Iffco on course to become largest fertiliser manufacturer

Written by Economy Bureau | New Delhi | Updated: Mar 5 2009, 04:57am hrs
Iffco has embarked upon a two-pronged strategy to become the worlds largest manufacturer of fertilisers, taking its present capacity from 85 lakh tonne to 100 lakh tonne within the next three years.

The key inputs of the programme include setting up joint ventures in resources rich countries such as Australia, Jordan and Qatar, import tie-ups with Russian and US companies for supply of di-ammunium phosphate (DAP) and enhancement of domestic capacities.

The move will ensure assured raw material supply at heavy discounts, as much as 5% over market prices in the international market and save about Rs 2,000 crore annually on governments fertiliser subsidy burden on one hand and reduce countrys import reliance by 50% on another within the next three years, said Iffco managing director US Awasthi on Tuesday.

The country faces a gap of about 6 million tonne between fertiliser supply and demand. The domestic capacity of the country stands at 20 million tonne.

Elaborating the strategy, Awasthi said, We are working on enhancing the domestic as well as overseas urea and phosphoric acid--a key input form the manufacture of DAP capacities with an initial investment of about $3 billion in the next three years.

While Rs 5,000 crore revamp plan for its Kalol plant in Gujarat has been finalised. The consultants have already been appointed. This will give an additional 14 lakh tonne of urea and ammonia. The fertiliser major will set up plant with QAFCO in Qatar which has proven and possible reserves of natural gas at an investment of $1 billion and an installed capacity of 1.2 million tonne. It will have a debt equity ratio of 70:30.

Under the agreement Iffco and QAFCO will form a joint venture company for setting up the project with 51% shareholding of QAFCO and balance 49% stake with Iffco.

There are also plans to set up a joint venture company in Australia, Jordan for mining rock phosphate and supply it to its facilities in India.

The co-operative will set up the joint venture with Legend International Holdings Inc of Australia and JPMC in Jordan. It will mine rock phosphate for supply of 8 million tonne of phosphate to Iffco annually at price negotiated on a fair and equitable basis for both companies based on international market prices, applicable for the Indian market with a discount. Rock phosphate is the main raw material for phosphoric acid which in turn is the main raw material for the multi-nutrient fertiliser DAP.

India imports about 60% of its requirement from Russia, the US and Gulf countries.

With agreements with Phos Agro and Phos Chem of Russia and the US, it will get about 25 lakh tonne of phosphorus acid annually, reducing the countrys import reliance by about 50%.