stock Performance

SWOT Analysis

Recommendation

THREAT OF NEW ENTRANTS:- LOW

Entry barriers are high

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

Porter Analysis

Introduction

Industry Analysis

Major Challenges

Stock Performance

SWOT Analysis

Recommendation

RIVALRY – LOW

• High fixed costs

• Negligible perceived differences between the brands

• Prices fixed – price competition impossible

• A little competition between these two.

Porter Analysis

Introduction

Industry Analysis

Major Challenges

Stock Performance

SWOT Analysis

Recommendation

POWER OF SUPPLIERS-LOW

• Gas subsidies given by government

• Long term agreements

• Firms can’t influence market prices

• Hence supplier power is very low

Porter Analysis

THREAT OF SUBSTITUTES-LOW

• No proper substitutes

• Natural fertilizers can be used but not as effective

• Animal manure not suitable for commercial production

Introduction

Industry Analysis

Major Challenges

Stock Performance

SWOT Analysis

Recommendation

Porter Analysis

BARGAINING POWER OF BUYERS- VERY LOW

• 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

Introduction

Industry Analysis

Major Challenges

Stock Performance

SWOT Analysis

Recommendation

Industry Analysis

• 65 large-sized fertilizer plants in India

• 32 units-urea

• 20 units-DAP & complex fertilizers

• 13 units-ammonium phosphate & CAN

• Nitrogenous fertilizers-88% urea ,10% DAP & 2% ammonium fertilizers.

Introduction

Industry Analysis

Major Challenges

Stock Performance

SWOT Analysis

Recommendation

Industry Analysis

Introduction

Industry Analysis

Major Challenges

Stock Performance

SWOT Analysis

Recommendation

24%8%3%9%5%3%4%

2.00%5%

Rice 37%Wheat 24%Food Grains 8%Pulses 3%Oil Seeds 9%Sugarcane 5%Cotton 3%Vegetables 4%

Figure 2: Crops wise consumption of Fertilizer in India

Rice37%

Wheat24%

Food Grains8%

Pulses3%

Oil Seeds9%

Sugarcane5%

Cotton3%

Vegetables4%

Fruits2%

Others5%

Rice

Wheat

Food Grains

Pulses

Oil Seeds

Sugarcane

Cotton

Vegetables

Fruits

Others

Major Players of Public Sector

Introduction

Industry Analysis

Major Challenges

Stock Performance

SWOT Analysis

Recommendation

The public sector companies in Indian fertilizer market are listed below:

Fertilizer Corporation of India Limited (FCIL)

Hindustan Fertilizer Corporation Limited (HFC)

Pyrites, Phosphates & Chemicals Limited

Rashtriya Chemicals and Fertilizers Limited (RCF)

National Fertilizers Limited (NFL)

Projects &Development India Limited (PDIL)

The Fertilizers and Chemicals Travancore Limited (FACT)

Madras Fertilizers Limited (MFL)

FCI Aravali Gypsum & Minerals India Limited, Jodhpur

Major Player of Private sector

Introduction

Industry Analysis

Major Challenges

Stock Performance

SWOT Analysis

Recommendation

The Scientific Fertilizer Co Pvt Ltd

Coromandel Fertilizers

Deepak Fertilizers and Petrochemicals Corporation Limited

Devidayal Agro Chemicals

DSCL

Gujarat State Fertilizers &Chemicals Limited

Tata Chemicals Limited

Chambal Fertilizers

Nagarjuna Fertilizers and chemicals limited

Godavari Fertilizers and Chemicals limited

Zuari Industries limited

Major Challenges

• 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

Introduction

Industry Analysis

Major Challenges

Current Scenario

SWOT Analysis

Recommendation

Current Scenario

Introduction

Industry Analysis

Major Challenges

Current Scenario

SWOT Analysis

Recommendation

• Most companies are expecting approval for their huge capital expenditure plans from department of fertilizer and industry

• Indian fertilizer companies joined hands with Jordan, Senegal, Oman, Morocco, Egypt etc

• The demand for fertilizer has increased by 5% (21 June 2010, Rashtriya Chemicals and fertilizer)

• 10% increase in Urea price in April 2010

• Fertilizer subsidy has taken largest share for 58.7% of total subsidies in 2008-09

About IFFCO

Introduction

Industry Analysis

Major Challenges

Current Scenario & IIFCO

SWOT Analysis

Recommendation

COMPANY OVERVIEW FOR THE FARMERS, OF THE FARMERS, BY THE FARMERS.Indian Farmers Fertilizer Co-operative Limited (IFFCO) was registered on November 3,1967 as a Multi-unit Co-operative Society. On the enactment of the Multistate Co- operative Societies act 1984 & 2002, the Society is deemed to be registered as a Multistate Co-operative Society. The Society is primarily engaged in production and distribution of fertilizers. IFFCO, to day, 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.

SWOT Analysis - Strengths

SWOT Analysis

1. 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.

2. Technology: Technology innovation has increased thecompany’s productivity and distributional channels

because of the company adoption of modern technology.

3. Over the years, IFFCO has grown in strength from a modest membership of 57societies in 1967-68 to 33260 as on March 31,2009.

4. The society derives strength from the invaluable contribution made by its talented and dedicated employees, who is well accomplished to deliver in the dynamic economic scenario for gaining competitive advantage.

Introduction

Industry Analysis

Major Challenges

Current Scenario

SWOT Analysis - Weakness

1. Gas supply: company has to depend on other companies for the use of production

2. Insufficient production: as per demand of the fertilizer in the country, company is not able to provide in full fledged way.

3. IFFCO are going only straight forward direction, i.e. produce only fertilizers.

4. The use of fertilizers is depending only on rain and irrigation facilities. If both are not good it will directly affected to the use of fertilizers.

Introduction

Industry Analysis

Major Challenges

Current Scenario

SWOT Analysis

SWOT Analysis - Opportunités

1. Continuous improvements quality and international exposure has helped open up new doors to crossover audience (farmers) and offers immense potential for development.

2. Company has opportunity to expand its Harrison by structuring new plant at kalol unit because of to meet demand of the market.

3. Expand the market by globalization.

4. IFFCO has a good distribution network by which he will sale pesticides, bio-fertilizer, research seeds etc40

Introduction

Industry Analysis

Major Challenges

Current Scenario

SWOT Analysis

Recommendation

SWOT Analysis - Threats

1. Many competitors are coming to crash the strengths of the company in the market for example GSFC.

2. Sometime lack of quality may generate disloyal market.

Introduction

Industry Analysis

Major Challenges

Current Scenario

SWOT Analysis

Recommendation

RecommandationIntroduction

Industry Analysis

Major Challenges

Current Scenario

SWOT Analysis

Recommendation

1. This industry is supposed to rise in next coming 5 years.2. Less rivalry will be the biggest cause for making it Perfect

Competition.

THANK YOU

Introduction

Industry Analysis

Major Challenges

Current Scenario

SWOT Analysis

Recommendation

Questions

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Introduction

Industry Analysis

Major Challenges

Current Scenario

SWOT Analysis

Recommendation