While planning significant consolidation of its vast expanse of business in the next five years, the Rs 17,000-crore (Rs 170 billion) Indian Farmers Fertilizer Cooperative Ltd (Iffco) has demanded "physical support by the government" through excise and Customs exemptions and income tax holidays.
U S Awasthi, managing director, elaborates on their Vision 2015 in an interaction with Nayanima Basu. Edited excerpts:
You say your foremost objective is increase in production from existing units. What is the strategy?
The new nutrient-based subsidy (NBS) policy will expand demand for fortified products and designer fertilisers. We are planning for greater diversification into profitable segments, besides exploring strategic alliances and strengthening raw material sourcing.
Our Chhattisgarh power plant is ready to commence. Our Kisan SEZ (special economic zone) in Nellore, Andhra Pradesh, is also in the final stages of operation, for which we are planning more partners.
This year, the Iffco-TOKIO General Insurance Company has completed 10 years, so we are planning to give it a push. We are also planning to overhaul the Iffco Kisan Sanchar, which has completed three years.
We are ready to expand our Kallol plant for the production of urea with ammonia; we are awaiting allocation of natural gas.
What diversification are you planning?
In the last few years, we have entered new areas such as oil and gas and mining of potash, which we are planning to significantly expand. Our plan is to produce at least 50,000 barrels per day of oil and to have at least 40-50 million standard cubic metres of gas production from Argentina.
In potash, we are looking at 2,50,000-5,00,000 tonnes of production at least in Peru. By 2015, we should start producing a billion tonnes of rock phosphate from Australia. In Jordan, we aim to start producing 4,50,000 tonnes of phosphoric acid per year.
In urea, our plan is to produce 1.2-2 million tonnes, over and above the current production of around 4.3 mt. In complex fertiliser, we want to be near 5-mt of production. All these require a great deal of consolidation.
What segments are you are aiming at through the Kisan SEZ?
We are planning a major dairy complex in the SEZ, as we plan to enter the milk segment under the brand name, Iffco Doodh. This project would commence very soon. For the dairy products, we are looking at both exporting the products as well as selling them in the domestic market.
The logic is that if India is willing to buy such products from other countries as a result of free trade pacts, then why not buy from us? We would provide better products at cheaper prices. The plant should start commencement by the end of the financial year or early next year.
Farmers would own part of the equity in it, while cooperatives would continue to be the main channel for distributing these products. We are also looking at the food processing segment, in which we would soon roll out packaged salads, a huge market waiting to be tapped.
How much demand for fertilisers do you foresee in the coming years?
We are producing 8.5 mt of fertiliser and we plan to increase it by two million tonnes by way of international tie-ups or expansion. Our target is to produce more than 10 mt in the next five years. In the coming decade, the demand for fertilisers would exceed production. We are looking at major expansion, by setting up new units and expanding existing ones and diversify in other growing sectors.
Complex fertiliser production units are already at their highest capacity. The need of the hour is physical support from the government by providing excise duty and customs duty exemption and income tax holidays, if they want investments into the industry. The mindset has to change in the government and in the fertiliser industry.
Has the decontrol of prices under the new NBS policy helped the industry? How have you planned the transition?
This has been a pricing incentive for the industry. We will soon start fortification and upgradation of existing fertilisers. We are going to start massive laboratories all over the country for soil investigation, reflecting the fertiliser requirement. This new policy would help us in increasing agricultural productivity by 25 per cent in the next two years. The age-old practices are no more conducive for environment and soil. These have to be modernised with proper technological upgradation, not possible under the old regime.
The farmer today is ready to pay more if he can increase his productivity by 20-25 per cent. The NBS policy would help bring companies closer to the farmers and give them access to designer fertilisers. They would be taught techniques to combine green manures, chemical fertilisers, organic fertilisers, all in proper proportion.