Page 145 - CW E-Magazine (13-2-2024)

Fertilisers

FERTILISER PRICING
Non-urea fertilisers now under price control; profi t

margins fi xed

The Government has brought Indirect MRP controls
diammonium phosphate (DAP), muriate Simply put, the guidelines impose
of potash (MOP) and all other such indirect MRP controls on non-urea ferti-
fertilisers that receive Nutrient-Based lisers by capping the profi ts companies
Subsidy (NBS) support under “reason- can earn from their sales. These will be
able pricing” controls. based on their “total cost of sales”, which
would cover cost of production/import,
Under the NBS scheme, introduced administrative overheads, selling &
in April 2010, maximum retail prices distribution overheads, and net interest
(MRPs) of NBS fertilisers – unlike and fi nancing charges. Deduction for
urea – are market-determined and set producing fi nished fertilisers as well as dealer’s margin will be allowed to the
by companies. The Government merely intermediates such as phosphoric acid extent of 2% of the MRP for DAP and
pays a fi xed per-tonne subsidy on each and ammonia). MOP, and 4% for other NBS fertilisers.
of these fertilisers, linked to their nutri-
ent content of nitrogen (N), phospho- Companies earning “unreasonable The guidelines have mandated fer-
rous (P), potassium (K) and sulphur (S). profi t”, i.e., over and above the stipu- tiliser companies to “self-assess” un-
lated percentages, in a particular fi nan- reasonable profi ts, based on the cost
But the Department of Fertilisers cial year will have to refund the same to auditor’s report along with audited cost
(DoF) has now, in an offi ce memo- the DoF by October 10 of the following data approved by their board of direc-
randum dated January 18, issued detailed fi scal. If they don’t an interest @12% tors. This report and data have to be fur-
guidelines for the evaluation of “rea- per annum on pro-rata basis would be nished to the DoF by October 10 of the
sonableness” of the MRPs for all non- charged on the refund amount from the following fi scal.
urea fertilisers covered under NBS. next day of end of fi nancial year (i.e.,
The guidelines, to be effective retro- in case of FY24, the interest would The DoF will then scrutinise the
spectively from April 1, 2023, have be charged from April 1, 2024),” the “reasonability of MRPs”, as submitted
prescribed maximum profi t margins memorandum said. The unreasonable by the companies, “by 28th February
that will be allowed – 8% for impor- profi ts would also get adjusted against for each completed previous fi nancial
ters, 10% for manufacturers and 12% subsequent fertiliser subsidy payments year (i.e., for FY24 by 28th February
for integrated manufacturers (those by the Government. 2025)”.

EVENTFUL TENURE
Kishor Rungta steps down as FACT CMD

Mr. Kishor Rungta stepped down scripted a new chapter in corporate Rungta’s tenure was the revival of the
on February 2 after completing his suc- history by attaining the highest market FACT caprolactam plant in 2021 after
cessful fi ve-year tenure as the Chair- capitalisation among fertiliser companies a nine-year shutdown. The past four
man and Managing Director of Kerala- in India, surpassing Rs. 56,000-crore. years saw FACT achieving record
based Fertilisers and Chemicals Tra- FACT was grappling for funds when he sales with all plants operating at 100%
vancore Ltd. (FACT). In a farewell took over the post as CMD in February capacity. The company posted a record
function at the FACT Udyogamandal 2019. However, his initiatives helped profi t of Rs. 612.99-crore on a turnover
Club, employees expressed gratitude the company turnaround from incurring of Rs. 6,200-crore in FY23. FACT is
and bid him a heartfelt farewell. losses into a profi t-making entity. currently undertaking an ambitious
production capacity expansion, aiming
Under his stewardship, FACT A notable achievement during Mr. to enhance its capabilities by 0.5-mtpa.

Chemical Weekly February 13, 2024 145

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