IFFCO may be forced to scale down profit target
"Due to various factors, we are likely to scale down our profit target for the next financial year to Rs 800 crore, though the target this year is Rs 1,000 crore," IFFCO Managing Director U S Awasthi told PTI in an interview here.
The cooperative fertiliser giant would also refrain from pumping fresh investments, launching new projects and undertaking major expansion activities, diversification and acquisition due to fluid economic situation, he said.
However, the profit targetted during the current fiscal would certainly be met, Awasthi said adding IFFCO would also surpass the production target of 83 lakh tonnes of fertilisers by its five plants this year.
Similarly, the turnover target of Rs 25,000 crore for 2011-12 would also be met by IFFCO, fertiliser leader in the cooperative sector, said Awasthi after a visit to the IFFCO plant in Paradip.
Though production target is likely to be raised up to 85 lakh tonnes and turnover to Rs 26,000 crore for next fiscal, profit goal may have to be reduced due to several reasons including uncertainty over subsidy, Awasthi said.
Lamenting delay in formulation of a new comprehensive fertiliser policy, he said IFFCO was yet to get subsidies to the tune of Rs 12,000 crore which has been pending for a long time due to uncrtainties in the absence of a clear policy.
Moreover, cost of inventory was now putting heavy financial burden due to high prices, making it an uphill task for fertiliser units to be profitable, the IFFCO MD said.
Another reason for possible decline in profit level is linked with apprehended foreigh exchange loss due to highly fluid and volatile international economic scenario and recessionary trend, he said.
"I don`t think it is going to be a rosy situation globally. It is marked by uncertainties and slowdown," he said describing the situation as precarious for fertiliser sector.
Apart from sluggishness abroad, the domestic situation also remains bleak. The fertiliser sector in the country, particularly the urea industry, continues to be in a bad shape as the proposed new policy appeared to have been pushed to the cold storage, Awasthi said.
Though it was a welcome move on the part of the government to shift fertilizer subsidy to `nutrient-based subsidy regime` about two years ago, no concrete step has so far been taken to give it a real shape, he said.
Seeking quick steps to decontrol the urea sector and introduce direct subsidy to farmers, Awasthi said a nutrient based subsidy policy would be encouraging and bring much needed succour to farmers as well as fertilizer industry.
Such a policy would assist in improving the soil health through balanced and integrated use of nutrients, including secondary and micro nutrients, the IFFCO MD said.
The country needs a new policy which can attract investment in fertilizer sector, almost stagnant over a decade. It would facilitate timely availability of fertilizer to the farmers and will reduce the fertilizer imports.
On IFFCO`s fertiliser plant at Paradip where a silo (cylindrical structure) had collapsed last week causing injury to some workers, Awasthi said a new one would come up very soon for which design has already been prepared.