"We are moving towards value added fertiliser products for specific crops. This will need much lower investments as compared to the traditional fertiliser manufacturing," Deepak C Mehta, managing director of Deepak Fertilisers and Petrochemicals Corporation said.
The move will enable the company to create a range of crop specific products at a much lower investment cost and will bring it in tandem to the market demand.
The new strategy will also enable the company to gain a substantial share in the fertiliser market by targeting certain niche areas where profit margins are also much higher.
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Company chairman C K Mehta expressed concern over the rising price of gas, the main feedstock of the company and also its short supply by Oil and Natural Gas Corporation.
"The gas price hike will add Rs 5-6 crore to the costs in the current year. Gas prices went up sharply during the year from Rs 2,750/SM3 to Rs 3,600/ 1000 SM3. Supply was lower as well as erratic resulting in under capacity utilisation of Ammonia and Methanol plants," Mehta said.
Even though the prices are expected to go up further, Mehta said he was hopeful that its supply will improve from November as new players from the private sector enter business by importing it. He expected the imported liquid natural gas to be much cheaper as the landed cost will be around 15 per cent lower than the domestic price.
Mehta ruled out the possibility of shifting from gas to naptha on a large scale as the cost of naphta is very high.
"Switching over from gas to naptha will increase cost of production from Rs 4,000 per tonne to Rs 9,000 per tonne," he pointed out.
Last fiscal, Deepak Fertilisers spent Rs 8 crore more on the energy front by using naptha on unavailability of gas.
On the Government's fertiliser policy, Mehta said the uncertainty in the fertiliser policy and adhoc decision on subsidy has affected the entire industry, resulting in depressed stock prices of many good fertiliser companies of international standards.
The project for retrofitting its Ammonia plant was completed in March 2000 at a cost of Rs 38 crore which has enabled the company to hike its Ammonia output from 272 tonne per day to 374 tonne.
Meanwhile, Deepak Fertilisers' sales remained almost stagnant at last year's level of Rs 127 crore for the first quarter ended June.