MUMBAI: The Cabinet Committee on Economic Affairs (CCEA) has approved the conversion of three National Fertilizers plants from fuel oil to natural gas. The changeover of 3 plants at Nangal, Panipath and Bathinda are at a cost of Rs 1295 crore and will enhance the life span of plants and reduce the cost of urea.

Results
Net sales up 16% at Rs 1453 cr vs Rs 1255 cr
PAT down 5% at Rs 36.7 cr vs Rs 38.8 cr

Fertiliser cos: Countdown to new policy
Ministerial Committee formed to review the fertiliser policy
Government committee to discuss the framework of new policy
Current fertilizer policy 'NPS-III' effective from Oct'06 is coming to an end in Mar' 2010

Fertilisers: Why new policy required
No capacity addition in the last decade has resulted in increase in import proportion
Nearly 45% of total fertilizer consumption via import
High import led to fluctuation in prices, subsidy touched Rs 1 lakh crore in FY 2009
Government desire to move to complex fertilizer from current practice of highly skewed to Urea
Lower availability of complex fertilizers in India, resulted in disproportionate usage
New policy framework is expected promote complex fertilizer, Aims to bring in new investments in the sector
Aim of ensuring self-sufficiency in Urea production in the next 5-7 years

Expectations from the fertilizer policy
Nutrient based subsidy is not possible for Urea players
Conversion of all Urea plants on gas will not be done by Mar '10
'NPS-IV' can be introduced with abolition of 'Mixed feedstock' group
Introduction of 'Nutrient based subsidy' for complex fertilizers
Nutrient based subsidy will result in increase in profitability for efficient players & reduction of subsidy
Possibility of increasing the MRP of fertilizers at farm-gate level very thin