Emerging Market & Growing Prospects - 2005

It is assumed that 100% water soluble fertilizers were formally introduced, in India, way back in 1993-94. No surprise if some of the pioneers of this field had sensed the “revolutionary concept” and “the emerging business opportunity” much before its formal introduction.

Till year 2001, this was a market for very small players or entrepreneurs, running around for finding new opportunities. This was also the time for the bigger players (except a few) to observe developments from a distance or for some of them to ignore. In reality there wasn’t enough reason for finding prospects in a product segment having more than ten times face value at the retail level as compared to conventional fertilizers.

But there are attributes just more than the face value, which overpowered all initial difficulties. Unknowingly this segment kept growing and took a different shape in the next three four years. This market grew despite discouraging factors like -
40% to 50% price hike in Phosphate based products in the international market.
Short supply of major basic raw material such as potassium nitrate.
Lack of proper support from the Government except including water solubles in the FCO. Products like Calcium Nitrate and Mono Potassium Phosphate remained very costly because of high import duty structure.

Study of individual products reaffirmed that there are positive developments underneath. Comparison of the major Agriculture season in 2001 and 2005 proves the story.

The composition of NPKs revert back to the basics to 19-19-19 and 20-20-20 from grades like 30-10-10 and many others. However, various formulae are now manufactured in small quantities, locally, to meet customized demand.

The pink colour crystalline powder (NPK 19-19-19) still holds 35% of the total water soluble market. With the growing potential 19-19-19 volume has grown almost 13 times between the periods under consideration. But this most balanced NPK fertilizer, 19all is now really threatened by its immediate substitute 20-20-20.

During this period almost 605 Mt of NPK 20-20-20 was consumed in various parts of the country. However, it is not even 15% of total 19all sales.

In the Phosphatic fertilizer segment, volume of both the composition Mono ammonium Phosphate 12-61-00 and Mono Potassium Phosphate 00-52-34 grew more than 6.5 times. Growth rate in Mono Potassium Phosphate consumption has been considerable despite having all factors against it. Prices are still very high in the international market, too many fluctuation because of phosphoric acid price fluctuation and adding to it the Governments discouragement. It also has some indirect competition from other Potassic fertilizers like sulphate of potash and Potassium nitrate.

Potassium Nitrate (PON) outperformed all other water soluble fertilizers and grew almost 55 time as compared to the previous period. Water soluble sulphate of Potash (SOP) grew almost 7 times. Volume consumed of both products were almost same.

A few more basic products like “calcium nitrate granular” (CAN) has gained popularity. A product like CAN suffers from the same problem as Mono Potassium Phosphate. Prices are high and the possible is, in many countries where calcium nitrate is produced in bulk has a different specification of grade than in India and therefore manufacturers are not getting enough volume to achieve economies of scale.

From the above mentioned facts it appears that water soluble fertilizer market is growing at a steady speed and it is gradually spreading to various parts of the country from the epicenter Central India. Possibly this spread is contributing to the volume growth along with increased markets within the market.