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Oct 01, 2013, 06.11 PM IST | Source: CNBC-TV18

Expect healthy sowing for rabi season in FY14: Coromandel

Speaking to CNBC-TV18, Kapil Mehan, managing director, Coromandel International says that despite the massive fall seen in the rupee, fertilizer costs have remained more or less constant.

Kapil Mehan, managing director, Coromandel International is expecting a health sowing in the rabi season in FY14 owing to a good monsoon season.

Speaking to CNBC-TV18, Mehan says that despite the massive fall seen in the rupee, fertilizer costs have remained more or less constant.

“With the rupee fall, the raw material prices and the international prices of phosphate and potassium fertilizer have also fallen. So, the rupee cost of these fertilizers has remained more or less constant and that is why we have been able to maintain our prices at current levels since April onwards. This trend is likely to continue because the international market is slow and the demand is not there and prices are falling as it is a trend with most of the commodities. So, that is helping us quite well,” he adds in an interview to CNBC-TV18.

Below is the edited transcript of Mehan's interview to CNBC-TV18.

Q: What you are foreseeing as far as volume growth is concerned. This time around we have had a good monsoon situation and the estimate is that companies like yours could see about 30-35 percent volume growth in FY14. How is business looking?

A: If one looks at the demand fundamentals for agricultural growth and the crop sowings that have happened so far, it is going very well. This year, due to good monsoons, the sowings were advanced and we covered 97-98 million tonne of 106 million hectares of kharif planting.

The balance will get covered in the next two-three weeks and that is what has led to the demand growth. When the water availability is good, the farmers then are more certain about their produce and that is why we have seen that farmers have more or less gone back to using the same amount of fertilisers that they used prior to last year

That has meant that overall consumption has grown while the total industry sale is down because the pipeline stocks with the distribution chain were very high and that is now coming off. This is a trend that we are seeing, which is leading to consumption growth and the share of imported phosphatic fertilizers is coming down and the share of domestic manufacturing will go up.

We are primarily a domestic manufacturer of these products and we are seeing that there is a good off-take of indigenously manufactured products that we make; especially fertilisers, pesticides, specialty nutrients and our retail has been doing very well.

Overall the going has been good and we foresee that rabi crops sowing also will be very robust. There is a good moisture level in soil and we should see the off-take now happening in more rabi market starting with potato buster in northern and eastern zone and then going to the north zone. So, next three months or so we should see good demand for fertilisers as well as other agricultural inputs.

Q: How you see complex fertilizer prices moving and whether there is any subsidy requirement from the government?

A: As far as the fertilizer prices are concerned, while the rupee has depreciated sharply, the raw material prices and the international prices of phosphate and potassium fertilizer have also fallen. So, the rupee cost of these fertilizers has remained more or less constant and that is why we have been able to maintain our prices at current levels since April onwards. This trend is likely to continue because the international market is slow and the demand is not there and prices are falling as it is a trend with most of the commodities. So, that is helping us quite well.

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