Table of Contents
OPERATIONS
Chambal Fertilisers share manufactures Urea in its three plants located at Gadepan, District Kota, Rajasthan.
Also engaged in Di-Ammonium Phosphate (DAP), Muriate of Potash (MOP), Ammonium Phosphate Sulphate (APS), different grades of NPK fertilisers, Sulphur, Micronutrients and Agrochemicals.
Highest ever production and sales of Urea and highest ever sales volumes of DAP and MOP fertilisers in recent times.
Growth in sales of NPK fertilisers, Sulphur, Micro-nutrients and Agrochemicals.
Chambal Fertilisers share is now looking forward to expanding its reach in new geographies in eastern, western and southern part of India.
New marketing offices are opened in these areas.
Focus of Chambal Fertilisers share is to expand its volumes of APS/ NPK fertilisers in the new territories.
Intent is to get the advantage of different weather cycles and seasons for sale of products through these expansions.
FINANCIAL PERFORMANCE
| FINANCIAL KEY METRICS | VALUE |
| MARKET CAPITALIZATION | ₹ 11,849 Cr. |
| STOCK P/E | 7.57 |
| INDUSTRY P/E | 9.38 |
| ROE | 26.7 % |
| ROCE | 23.4 % |
| DEBT TO EQUITY RATIO | 0.68 |
MORE ANNUAL REPORTS
KIRLOSKAR FERROUS: Important points of Annual report. (learntwotrade.com)
ANNUAL REPORT: KPR MILL – Learn Two Trade
GUJARAT AMBUJA EXPORTS SHARE: Annual Report Summary (learntwotrade.com)
SUBISIDARY AND JOINT VENTURES
- Subsidiaries
CFCL Ventures Limited, Cayman Islands and its subsidiaries
CFCL Ventures Limited (“CVL”) is a subsidiary of Chambal Fertilisers share in Cayman Islands and ISGN Corporation (“ISGN, USA”) in USA and ISG Novasoft Technologies Limited (“ISGN, India”) in India are subsidiaries of CVL.
No business activity in these subsidiaries in recent times.
- Other subsidiaries
Chambal Infrastructure Ventures Limited is a subsidiary which is wholly owned.
India Steamship Limited (“ISS, India”) was a wholly owned subsidiary.
- Joint Venture: Indo Maroc Phosphore S. A. – IMACID (“IMACID”)
IMACID is a joint venture of Chambal Fertilisers share in Morocco with Tata Chemicals Limited and OCP, Morocco.
Each partner is having equal stake in the joint venture (33.33% each).
IMACID is engaged in the manufacture of phosphoric acid in Morocco.
INDUSTRY STRUCTURE AND DEVELOPMENTS
UREA
Three manufacturing plants with annual production capacity of around 3.4 million MT of Urea.
Three manufacturing plants are located at Gadepan, District Kota, Rajasthan, which is largest single location Urea manufacturing facility in India.
First Urea Plant commenced commercial production in 1994.
Second Urea Plant (“Gadepan-II”) commenced commercial production in the year 1999.
Third Urea plant of the Company (“Gadepan-III”) which commenced commercial production from January 01, 2019.
Urea is most important crop nutrient which plays a vital role in ensuring the food security in the country. The Urea industry comprises of manufacturers from public, co-operative and private sector.
Demand of Urea is met through imports. The price of Urea is controlled by the Government of India.
Natural gas is the main input for manufacture of Urea. The cost of natural gas is considered appropriately by the Government of India while determining subsidy on Urea payable to the manufacturing units. Hence, the fluctuation in prices of natural gas does not have much impact on the Urea manufacturing units.
After Gadepan-II plant, setup in 1999, no new plant was set up in India for almost two decades.
Gadepan-III plant of the Company is the fi rst plant set up under NIP-2012 which has helped in reducing the gap in the demand and supply of Urea in the country. Few more Urea plants are under implementation which are likely to make the country largely self-dependent in Urea production.
Urea production in the country during the Financial Year 2020-21 was 24.60 million MT against 24.45 million MT during the 2019-20.
During the Financial Year 2020-21, total 9.83 million MT of Urea was imported in the country in comparison to 9.20 million MT of Urea imported during 2019-20.
The Urea sales in the country during the Financial Year 2020-21 was 35.10 million MT against the Urea sales of 33.57 million MT during 2019-20.
The price of imported Urea remained in the range of USD 227 per MT to USD 285 per MT during the Financial Year 2020-21.
OTHER PRODUCTS
Motive to provide all agri-inputs under one roof to farmers.
Chambal fertilisers share produces products such as Di- Ammonium Phosphate (DAP), Muriate of Potash (MOP), Ammonium Phosphate Sulphate (APS), different grades of NPK fertilisers, Sulphur, micro-nutrients and agrochemicals.
DAP, MOP, APS and NPK fertilisers are covered under the Nutrient Based Subsidy (“NBS”) policy of the Government of India.
MOP is not produced in India and the country is fully dependent on imports.
Sulphur and micronutrients are purchased from manufacturers in India and also imported from international manufacturers.
Chambal fertilisers share purchases agrochemicals from manufacturers of repute in India.
Chambal fertilisers share’s largest selling products are DAP and MOP after UREA.
DAP sales:
FY 2020-21: 10.50 million MT.
FY 20219-20: 10.38 million MT.
OPPORTUNITIES AND THREATS
Gadepan-III plant has enabled to increase its market share in Urea.
Established brand and sizeable market share in the DAP and MOP fertilisers and making inroads in the NPK fertilisers space.
To increase the indigenous supply of Urea during next 1-2 years which shall reduce the demand-supply gap in the country, a few more plants are expected to be operational.
Urea manufactured by Chambal fertilisers share is preferred by the customers in its marketing territory due to good product quality and strong brand image.
The demand variation due to change in monsoon pattern, volatility in the prices of DAP, MOP, APS and NPK fertilisers and variation in the foreign exchange rates are few challenges which the Company faces in its business related to non-Urea fertilisers.
RISKS AND CONCERNS
The Fertiliser industry is subject to Government regulations and dependent upon subsidy policies.
Gadepan-III plant is under NIP-2012 which is effective for 8 years from the start of production.
The increasing prices of marketed fertilisers may result in demand destruction in the short term.
OUTLOOK FOR CHAMBAL FERTILISERS SHARE
The Government of India had made additional provision during the Financial Year 2020-21 for making payment of subsidy arrears to the fertilizer companies.
In view of this, the long outstanding subsidy arrears of the Company were released by the Government of India resulting into substantial reduction in outstanding subsidy as on March 31, 2021 in comparison to the previous year and improvement in the liquidity position of the Company.
The Company is now in a position to look at avenues for expansion in fertilisers and other related sectors.
Considering the Company’s brand image and strong marketing network, the outlook in Urea remains positive.
Moreover, the brand strength, reliable supply channels and established network with focus on expansion in new geographies shall enable the Company to achieve growth in non-Urea fertilisers, micronutrients and agrochemicals.