Shortage of key raw materials in the international markets and skyrocketing prices have forced Coromandel Fertilisers Ltd (CFL), part of the Murugappa group, to suspend production at its Ennore factory near Chennai. Also, SSP (single super phosphate) production at its Ranipet plant in Tamil Nadu will be hit.
With the prices of key raw materials increasing nearly 8 to 9 times in the last one year in the global markets, the company felt that it is unviable to run the Chennai factory, which manufactures complex fertilisers with an annual capacity of 2.75 lakh tonne.
When contacted, a senior official of the company told FE, ?Unless and until we get the supply of raw materials in time and a competitive price, it will be unviable for us to run the plant.? Due to loss of production, the company foresees an adverse impact on its topline, bottomline and its margins, the official added.
The temporary closure of the Chennai plant is also expected to hit the farming community in Tamil Nadu and the neighbouring states. The central government is not bothered to increase the subsidy on imported raw materials, he added.
According to him, the company imports the entire requirement of key raw materials such as sulphur, rock phosphate and ammonia from Jordan, Middle East and other Gulf countries. It imports 95,000 tonne of sulphur, 2 lakh tonne of phosphate and 60,000 tonne of ammonia annually, he added.
Responding to queries, the official said, ?The prices of sulphur have gone up almost 8 times to touch $600 a tonne as against $80 a few months back. Similarly, the prices of rock phosphate and ammonia too have gone up substantially, which we found not viable to import and run the plant.?
?Both the plants (Chennai and Ranipet) together contribute 30% to 35% of the company?s total turnover,? he said. The one million tonne Vizag plant will function as usual.