Subsidy revision on expected lines: Coromandel

The Cabinet on Thursday approved revision in nutrient-based subsidy (NBS) on fertilizers. The government would be spending Rs 33,500 crore for the subsidy, which would come into effect from April 1, 2011.

Speaking to CNBC-TV, Kapil Menon, MD, Coromandel International said that Cabinet's move was awaited and is on expected lines. Revised rate will surely help the industry to arrange for supplies as well as ensure adequate availability of fertilisers. Below is the verbatim transcript of Menon's interview with Latha Venkatesh and Anuj Singhal of CNBC-TV18. Also watch the accompanying video. Q: The cabinet has approved the nutrient based subsidy and it becomes effective from April 1 this year. What are your first thoughts, does it practically meet all the cost issues especially the higher import cost? A: This was awaited and the cabinet has approved the revised rates of subsidy, which will definitely help the industry to now arrange for supplies as well as ensure that there is adequate amount of availability of fertilisers. What has come out today is on expected lines. Q: Does this mean that you will be embolden to make more investments? A: We will be emboldened to definitely, work towards ensuring more availability, to ensure that more product is brought in. Definitely, that has a positive impact on our sales. Q: We were given to understand that even at the hiked rate of USD 612 for phosphatic fertilisers and 480 for potassic, you are still falling short of what the international sellers are asking? A: As far as phosphate is concerned, the price has already been finalized for most of the imports at USD 612 for DAP which is the main phosphatic fertiliser which gets imported into India. As far as potash is concerned, there is still a large gap between what the international market price is than what this subsidy price, which has been announced. Between the industry and the government, there is a decision taken to hold on for potash supplies as much as we can. This is because with the available potash in the file, you can skip one season and not have any impact on productivity. Having said that, there is also enough carryover stock from the last year. So, as a large buyer of potash fertiliser, we would like to hold on for sometime now. Q: In Q4 we saw quite a bit of impact on your sales volume and also on EBITDA and net profit, do you think going forward Q1 and Q2 would compensate for that decline that you had in Q4? A: We don