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LATEST NEWS UPDATES | Why record foodgrain production failed to cheer farm input providers -R Sree Ram

Why record foodgrain production failed to cheer farm input providers -R Sree Ram

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published Published on Oct 2, 2018   modified Modified on Oct 2, 2018
-Livemint.com

Both fertilizer and agrochemical companies are highly dependent on imports for raw materials. With rupee depreciation exacerbating the rise in prices of raw materials, the profitability of the companies is expected to take a hit this year

The forecast of a record foodgrain production in the ongoing kharif season has brought no cheer to agricultural inputs stocks. Shares of Rallis India Ltd lost 3% last week. Dhanuka Agritech Ltd slumped 12%. Coromandel International Ltd lost 0.7%. The reaction reflects the challenges the industry is facing. Despite the timely onset of monsoon rains facilitating good product placements, sales did not take off in a big way, says Aditya Jhawar, an analyst at Investec Capital Services (India) Pvt. Ltd. “It is turning to be an OK or subdued season as below-par rains in several parts of high agriculture inputs consuming states Telangana, Andhra Pradesh and Karnataka impacted sales,” he adds.

Channel checks by analysts at Antique Stock Broking Ltd reveal that the domestic agrochemicals industry is likely to grow 10-12% in the ongoing kharif season, a sub-par rate compared to expectations. “During the ongoing kharif season, agrochemical demand has been at sub-par, aided by better paddy acreage, partially impacted by erratic rain fall, low agro-commodity prices and reduced cotton sowing,” analysts at Antique said in a note released in the second week of September.

In contrast, the fertilizer industry clocked decent sales, in spite of the disruption the sector saw due to implementation of the direct benefit transfer. Urea sales are up 7% in April-August, shows data compiled by Emkay Global Financial Services Ltd.

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Livemint.com, 1 October, 2018, https://www.livemint.com/Money/8MxkXXPfvLPzolH4MiidCN/Why-record-foodgrain-production-failed-to-cheer-farm-input-p.html


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