Fertiliser stocks reap a bounty

Chambal Fertilizers hit a new 52-week high today at Rs.73.55, Deepak Fertiliser was up almost 5.5%, FACT rose 11.5% at Rs.26.10, getting closer to its 52-week high of Rs.28.80. RCF also rose over 5.5%; NFL hit an intra day high of Rs.38.10, which is a tad away from its 52-week high of Rs.38.25.

The reason why almost all fertilizer stocks are up in the green today is because the Cabinet Committee on Economic Affairs (CCEA) decided to keep intact the subsidy on phosphatic and potassic fertilizer for H2FY17.

The subsidy on nitrogen was fixed at Rs 15.85 a kg, phosphorous at Rs 13.24 a kg, Potash at Rs.15.47 a kg and Sulphur at Rs 2.04 a kg. U

Urea is the only controlled fertilizer and it is sold at statutory notified uniform sale price while Phosphatic and Potassic fertilizes are decontrolled, sold at indicative maximum retail prices (MRPs). The statutorily notified sale price and indicative MRP is generally less than the cost of production of the irrespective manufacturing unit. The difference between the cost of production and the selling price/MRP is paid as subsidy/concession to manufacturers. As the consumer prices of both indigenous and imported fertilizers are fixed uniformly, financial support is also given on imported urea and decontrolled Phosphatic and Potassic fertilizers.