NBS for urea would be welcomed by fertiliser industry, says NFL CMD

In what could come as a big boost for fertiliser stocks, a news agency - Newsrise reported yesterday quoting an official that the finance ministry was mulling a revamp of the fertiliser subsidy system, as well as a plan to decontrol urea prices.

Manoj Mishra, CMD of NFL said, “This has been under discussion - not the decontrol news but introduction of nutrient-based subsidy (NBS) scheme applicable for nitrogen, phosphorus and potassium (NPK) fertiliser, as well as urea was under discussion. Whether the government will take a call or not on that and when, we don’t know.  We are also not privy to the contours of the policy."

According to him, any NBS would mean a partial deregulation. "It is a partial decontrol and like it happens in NPK, there is a clause of reasonable price (MRP) and one cannot be overcharge. Those safeguards will be there. In case NBS for urea comes through then industry would welcome it,” he added.

“In case NBS comes, there will be partial decontrol of urea and industry has also been asking for NBS for urea.," he said,

When asked about subsidy, he said, "This year, by the rate at which we are getting subsidy, we will be ending with the highest ever working capital loans and that has been a big concern. Right now in urea, three-fourth of our pricing we get from subsidy and one-fourth is coming from the market. So, any NBS or partial decontrol or full decontrol, in whichever manner happens, it means we will get more from the market - from the MRP and less from the government by way of subsidy other things remaining same."

According to him, for any NBS or other scheme to be put in place, government should have adequate funds to run the scheme properly or else companies may have problem with working capital.

When asked about their business outlook, he said “In terms of volume of business, we will be growing but in terms of profitability, we still have some concerns,” he further mentioned.