FERTILISER
Delay in revision of fixed costs to hit urea cost: ICRA
The delay in revision of fixed cost, delay in payment of subsidy and rising input prices have exerted pressure on
urea manufacturers’ profitability.
The fixed costs were last revised in April 2014, under the Modified New Pricing Scheme-III. As per the proposal,
there was a rise of ₹350 a tonne for all urea units with a minimum fixed cost of ₹2,300 a tonne and ₹150 a tonne
of additional fixed costs reimbursement for urea units which have been operating for over 30 years.
However, the government is yet to implement the revised subsidy as companies continue to receive the fixed
cost reimbursement on the basis of cost data of 2002-03. Moreover, as majority of the urea manufacturers have
booked the increased fixed costs on an accrual basis over the last four years, any reversal of policy decision on
this account will lead to write-down of profits for the units concerned, said rating agency ICRA.
In May, the Cabinet Committee on Economic Affairs approved the proposal of Department of Fertilizers to
continue urea subsidy scheme up to 2020 at an estimated cost of ₹1,64,935 crore and implement it through
Direct Benefit Transfer.
K Ravichandran, Senior Vice-President, ICRA, said the revision in fixed costs has now been pending for over 16
years leading to significant pressure on the profitability of the urea units which have been witnessing rising fixed
costs owing to inflationary pressures. The Di-Ammonium Phosphate and/NPK (Nitrogen, Phosphate and Potash)
fertilizer manufacturers are facing inverted duty structure ……….
The rise in gas prices in recent times is another concern for urea players.
Source: The Hindu Business Line, Friday , August 3, 2018
Source: The Hindu Business Line, Friday , August 3, 2018
No comments:
Post a Comment