Fertiliser Growth Sluggish Amid Geopolitical Challenges

Growth in complex fertiliser volume is projected to slow to 2-4% due to import constraints and geopolitical issues. Despite supply issues raising raw material costs, credit profiles remain stable thanks to steady profits and timely subsidies. Domestic production is prioritizing NPK over DAP amid changing economic conditions.

The growth of complex fertiliser volumes is projected to decelerate to 2-4% this fiscal year, a noticeable drop from last year's 9%, according to a report. The factors affecting this downturn include import constraints and ongoing geopolitical challenges.

Crisil Ratings, in its detailed analysis, highlighted that these supply disruptions have caused an increase in raw material prices, potentially leading to higher subsidy requirements. The credit profiles of fertiliser manufacturers, however, are expected to remain stable due to steady profitability and timely subsidy allocations.

The report further elaborates on the challenges faced by domestic manufacturers, emphasizing their increased focus on NPK production due to better cost economics compared to DAP, which has seen a volume decline. The report predicts further normalisation in demand as geopolitical issues ease and trade relations stabilize.

(With inputs from agencies.)