STRATEGIC ANALYSIS OF INDIAN FERTILISER INDUSTRY

GROUP-5

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 2008-09. 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.

Stock Performance
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Main Fertiliser produce in India

Introduction
Industry Analysis Major Challenges

Urea Di-ammonium Phospahte Complexes Single Super Phosphate

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Porter's Model on Fertilizers

Introduction
Industry Analysis Major Challenges

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Porter Analysis
Introduction
Industry Analysis Major Challenges

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.

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SWOT Analysis Recommendation

Porter Analysis
Introduction
Industry Analysis Major Challenges

RIVALRY LOW

High fixed costs

Negligible perceived differences between the brands

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Prices fixed price competition impossible

A little competition between these two.

Porter Analysis
Introduction

POWER OF SUPPLIERS-LOW
Industry Analysis

Gas subsidies given by government

Major Challenges

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SWOT Analysis Recommendation

Long term agreements Firms cant influence market prices Hence supplier power is very low

Porter Analysis
Introduction
Industry Analysis Major Challenges

THREAT OF SUBSTITUTES-LOW

No proper substitutes
Natural fertilizers can be used but not as effective Animal manure not suitable for commercial production

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Porter Analysis
Introduction
Industry Analysis Major Challenges

BARGAINING POWER OF BUYERS- VERY LOW

No alternate for urea have to buy it irrespective of prices

Urea used as an alternate for DAP

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When DAP prices increase, urea sales increase and DAP sales fall

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 ,10% DAP & 2% ammonium fertilizers.

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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

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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%

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, Phosphates & Chemicals Limited Rashtriya Chemicals and Fertilizers Limited (RCF) National Fertilizers Limited (NFL)

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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

The Scientific Fertilizer Co Pvt Ltd

Coromandel Fertilizers Deepak Fertilizers and Petrochemicals Corporation Limited

Stock Performance Devidayal Agro Chemicals

SWOT Analysis Recommendation

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
Introduction
Industry Analysis Major Challenges

Gap between demand and supply Greater dependency of country on imports( also feedstock)

Current Scenario
SWOT Analysis Recommendation

Unable reduce burden of government in subsidiary rates

Infrastructural bottlenecks Uncertainties in government policies Small size of older plants

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, Senegal, Oman, Morocco, Egypt etc with

Current Scenario
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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

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 Cooperative 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 Recommendation

SWOT Analysis - Strengths

Introduction
Industry Analysis Major Challenges

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 the companys 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.

Current Scenario
SWOT Analysis

SWOT Analysis - Weakness

Introduction
Industry Analysis Major Challenges

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

Current Scenario
SWOT Analysis

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.

SWOT Analysis - Opportunits

Introduction
Industry Analysis Major Challenges

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.

Current Scenario
SWOT Analysis Recommendation

3. Expand the market by globalization.

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

SWOT Analysis - Threats

Introduction
Industry Analysis Major Challenges

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.

Current Scenario
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Recommandation
Introduction
Industry Analysis Major Challenges

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.

Current Scenario
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Introduction
Industry Analysis Major Challenges

Current Scenario
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THANK YOU

Introduction
Industry Analysis Major Challenges

Current Scenario
SWOT Analysis Recommendation Questions