Fertiliser major IFFCO may fix the profit target for the next financial year at Rs 800 crore, lower than Rs 1,000 crore set for this year, due to various reasons, including uncertainty on subsidy front.
“Due to various factors, we are likely to scale down our profit target for the next financial year to Rs 800 crore, though the target this year is Rs 1,000 crore,” IFFCO Managing Director U S Awasthi told PTI in an interview in Bhuveneshwar.
The cooperative fertiliser giant would also refrain from pumping fresh investments, launching new projects and undertaking major expansion activities, diversification and acquisition due to fluid economic situation, he added.
However, the profit targeted during the current fiscal would certainly be met, Awasthi said, adding that IFFCO would also surpass the production target of 83 lakh tonnes of fertilisers by its five plants this year.
The turnover target of Rs 25,000 crore for 2011-12 would also be met by IFFCO, the fertiliser leader in the cooperative sector, he said after a visit to the IFFCO plant in Paradip.
Though production target is likely to be raised up to 85 lakh tonnes and turnover to Rs 26,000 crore for next fiscal, profit goal may have to be reduced due to several reasons including uncertainty over subsidy, he said.
Lamenting delay in formulation of a new comprehensive fertiliser policy, he said IFFCO is yet to get subsidies of Rs 12,000 crore which have been pending for a long time due to uncertainties in the absence of a clear policy.
Another reason for the possible decline in profit level is linked to apprehended foreign exchange loss due to highly fluid and volatile international economic scenario and recessionary trend, Awasthi added.
“I don’t think it is going to be a rosy situation globally. It is marked by uncertainties and slowdown,” he said describing the situation precarious for fertiliser sector.
Apart from sluggishness abroad, the domestic situation also remains bleak. The fertiliser sector in the country, particularly the urea industry, continues to be in a bad shape as the proposed new policy appears to have been pushed to the cold storage, Awasthi said.
He added that though it is a welcome move on the part of the government to shift fertiliser subsidy to ‘nutrient-based subsidy regime’ about two years ago, no concrete step has so far been taken to give it a real shape.
Seeking quick steps for decontrolling of the urea sector and introducing of direct subsidy to farmers, he said a nutrient-based subsidy policy would be encouraging and bring much needed succor to farmers as well as fertiliser industry.
Such a policy would assist in improving the soil health through balanced and integrated use of nutrients, including secondary and micro nutrients, he said.
It may be recalled that a Group of Ministers (GoM) last week approved a new urea investment policy that promises incentives on natural gas price to fertiliser companies for reviving, expanding and setting up of new plants, to boost domestic production.
The country needs a new policy that can attract investment in the fertiliser sector, which is almost stagnant for over a decade. It would facilitate timely availability of fertiliser to the farmers and will reduce their imports.
On IFFCO’s fertiliser plant at Paradip, where a silo (cylindrical structure) had collapsed last week causing injury to some workers, Awasthi said a new one would come up very soon for which design has already been prepared.