Rainfall deficit, currency issues impact FACT’s fertiliser sales

Rainfall deficiency coupled with currency demonetisation have affected fertiliser sales of the public sector FACT, despite record production this fiscal year.

The plummeting sales have put the company in a precarious situation at a time when it has received a ₹1,000-crore loan from the Centre to restart its caprolactam plant and augment production in all other plants.

With the maximum production among all fertiliser plants, FACT was able to set new records in production as well as marketing of fertilisers in the first six months of the current fiscal and was confident of closing the year on a positive note.

However, the rains played spoilsport with fertiliser sales in South India, especially with the deficient South-West and the delayed North-East monsoon.

The company — through the financial package — had stepped up production with a target of achieving 10 lakh tonnes and it is also evident in the improvement in production on a monthly basis.

Despite it being the peak season, fertiliser sales have come down in November. It is not FACT alone that bears the brunt; half a dozen other players in South India have also started feeling the pinch of the rain scarcity. And the currency demonetisation has fuelled to the crisis.

D Nandakumar, Chief General Manager (Marketing), FACT, told BusinessLine that normally there is a good offtake from Tamil Nadu in the October-November period but this year sales have dropped by almost 50 per cent till date.

Fertiliser companies based in North India are in an advantageous position, thanks to the good monsoon that lifted sales in the entire region. “It seems the lean period for fertiliser sales — January, February and March — has started from November itself,” he said.

However, with added sales effort and the recently-announced incentives for dealers, Nandakumar is optimistic that the quantities of fertilisers sold can be enhanced.

To tide over the crisis, he said the management has decided to offer discounts to dealers, which would be ₹700 per tonne at base price for Factamfos, ₹500 for ammonium sulphate and ₹400 for Muriate of Potash, till end-November. “We hope that the discounts will boost sales since FACT products are the most preferred brand in Tamil Nadu,” he added.

On the currency demonetisation, he said the entire sale was on a cash-and-carry basis and the unavailability of small currency denomination has affected railhead clearance of cargo as well as loading and unloading at depots.

However, the company’s shift towards online payment has lessened the impact, he added.

The company is now facing difficulties in storage as it has stock of approximately 95,000 tonnes of Factomfos and almost 19,000 tonnes of ammonium sulphate.

FACT has only four-and-a-half months to achieve the production target of 10 lakh tonnes and it has so far produced, 4.84 lakh tonnes of Factomfos and 1.1 lakh tonne of ammonium sulphate.