Objective of the study

The main objective of the study was to examine about the Ways to Increase Market Share OF IFFCO. All the research studies are based on some objectives so objective of this study are as follows: 1. To examine awareness about IFFCO fertilizers in market. 2. To examine which product is more demanded by farmer. 3. To examine problems that are faced by the dealers. 4. To examine problems that are faced by the Farmers. 5. To Know dealers opinion about IFFCO fertilisers in terms of Quality. 6. To know dealers opinion about IFFCO fertilisers in terms of Packaging & Weight. 7. To know awareness of farmers about the promotional programme carried out by IFFCO. Before finding the ways to increase the market share of IFFCO in Maharashtra it is necessary to understand various aspect of fertiliser production and its use in Maharashtra. Following are the salient features of use of fertiliser & production in Maharashtra 1. Importance of fertilisers is in yield improvement, which is essential for achieving increased agricultural production, because there is little scope for bringing more area under cultivation as well as majority of Indian soils are deficient in many macro and micro nutrients. The application of essential plant nutrients, particularly major and micronutrients in optimum quantity and right proportion, through correct method and time of application, is the key to increased and sustained crop production. Therefore it is important to understand fertiliser use behaviour in the country over time as well as role of factors influencing fertiliser consumption at the national and state level because intensity of fertiliser use varies from state to state. 2. Maharashtra state has experienced positive growth in fertiliser consumption. The factors e.g., agro-climatic characteristics, institutional and infrastructure variables, economic factors play a significant role in shaping fertiliser consumption patterns. 3. IFFCO contributes major share in Maharashtra fertiliser consumption. Farmers are loyal to IFFCO Fertilisers especially Phosphatic fertiliser because farmers know that IFFCO is a cooperative sector where profit is not the objective rather its aim is to increase the socio
1

economic condition of farmers. IFFCO is based on the values of self-help, self responsibility, democracy, equality, equity & solidarity, ethical values of honesty, openness, social responsibility and caring for others. IFFCO has launched Save the Soil campaign where farmers are getting benefitted. 4. Presently, there are various competitors in the market like Rashtriya Chemical fertilizers (RCF), Zuari India Limited, Gujarat Narmada Valley fertilizers Co. Ltd (GNFC), Gujarat State Fertilisers & Chemicals Ltd. (GSFC), Hindalco, Mangalore Chemicals & Fertiliser Ltd. (MCFL), and Deepak Fertilisers they are offering financial benefit and there are other reason due to which share of IFFCO fertilizers sale has decreased. 5. Since IFFCO is a cooperative sector which has some limitation like Lack of Capital, Cash Trading, Political Interference, and Lack of Motivation in marketing policies etc. No Uniform Policy has yet been evolved for sharing of distribution margin between various tiers of cooperative network in the states. This is also one of the reasons that our share in cooperatve sector has declined. Keeping in mind the above features, This Project work is undertaken to understand the role of IFFCO in Maharashtra fertiliser industry and ways to increase market share of IFFCO in Maharashtra state.

Overview of fertiliser Industry

India lives in villages said Mahatma Gandhi decades ago. It is true even today. Like every developing economy, the economy of India is also agro-based. Agriculture accounts for nearly 1/4th of India's GDP and more importantly, about 2/3rd of the country's population is dependent directly or indirectly on agricultural activities for their livelihood. As per statistics nearly 175 lakh MT of fertiliser nutrients are required every year in this country. The demand of fertilisers was so high that India had to import almost 30% of its requirement from other countries. Therefore, to achieve the economic growth, agriculture base of the country must be strengthened. To attain this objective, agriculture practices have to be improved from their traditional pattern to a modern technological pattern involving better irrigation and use of better quality seeds, fertilisers, insecticides & pesticides. Therefore, chemical fertilisers plays a very important role and fertiliser industries plays a major role in increasing food production in the country and also helps to modernize the outlook of the common farmers and make them innovative and adaptive to the new technology change. Fertiliser is any material, organic, inorganic, natural or synthetic, that is added to soil to supply plants with one or more of plant nutrients necessary for normal growth. Fertiliser is the material, which supplies the chemical elements required for plant growth. Primary nutrients like nitrogen, phosphorous and potash are supplied through chemical fertilisers. Fertiliser production is of evergreen importance for the country because fertiliser increases agriculture productivity. On one hand population is increasing day by day but on the other hand availability of agricultural land is decreasing, so we have to produce more fertiliser in order to increase the agricultural productivity. This can be done with effective use of fertilisers as fertilisers play a major role in improving agricultural productivity. As fertiliser is a vital commodity for agricultural production, it is in the interest of nation that farmers get quality fertilisers at reasonable rate and in adequate quantity. Looking to the poor economic condition of Indian farmers, Government of India framed fertiliser policy in 1977 based on Maratha committee report. The purpose behind introducing this policy was to supply

fertiliser to the poor at a price they could afford, so as to increase the consumption of fertiliser, increase food production, and ensures fair return to fertiliser producers. With this twin objective, Retention Price Scheme (RPS) for fertilisers came into picture. In this scheme government has brought the fertiliser under the preview of Essential Commodities Act (ECA) in which the retail price of fertiliser to the farmer is notified by the Government of India from time to time. This retail price to the farmer is uniform throughout the country and is subject to local taxes applicable under the respective States. Further under ECA, the government also operates a system of distribution control in which the manufacturers including the handling agents for the imported fertilisers are directed to sell specified quantities of fertilisers in given states/union territories. While doing so, the logistics of fertiliser distribution including storage, transportation, handling etc are also suitably regulated conforming to overall supply plans of the government to meet the requirement in all the parts of the country. It is envisaged that manufacturers should also get reasonable rate of return for producing fertilisers. Manufacturers should get at least that much, which can enable them to remain in the industry. Government of India fixes the price of fertilisers in such a way that manufacturer's cost of production including cost of marketing is covered.

GLOBAL SCENARIO OF FERTILISER INDUSTRY

The United Nations projection indicates the world population has been increasing at very fast rate while the natural resource such as land remain the same so, to recover from the increasing demand for food grains, productivity of the crop has to be increased by using fertilisers. Today 35% of the world fertiliser production comes from developing countries. Canada and U.S.A. are top exporters of fertiliser in the developing countries. India is the second largest consumer of fertilisers in the world after China, consuming about 26.5 million tonnes. However, average intensity of fertiliser use in India remains much lower

than most countries in the world but is highly skewed, with wide inter-regional, inter-state, and inter-district variations. Non-price factors such as irrigation, high yielding varieties are more important than price factors in influencing demand for fertilisers.

INDIAN SCENARIO
After independence the use of fertilizers in India in the last 50 years has grown nearly 170 times. In 1950 use of fertilizer per hectare in India was 0.55 Kg but by 2001-02 this figure has increased to around 90.12 Kg per hectare. Green revolution during 1960s and subsequent increased intensification of agriculture were major causes behind this growth. By fiscal year 1995, the fertiliser consumption in India touched 13.56 million tons. In the same year, the total supply was 10.43 Million tons. With that India has become the third largest producer after U.S.A. and China. To bridge the demand and supply gap India has to import necessary fertilisers. Indian Fertiliser industry is one of the important industries for the Indian economy, since it manufactures a very critical raw material for agriculture. The fertiliser industry especially the ammonia urea plants are energy demanding in their operation.

The main objective of the fertiliser industry is to ensure the supply of primary and secondary nutrients in the required quantities. The fertiliser industry in India has played an important role in enabling the necessary increase in the use of plant nutrients for achieving the objectives of selfsufficiency in food grains production and accelerated continuous agricultural growth.

The fertiliser industry which is one of the most energy intensive sectors which is very important from the context of environmental discussions. Due importance to increasing productivity through the implementation of competent and pollution free technologies in the manufacturing sector would be most desirable in combining economic, environmental and social development objectives. Fertilizer consumption in India has increased significantly in the last three decades. Total NPK (N, P2O5 and K2O) consumption increased nine-fold (from 2 million to 18 million tons) between 1969/1970 and 1999/2000. Per-hectare NPK consumption increased from 11 to 95 kg in the same period. After reaching a record level in 1999/2000, fertilizer consumption in India has been irregular. It has fluctuated around 17 million tonnes since 2000.

Plant wise Production and Import of IFFCO Fertiliser

200607 5.6 14.57 17.7 37.87 14.55 52.42 16.72 3.32 20.04 0 20.04 8.04 4.18 12.22 7.17 19.39 200708 5.45 15.54 18.65 39.64 15.12 54.76 15.32 2.73 18.05 0 18.05 4.86 5.93 10.79 2.19 12.98 200809 5.6 15.04 20.05 40.69 17.37 58.06 16.04 8.69 24.73 0 24.73 1.89 4.36 6.25 23.26 29.51 200910 6 17.23 20.01 43.24 20.52 63.76 16.51 10.98 27.49 0 27.49 7.23 4.02 11.25 15.88 27.13 (Lakh tonnes) 2010- 201111 12 6 6 17.71 18.34 20.32 20.53 44.03 44.87 24.6 24.34 68.63 69.21 24.59 25.75 7.45 8.46 32.04 34.21 1.36 6.19 33.4 40.4 0.6 4.97 9.17 9.95 9.77 14.92 14.75 11.44 24.52 26.36

UREA

NPK

DAP

Kalol Phulpur Aonla Indigenous Imported Total Kandla Paradeep Indigenous Imported Total Kandla Paradeep Indigenous Imported Total

a) Urea: In the year 2011-12, the Coop. Society manufactured 44.87 lakh tonnes of total Urea. This is the highest total annual manufacturing of Urea achieved by IFFCO since inception and imported 24.34 lakh tonnes in year 2011-12. This makes a total of 69.21
7

lakh tonnes. From the above table, we come to know that every year production of urea is increasing and import of urea is also increasing. b) NPK: In the year 2011-12, the Coop. Society manufactured 34.21 lakh tonnes of total NPK. This is the highest total annual manufacturing of NPK achieved by IFFCO since inception and imported 6.19 lakh tonnes in year 2011-12. This makes a total of 40.4 lakh tonnes. From the above table, we come to know that every year production of NPK is increasing and IFFCO in year 2010-11 has started importing urea. c) DAP: In the year 2011-12, the Coop. Society manufactured 14.92 lakh tonnes of total DAP. This is the highest total annual manufacturing of DAP achieved by IFFCO since inception and imported 11.44 lakh tonnes in year 2011-12. This makes a total of 26.36 lakh tonnes. From the above table, we come to know that production of DAP has increased and DAP is also being imported in varied proportion every year.

Sale of IFFCO Fertiliser in INDIA

2006Product 07
UREA NPK/NP DAP Total 52.4 17.02 16.66 86.08

200708
54.28 22.19 16.75 93.22

200809
58.69 24.72 29.17 112.58

200910
63.35 27.95 26.97 118.27

(Lakh tonnes) 2010- 201111 12

68.23 33.09 24.55 125.87 67.82 28.71 25.18 121.71

a) During the year 2011-12 Coop. Society sold 67.82 lakh tones of total Urea. This is
observed that overall sale of urea has increased; every year starting from 2006 to 2012 Sale has increased from 52.4 to 67.82 lakh tonne. Urea sale shows increasing trend. b) During the year 2011-12 Coop. Society sold 28.71 lakh tonnes of total NPK. This is observed that overall sale of NPK till 2011 has increased. c) During the year 2011-12 Coop. Society sold 25.18 lakh tonnes of total DAP. We see that overall sale of DAP has increased; every year starting from 2006 to 2012 Sale has increased from 16.66 to 25.18 lack tonne.

FERTILISER POLICY 1944-2011

(HIGHLIGHTS)

1944: Central Fertilizer Pool The Government of India established the Central Fertilizer Pool in 1944 to ensure equitable distribution of all fertilisers at fair prices all over the country. All fertilisers irrespective of domestic or imported were pooled together under Central Fertilizer Pool and distributed through state agencies. 1957: Fertiliser Control Order In 1957, the Government of India passed the Fertiliser Control Order (FCO) under the Essential Commodities Act (ECA) to regulate the sale, price, and the quality of fertilisers.

1965: Committee on Fertilisers (Sivaraman Committee) The Government of India constituted a Committee on Fertilisers in 1 964, headed b y Shri B.Sivaraman , Secretary, Department of Agriculture, Government of India, to examine the problems connected with the distribution of all chemical fertilisers, pricing of fertilisers, role of cooperatives in their marketing, and the role of extension services in the promotion and popularisaton of the use of fertilisers. The Sivaraman Committee submitted its report in 1965. The Sivaraman Committee made a number of recommendations, which laid the foundation regarding production, promotion, distribution, and consumption of fertilisers in the country.

1966: Liberalization of Fertiliser Marketing Fertiliser marketing liberalized as per the recommendations of the Sivaraman Committee Report. The manufacturers were given freedom to market up to 50% of their production.

1969: By 1969, domestic manufactures were given complete freedom in marketing. But this was short-lived.

1972: Half-yearly Zonal Conferences In the early seventies, shortages of fertilisers were experienced in the country. Consequently, the
9

government

started

regulating

the

distribution

of

fertilisers

under

the

Essential

Commodities Act (ECA) and the concept of Half-yearly Zonal Conferences was introduced in 1972. All the fertilisers were distributed b y the manufacturers according to their ECA allocation during the two cropping (Kharif and Rabi) seasons, as per the supply plan fixed at the zonal conferences.

1973: Fertiliser Movement Control Order Fertiliser shortages in the early 70s led the government to pass the Fertiliser Movement Control Order in 1973, which brought fertilizer distribution and its inter-state movement under government control. 1984: A/S and CAN brought under price control

1985: Ammonium chloride was brought under RPS during 1985

1986: High Powered Committee of Secretaries (B. B. Singh Committee)

1987: High powered Committee on Fertilizer Consumer prices (G.V.K. Rao Committee)

1991: Dual Pricing The retail prices of fertilisers were raised by 30 per cent w. e. f 14 August 1991. The government the of India tried to experiment with dual pricing of fertilisers on a limited scale by exempting small & marginal farmers from the hike of 30 percent on the retail prices of fertilisers with effect from 14 August, the 1991. The government earmarked funds on the basis of the area held by the small and marginal farmers up to a limit of 2 hectares and the average per hectare consumption of fertilisers during 1990-91 in each state. But the scheme did not succeed. It was operational for a brief period, from 14August91 to 31 March92 and was discontinued after that.

Decontrol of A/S, CAN and Ammonium Chloride The prices of Ammonium Sulphate, CAN and Ammonium Chloride were decontrolled w. e. f 25th July, 1991.
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1992: BICP Report on Normative Retention Price of Fertilizers

1992: Different changes made in 1992. 1) Joint (Parliamentary) Committee on Fertiliser Pricing 2) Decontrol of P & K fertilisers 3) Ammonium sulphate, CAN and Ammonium chloride brought under price control 4) Decanalisation of Raw materials, Intermediates and DAP 5) Concession on decontrolled P & K fertilisers introduced

1993: Decanalisation of MOP Import of MOP was decanalised w. e. f 17th June,93. Adhoc concession on SSP 1994: Decontrol of A/S, CAN and Ammonium Chloride 1998: High Powered Fertiliser Pricing Policy Review Committee (HPC) (Hanumantha Rao Committee) 2000: Expenditure Reforms Commission (ERC) 2001: Expert Committee on Reassessment of Production Capacity (Alagh Committee) The Department of Fertilizers constituted an Expert Committee under the Chairmanship of Dr. Y. K. Alagh, Eminent Economist & Former Union Minister, to reassess the production

capacity of Urea manufacturing units. The terms of reference of the committee included (a) The method of reassessment to be adopted. (b) The effective cutoff date to be adopted for the purpose of recovery on the method of reassessment, (c) Quantification of total amount of unintended benefits accrued to each unit and suggest Modalities to recover the amounts thus quantified. The committee submitted its report in March 2001. Based on the recommendations of the committee, the capacities of 22 ammonia-urea plants were reassessed with effect from 1.4.20 00 for the purpose of pricing and subsidy.

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Cost Price Study of Complex Fertilizers (Tariff Commission) On the request of the Ministry of Agriculture, the Tariff Commission under the Ministry of Commerce and Industry undertook a Cost Price Study of Complex Fertilizers to decide the rates of concession of decontrolled complex fertilisers covered under the Concession Scheme. The commission submitted its report in May 2001. The commission recommended the delivered prices of various complex fertilizers for (a) Group I comprising units with gas as feedstock. (b) Group II comprising of the units using predominantly naphtha. The commission also recommended that the Department of Fertilisers may consider carrying out cost-benefit analysis to assess desirability for switching over to imported ammonia by the units under Group II to reduce costs and concessions.

2003: Committee on Cost Price Study of Diammonium Phosphate (Indigenous and Imported) and Muriate of Potash (Imported) The then Bureau of Industrial Costs & Prices (BICP) had conducted a study during in 1998-99 for DAP/MOP and recommended the normated industry price for indigenous DAP based on the prices of the group o f units using imported phosphoric acid and imported ammonia, which constituted 70% of total production of the country. Uniform concession rates for decontrolled fertilisers were announced from 1999-2000 based on the BICP study. Subsequently, two new units, i.e., Oswal Chemicals & Fertilisers and Hindalco Industries Ltd., based on captive phosphoric acid went into production. The share of units using captive phosphoric acid has gone up substantially. Accordingly, a committee was set up under the chairmanship of Dr. V. K. Agnihotri, Chairman, Tariff Commission, Ministry of Commerce & Industry Govt of India to undertake cost evaluation in respect of DAP, both indigenous and imported and MOP and work out the delivered prices of the products. The committee submitted its report in February 2003. Based on the recommendations of the committee, the indigenous DAP units have been divided into two groups, i.e., plants based on (i) captive phosphoric acid and (ii) imported phosphoric acid. Committee on Efficient Energy Levels, etc. for Urea Units (Gokak Committee)

New Pricing Scheme for Urea units (NPS) (Stage I and II)
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Based on the recommendations of various committees, a new pricing policy for urea units was app roved by the Government on 19.12.2002. The New Pricing Scheme came into force w.e.f 1.4.2003. The new policy aimed at greater transparency, uniformity, and efficiency in disbursements of subsidy payments to urea units and inducing them to take cost reduction measures on their own and be competitive. The scheme was implemented in three stages. (a) Stage-I for one-year duration from 1.4.2003 to 31.3.2004 (b) Stage-II for two years duration from 1.4.2 004 to 31.3.2006 (c) Stage- III from 1.4.2006 onwards. The modalities were to be decided by the Department of Fertilizers (DOF) after review of the implementation o f Stage-I and Stage-II. The scheme introduced a group based concession, which replaced RPS. The NPS envisaged phased decontrol of movement, distribution and sale of urea which was hitherto entirely under the purview of ECA allocations. For the Kharif 2003 season, 75% of the dispatches of each manufacturer was covered under ECA allocation and the balance 25% could be sold freely anywhere in India. For the Rabi 2003-04 seasons, this ratio was changed to 50:50. The scheme is still continuing. For quantities sold under the ECA, units are allowed equated freight in the same manner as for the 8th pricing period. For urea sold under the free category (urea outside the ECA allocation), the equated freight has been reduced by Rs.100. Under Stage II of NPS, the capital related charges and consumption norms were tightened.

2004: Cost Price Study of Single Super phosphate (CAB Report) The Cost Accounts Branch (CAB) under Department of Expenditure of the Ministry of Finance was requested by the Department of Fertilizers to undertake cost study of Single Super phosphate industry in India. The report on Cost price Study of Single Super phosphate was submitted by CAB in April 2004. The committee recommended (i) fixation of maximum retail price by the central government, (ii) a fresh cost study after every three years and (iii) review of price, based on price adjustment formula every quarter/six months, in consultation with the CAB. Fair prices should be worked out based on price adjustment formula as recommended on a quarterly basis by the manufacturing units based on actual prices of inputs used by them duly certified by practicising cost accountant and submitted to the government. Time bound scheme needs to be framed so that states ensure issuance of certificates to the industry within specified
13

time once sales have materialized. Subsequently, as a temporary relief, the government enhanced the concession of SSP from Rs.650 per tonne to Rs.975 per tonne w.e.f 1 September 2005 on an adhoc basis.

2005: Working Group on Review of Stage I & II of New Pricing Scheme (NPS) and formulation of Policy for Stage III for Urea units (Alagh Committee) The New Pricing Scheme (NPS) for urea in force from the 1st April, 2003 was to be implemented in three stages. Stage-I was applicable for one year i.e., up to the 31stMarch, 2004 second stage was for two years from the 1st April, 2004 to the 31st March, 2006. The policy for Stage-III commencing from the 1 April, 2006 was to be formulated and announced based on the experience of Stages I and II. Accordingly, the Government of India set up a Working Group on Review of Stage I & II of New Pricing Scheme (NPS) and formulation of Policy for Stage III for Urea units under the chairmanship of Eminent Economist & Former Union Minister, Dr. Y.K. Alagh on the 10 December, 2004.The Working Group submitted its report in December 2005. Expert Group on Phosphatic Fertilizer Policy (Abhijit Sen Committee) The government of India constituted an Expert Group on Phosphatic Fertilizer Policy under the chairmanship of Prof. Abhijit Sen, Member, Planning Commission to review the current phosphatic fertiliser environment, examine international and Indian phospahtic fertiliser scenario and examine alternatives to the existing methodology of phosphatic fertilizer pricing and costing. The Expert Group submitted its report during October 2005. The committee made a number of recommendations and suggested the subsidy on DAP to form the basis for subsidy on other phosphatic and complex fertilisers. The subsidy on DAP would have 3 components, viz. (1) difference in the landed price of imported DAP (including customs duty) and the MRP, (2) cost of marketing including the selling and distribution expenses and dealers margin (Rs.350 per tonne) and (3) to offset disadvantage to the domestic manufacturers of vis--vis abroad. Floor and ceiling for the disadvantage has been recommended as 5% and 20% of CFR price of DAP. The government may review the competitiveness achieved by the industry in future and accordingly consider downward revision of the two limits. The cost of domestic production would be arrived at taking into account the normated cost of phosphoric acid, international ammonia prices, cost of conversion, and capital cost based on
14

norms given by the tariff commission. The marketing cost of Rs.1350 would be escalated on annual basis linked to WPI (General) index. The adjustment in subsidy of the first two

components would be made quarterly after taking into account the prevalent international prices and foreign exchange rates. The expert group did not recommend any immediate change in the MRP. However, changes in MRP may be considered in case the MRP goes below 65 % of the landed price of imported DAP. The government may, however, consider revision in the MRP of DAP in case any revision is brought in the MRPs of other nutrients. Task Force on Balanced Use of Fertilisers The imbalanced use of chemical fertilisers and neglect of organic manure caused many problems, like stagnation in productivity, soil sickness, widespread deficiency of secondary and micro nutrients, spread in salinity and alkalinity, etc. The fertiliser use is also skewed in the country. In this context, the Ministry of Agriculture constituted a Task Force on Balanced Use of Fertilisers, under the chairmanship of Shri A.K. Singh, Additional Secretary, Department of Agriculture and Cooperation to relook at the policy on use of fertilisers. The committee recommended the restoration of NPK use ratio at the macro level by increasing the use of nutrients P and K instead of reducing the intake of nitrogen. However at the micro level, the application of nutrient has to be soils, crops, and climate specific. Among other major recommendations, the committee suggested strengthening of soil testing laboratories, fertiliser quality control lab oratories, efforts for promotion of green manures, vermi compost, enriched organic manures, micronutrients, expansion of area under fertigation, etc. The committee also felt the need for recognition of sulphur as a critical input at par with NPK for price fixation and subsidy and the extension of subsidy to other secondary and micro nutrients. The existing pricing mechanism need to be made conducive for balanced fertilization by properly adjusting the pricing and subsidy on nutrient basis. The recommendations of the Report have been accepted in principle.

2007: New Pricing Scheme for Urea units (NPS) (Stage III) The Government notified the New Pricing Scheme (NPS) Stage III for urea units on the on the 8th March, 2007. The NPS Stage II scheduled to be expired by the 31st March, 2006 was extended up to 30th September, 2006. The NPS Stage III came into force from 1st October 2006 and will be effective up to 31st March 2010. The policy aims at greater efficiency in urea production and its
15

distribution in the country. The Policy seeks to encourage urea production from the indigenous urea units beyond 100% of their reassessed capacity by introducing a system of incentives for additional urea production subject to merit order procurement. All production between 100% and 110% of the existing reassessed capacity, as per the approved production plan will be incentivised on the existing net gain sharing formula between the government and the unit in the ratio of 65:35, respectively. Units increasing production beyond 110% may be compensated at their concession rate, subject to the overall cap of import parity price (IPP). The provision of prior Government permission for additional urea production has been dispensed with. NPS Stage III sought to promote the sage of natural gas, which is an efficient and comparatively cheaper feedstock for production of urea. A definite time schedule of three years has been provided for conversion of all non-gas based units to gas. To expedite conversion, the Policy provides for non-mopping up of energy efficiency for a period of five years for naphtha and F.oil/ LSHS based plants. Units not able to tie up gas will have to explore alternative feedstock like coal bed methane (CBM) and coal gas. The Policy encourages setting up joint venture (JV) fertiliser plants abroad in countries where gas is available in abundance and at reasonable prices. The JVs for urea will be set up abroad subject to the condition that the government will enter into long term buy back arrangements with JVs abroad depending upon merits. The government will continue to regulate movement of urea up to 50% of production depending upon the exisgencies of the situation. States would be required to allocate the entire quantity of planned urea arrivals for regulated and deregulated urea in a district-wise, month-wise, and supplier-wise format. The units will be required to maintain a district level stock point (primary godowns) in the districts where it is required to supply urea. The monitoring of movement and distribution of urea throughout the country up to district level will be done by an on-line web based system.

MAP brought under concession scheme Imported MAP (11-52-0), including powdered MAP was brought under concession scheme for decontrolled phosphatic and potassic fertilisers w.e.f 1.4.2007. GOI decided that concession payable on these fertilisers will be capped to that payable on imported DAP and no additional concession/ cost would be reimbursed for processing powdered MAP to granulated MAP.

16

Cost Pricing Study of DAP, Complex Fertilisers & MOP by Tariff Commission The Department of Fertilizers entrusted a fresh Cost Price Study on the DAP, MOP and Complex Fertilisers to the Tariff Commission (TC) in November, 2006. The Commission submitted its report in December, 2007. Salient features of the recommendations are stated below: a) The normative delivered price of all complex fertilisers, including DAP has been worked out on the basis of per unit material cost of four nutrients namely N, P, K, & S and other costs. Sulphur (S) has been recognized as a nutrient in pricing for the first time and compensation for S bearing complex fertilisers has been allowed accordingly with lump sum compensation for use of sulphur in manufacturing other fertilisers. (b) For determining the normative production levels, the TC has adopted a norm of 85% of capacity utilization. The minimum efficiency factor for conversion of raw

materials/intermediates used by TC in the case of DAP is 97% for N and 98% for P. The minimum efficiency factor in the case of other complexes for nutrients N, P and K is 96%. Upper limit of efficiencies have been adopted at 99% for all the nutrients. (c) All domestically produced complex fertilisers, including DAP have been grouped as complex fertilisers for the purpose of determining normative nutrient cost/total delivered cost. (d) For the purpose of determining the price of nutrient N, the units have been divided into four groups based on the source of nitrogen namely natural gas, naphtha/fuel oil, imported ammonia/urea mix and imported ammonia. For determination of price of P and K nutrients, a single reference price has been adopted. (e) For determination of other costs, the complex fertiliser units have been categorised in four groups depending on the sources of N as explained above. The TC has also suggested a uniform other costs as an alternative. (f) Freight is recognized as a separate component from other costs for indigenous fertilisers. A separate report on state-wise lead distance for DAP/complex fertilisers from factory/port to consumer destination was also submitted by TC. (g) Separate compensation has been recommend for IFFCO-Paradeep unit based on Long Run Marginal Costing to take care of the capital investment in acquisition of the unit and revamping cost. (h) Escalation/de-escalation formula has been provided for updating prices of four nutrients N, P, K and S. Escalation formula for freight is also provided.
17

(i) Delivered cost of imported DAP and MOP has been worked out with normative handling and distribution cost including freight element. (j) The Commission has recommended compensation to the industry on delayed payments by way of payment of interest by the Government of India.

2008: Guidelines for production and use of Customised Fertilisers Keeping in view the focus of balanced fertilization, GOI formulated guidelines for production and use of customized fertilisers under Clause 20B of FCO, 1985. The guidelines were issued on March11, 2008 to enable interested companies to initiate the process of developing different grades of customized fertilisers. The guidelines broadly covered the definition, eligibility criteria, grades, quality requirement, and tolerance limit, labeling and pricing of customized fertilisers.

As per the guidelines, permission for manufacture and sale of customized fertilisers shall be granted to the manufacturing companies whose annual turnover is Rs.500 crores or above, having soil testing facility with annual capacity of 10,000 samples per annum and should have analyzing capacity for NPK, micronutrient and secondary nutrient. The proposed grades shall be based on area specific and crop specific soil testing results. All subsidized fertilisers can be used for manufacturing of customized fertilisers. The company shall fix reasonable MRP for its approved grades of customized fertilisers.

Revised concession scheme for SSP for 2008-09 GOI implemented a revised concession scheme for SSP with effect from 1st May, 2008 for the year 2008-09. The new policy for SSP has made provision for fixation of uniform MRP throughout the country b y the Central Government unlike the earlier practice of MRP being fixed by the State Governments. The policy also provided for monthly revision in the concession rates to reflect the variation in prices of raw-materials vis--vis indigenous and imported rock phosphate and imported sulphur. For the first time, the policy recognized sulphur content in SSP while fixing MRP. The policy continued up to 30th September, 2009.

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Policy for encouraging production and availability of fortified and coated fertilisers To promote use of secondary and micro nutrients and to improve fertiliser use efficiency, the Government of India has allowed the fortification/coating of fertilisers specified in Fertilizer Control Order (FCO), up to 20% of their total production w.e.f 1st June 2008. The manufacturers have also been allowed to charge additional cost involved in manufacture of these fertilisers from the consumers as per the Government guidelines. The manufacturers/producers of fertilisers are allowed to sell the FCO approved fortified/coated subsidized fertilisers, except for Zincated urea and Boronated SSP at a price up to 5% above the MRP. For Zincated urea and Boronated SSP, the manufacturers are allowed to charge up to 10% above MRP of urea and SSP, respectively. Nutrient based pricing of subsidized fertilisers GOI introduced nutrient based pricing of subsidized fertilisers to promote balanced fertilisation. As per the scheme, the per unit price of nutrients N, P, K and S will be the same in all complex grade fertilisers. Consequently, MRPs of complex fertilizers have been significantly reduced w.e.f. 18th June 2008. The nutrient prices of urea DAP and MOP is the benchmark for determining the prices for nutrient prices of N, P and K. For the first time, sulphur has been recognized as a primary nutrient to be covered under the Concession Scheme.

Indigenous and imported TSP under the concession scheme GOI included TSP under the concession scheme w.e.f 1st April 2008.

Indigenous Amm. Sulphate under concession scheme GOI included indigenous Ammonium Sulphate (20.6-0-0-23) under the concession scheme w.e.f 1st July 2008. Policy on P & K fertilisers The government of India continued the Concession scheme on decontrolled P & K fertilisers w.e.f 1st April 200 8 with the following policy: DAP: In the policy for Phosphatic and Potassic fertilizers there has been a departure from hitherto cost plus approach. The subsidy has been benchmarked to Import Parity Price (IPP) of DAP. Unlike in the past, there will be uniform subsidy for imported and indigenous DAP based on IPP concept.
19

NP/ NPK Complex Fertilisers: In case of complex fertilisers, the price of P2O5 will be determined on the basis of imported DAP. The price o f K will be determined on the basis of imported MOP. The price of N will continue to be determined on unit wise basis, in a rationalized manner. Cost of S in sulphur containing complex. Fertilisers will be recognized based on the price of imported sulphur. Policy for uniform freight subsidy on all fertilisers GOI approved a separate uniform freight subsidy policy on all subsidized fertilisers covered under the NPS III for indigenous urea and the concession scheme on P & K fertilisers. The policy implemented w.e.f 1st April 2008. Under the new uniform freight policy inland freight for transportation of fertilizers will be reimbursed to the fertiliser companies from plant/port up to the block level. For this, rates would be calculated based on actual railway freights and in case of road transport, it will be based on the average lead distance of all the blocks in the district and the State level truck rates from rake point to the block. The state governments will be responsible for confirming the receipts of fertilisers as indicated in the movement plan in FMS.

Policy related to Surplus Ammonia from Urea units The policy for sale of surplus ammonia from domestic urea units was notified on the 19th August, 2008 and was made applicable from 1st August, 2008. The policy will be applicable to all urea producing units covered under NPS. The sale will include inter-unit or intra-unit transfer of ammonia and also surplus capacity created by debottlenecking/revamp/modernization of urea/ammonia plant. It will, however, not be applicable for multi-product/integrated fertiliser units where APM gas will be allocated on priority for production of urea and other subsidized fertilisers and actual mix excluding APM gas will be allowed towards energy for remaining urea and surplus ammonia. The policy on sale of surplus ammonia is classified under three categories: (1) Urea production is less than 100% of re-assessed capacity and surplus ammonia is due to technical reasons. In this case, net gain from sale of surplus ammonia will be shared between the Government and the unit in the ratio of 65:35 respectively. (2) Urea production at 100% of re-assessed capacity & beyond and surplus ammonia available due to technical reasons. Under this category, the Government will take only 35% of the net gain and balance 65% will be left for the unit.
20

(3) Surplus ammonia due to non-technical or commercial reason. Here, net gain will be shared in the ratio of 90:10 between the Government and the industry. For all the above three categories, the actual input mix of energy used for entire production of urea and ammonium including surplus ammonia would be considered. The quantum of energy consumed for surplus ammonia would be taken on actual basis as furnished by the units in their annual escalation/de-escalation claims.

21

MAHARASHTRA SCENARIO
Overview of Maharashtra State Maharashtra is the third largest state in area in India. Maharashtra accounts for 9% of the total agricultural income in the country. The major crops grown in the state include rice, Jowar, Bajra, Wheat, Pulses, Cotton, Sugarcane, several oilseeds viz sunflower, groundnut and soyabean, turmeric, onion and other vegetables. Maharashtra is also famous for its fruit production. The major fruits produced in the state are mangoes, bananas, grapes, oranges, and pomegranate. The water resources are scarce. Only 17 % of the land is under irrigation. As much as 76% of the irrigation water is used for sugarcane grown on 3% of the cultivated area.60% of the area under drip irrigation in the country is located in Maharashtra.

Geographical Statistics Geographical area: 3,07,713 Sq. km Net Crop area-176,19,000 ha Total Crop Area-223,81,000 ha Total Irrigated area: 36, 67,000 ha (17%) Area under cereals: 67.46 lakh ha Area under Pulses: 26.82 lakh ha Total area under food grains 94.28 lakh ha Area under Horticulture:10.14 lakh ha Sixty percent of the area under drip in the country is located in Maharashtra

Regions of Maharashtra There are five main region of Maharashtra namely Vidarbha or Berar (Nagpur & Amravati divisions), Marathwada (Aurangabad and Latur Division), Northern Maharashtra (Nasik Division), Desh or Western Maharashtra Division and Konkan (Konkan Division).

22

Soils of Maharashtra The soils of Maharashtra are residual, derived from the underlying basalts. In the semi-dry plateau, the regur (black-cotton soil) is clayey, rich in potash, but poor in phosphorus, nitrogen and organic matter. It is moisture retentive. Where redeposited along the rivers valleys, those kali soils are deeper & heavier better suited for Rabi crops. Farther away, with a better mixture of lime, the morand soils from the ideal kharif zone. The higher plateau areas have pather soils, which contain more gravel. In the rainy Konkan, and the Sahyadri Range, the same basalts give rise to the brick red laterites productive under a forest cover, but readily stripped into sterile varkas when the vegetation is removed. By & large, soils of Maharashtra are shallow and somewhat poor. Some districts of the state shown micronutrient deficiency in zinc, ferrous, boron and sulphur. Soils of Maharashtra are neutral, PH range is between 6.57.5 except some districts viz., Kolhapur, Ratnagiri, Raigad, Sindhudurg, Bhandara, Gondia, Gadchiroli & Yeotmal are having acidic soils and in Nasik, Jalna, Beed, Solapur, Sangli and Osmananabad district salinity is reported. Fertiliser Consumption in Maharashtra Maharashtra is the second largest fertiliser consuming state in India. The total nutrient consumption during 2011-12 is 3.25 million tonnes. The consumption of Nitrogen is 1.7 million tonnes, Phosphorous is 1.1 million tonnes and potassium is 0.39 million tonnes. The market share of IFFCO Fertiliser in Maharashtra is 17 % in which nitrogen share is 13 %, Phosphorous share is 21.4 % and K share 19%.

The total nutrient consumption during 2010-11 is 3.41 million tonnes. The consumption of Nitrogen is 1.68 million tonnes, Phosphorous is 1.1 million tonnes and potassium is 0.65 million tonnes. The NPK ratio during 2010-11 is 2.6:1.7:1. Per hectare consumption of total fertiliser nutrients is 167.9 Kg.

The total sale of all fertiliser in Maharashtra is 70.64 lakh tonnes during 2011-12 which consist of urea of 25.42 lakh tonnes; DAP of 11.22 lakh tonnes and complexes of 19.28 lakh tonnes. The NPK complex grades are 10:26:26, 12:32:16, 20:20:0:13, 19:19:19, 15:15:15, 23:23:0 and 14:35:14. SSP sale during the same year was 9.20 lakh tonnes and MOP sale was 3.98 lakh tonnes.
23

The total sale of all fertiliser in Maharashtra is 66.9 lakh tonnes during 2010-11 which consist of urea of 25.5 lakh tonnes; DAP of 13.81 lakh tonnes and complexes of 18 lakh tonnes. The NPK complex grades are 10:26:26, 12:32:16, 20:20:0:13, 19:19:19, 15:15:15, 23:23:0 and 14:35:14. SSP sale during the same year was 2.75 lakh tonnes and MOP sale was 6.4 lakh tonnes. The total sale of Water soluble fertiliser is 34000 MT.

Fertiliser Sale during last three years in Maharashtra is given in the table below: (All Companies) Particulars Total Fertiliser Sale Total Urea Sale Total DAP/ MAP Sale Total 10:26:26 sale Total 12:32:16 sale Total other complexes Total Complex Total SSP Sale Total MOP Sale Total N Consumption Total P Consumption Total K Consumption Total N+ P+K Fertiliser Consumption ( Kg/ha) 2009-10 60.93 22.9 13.6 4 1.06 6.0 11.06 2.32 6.7 15.03 10.65 5.64 31.32 153.4Kg 2010-11 66.9 25.5 13.81 6.83 1.56 9.61 18 2.75 6.4 16.4 11.93 6.93 35.3 167.9 Kg 2011-12 70.64 25.42 11.22 4.09 0.047 1.39 19.28 9.20 3.98 17.08 11.49 3.95 32.52 163.4 Kg (Lakh tonne)

24

IFFCO ORGANISATIONAL PROFILE

3 November 1967: Indian Farmers Fertiliser Cooperative Limited (IFFCO) was set up at the initiative of the farmers. It soon emerged as a role model for cooperatives. IFFCO is worlds largest fertilizer cooperative based in INDIA, registered under the Multi-State Cooperative Societies Act 1984, which was amended in 2002. Membership has grown from modest 57 societies to around 40,000 at present. The initial equity capital of Rs 6 lakh has increased to a paid up capital of around Rs 426 crore. A pioneer in this field, IFFCOs growth reflects its belief in the strength of the farmer. Several prestigious awards stand testimony to the fact that IFFCO is driven by its values and the dedication of its people. This is an organisation that believes in fair play and has always followed transparent and professional practices in corporate governance. Mission To enable Indian farmers to prosper through timely supply of reliable, high quality agricultural inputs and services in an environmentally sustainable manner and to undertake other activities to improve their welfare. Vision To augment the incremental incomes of farmers by helping them to increase their crop productivity through balanced use of energy efficient fertilizers, maintain the environmental health and to make cooperative societies economically & democratically strong for professionalized services to the farming community to ensure an empowered rural India. IFFCO visualized a comprehensive plan titled Vision-2015 which is presently under implementation. In pursuit of its growth and development, IFFCO started and successfully accomplished its corporate plans, Mission 2005 and Vision 2010. Success of these plans resulted in IFFCO becoming one of the largest producer and marketer of chemical fertiliser by expansion of existing units, setting of joint venture companies overseas and Diversification into new sectors.

25

Salient features of the Vision-2015 are as under:

1. To stand as a Global Leader in Fertilisers Production to cater to the food security need of the nation. 2. Maximizing the synergies of the Core Business through Downstream Value Additions and Forward/ Backward Integrations. 3. Enhancing presence in International Markets through Strategic Joint Ventures and Synergistic Acquisitions. 4. Diversification into other profitable businesses to maximize returns to our stakeholders. 5. Leveraging State of the Art Technologies and Global best practices to retain its global competitiveness. 6. Promoting Integrated Nutrient Management to improve efficiency of Fertilizer use and promoting location specific research on efficient fertilizer practices. 7. To bring in Sustainability and Strategies to prevent Climate Change by reducing Energy Consumption, better Resources Management and promoting Renewable Energy sources. 8. To help the Cooperative Societies become economically strong, professionally managed and to equip the Farming Community with advanced agricultural practices for improved Productivity, to ensure an Empowered Rural India. 9. Achieve Fertilizers Production / Marketing target of 15 million tonne per annum with an annual turnover of Rs. 30,000 crores.

26

Organisational Structure/ Organogram

General Body

Board of Directors

Managing Directors

Production

Finance

Marketing

Planning

Technical Dept.

Plants

INDIA

Kalol Phulpur Kandla Aonla Paradeep

Zonal Offices 5

State Offices 28

Area Offices 64

27

Plants of IFFCO
IFFCO has five manufacturing plants Located in different parts of country. Two plants are located in Gujarat in Kalol and Kandla, two in Uttar Pradesh in Phulpur and Aonla and one plant is located in Orissa in Paradeep.

Production Unit Kalol Produced 6.00 lakh MT of Urea with capacity utilisation of 110%. Achieved lowest specific energy consumption of 5.7310 Gcal/MT of Urea during 2010-11.

YEAR OF COMMISSIONING: INVESTMENT: YEAR OF EXPANSION: INVESTMENT:

1975 Rs. 71.23 Crore 1997 Rs. 149.70 Crore

PRODUCT

CAPACITY TPD TPA

TECHNOLOGY

AMMONIA UREA N

1100 3, 63,000 1650 759 5, 44,500 2, 50,470

M.W. KELLOG & HTAS STAMICARBON & H&G

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Production Unit Aonla Produced the highest ever 20.31 lakh MT of Urea with capacity utilisation of 102%. AonlaI Produced 9.88 lakh MT of Urea and operated with specific energy consumption of 5.6763 Gcal/MT of Urea. Best production was 10.00 lakh MT of Urea in 2009-10. Aonla-II Produced the highest ever 10.43 lakh MT of Urea and operated with specific energy consumption of 5.5220 Gcal/MT of Urea. YEAR OF COMMISSIONING: INVESTMENT (AONLA - I): YEAR OF EXPANSION: INVESTMENT (AONLA - II): YEAR OF DEBOTTLENECKING: INVESTMENT: PRODUCT TPD AMMONIA UREA 3480 6060 1988 Rs. 651.6 Crore 1996 Rs. 954.7 Crore 2008 Rs.149.2 Crore CAPACITY TPA 11, 48,400 19, 99,800 HALDOR TOPSOE SNAMPROGETTI TECHNOLOGY

29

Production Unit Phulpur Produced the highest ever 17.71 lakh MT of Urea with capacity utilisation of 104%. Phulpur-I and Phulpur-II produced the highest ever 7.45 LMT and 10.26 LMT of Urea, respectively, with lowest specific energy consumption of 6.6698 Gcal/MT of Urea at Phulpur-I. Specific Energy Consumption at Phulpur-II was 5.6689 Gcal/MT of Urea. YEAR OF COMMISSIONING: INVESTMENT: YEAR OF EXPANSION: INVESTMENT: YEAR OF DEBOTTLENECKING: INVESTMENT: PRODUCT 1981 Rs. 205.2 Crore (Phulpur - I) 1997 Rs.1190 Crore (Phulpur - II) 2008 Rs.185.3 Crore CAPACITY TPD AMMONIA UREA N 2955 5145 2367 TPA 9, 75,150 16, 97,850 7, 81,011 KELLOG & HTAS SNAMPROGETTI TECHNOLOGY

30

Production unit Kandla The unit produced 25.19 lakh MT of NPK/DAP during 2010-11. Best production was 26.86 lakh MT of NPK/DAP in 2005-06. Kandla Unit also produced 2385 MT of Urea Phosphate as trial production during 2010-11. YEAR OF COMMISSIONING: INVESTMENT: YEAR OF FIRST EXPANSION: INVESTMENT: YEAR OF SECOND EXPANSION: INVESTMENT: 1975 Rs. 24.26 Crore 1981 Rs. 28.60 Crore 1999 Rs. 205.30 Crore

PRODUCT

CAPACITY TPA

TECHNOLOGY

P2O5

9, 10,000

FOUR STREAMS (A, B, C & D) BASED ON TVA Slurry GRANULATION PROCESS. TWO STREAMS (E & F) BASED ON AZF PIPE

REACTOR TECHNOLOGY N 3, 51,540

31

Production Unit Paradeep Produced the highest ever 16.62 lakh MT of NP/DAP during the year 2010-11 registering a rise of 10.8 % over last year. Paradeep Unit also produced an all time high 19 lakh MT of Sulphuric Acid and 6.56 lakh MT of Phos. Acid during 2010-11. INVESTMENT: Rs. 2237 Crore

PRODUCT

CAPACITY TPA

TECHNOLOGY

PHOS. ACID SULPHURIC ACID P2O5 (Fert. Grades) N POWER

8, 75,000 23, 10,000 8, 02,800 3, 25,200 2 x 55 MW

JACOBS ENG. LURGI GmbH JACOBS ENG.

32

Product Mix of IFFCO

IFFCO

UREA

NPK

DAP

NP

WATER SOLUBLE FERTILISER

BIO FERTILISER
Nirogen

46% N

10:26:26

18:46:0

20:20:0:13

17:44:00

12:32:16

18:18:10

Rhizobium

16:20:0:13 19:19:19

Azotobacter

SOP

Bentonite Sulphur

Phosphate Solubilising Micro Organism Acetobacter

Azospirillium

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IFFCO Associates and Subsidiaries

1. IFFCO - TOKIO GENERAL INSURANCE CO. LTD

2. OMAN INDIA FERTILISER CO

3. JORDAN INDIA FERTILISER CO. 4. IFFCO CHHATTISGARH POWER LTD.

5. KISAN INTERNATIONAL TRADING, FZE, DUBAI.

6. IFFCO KISAN BAZAR & LOGISTICS LTD.

KBL

7. IFFCO KISAN SANCHAR LTD.

8. IFFCO KISAN SEWA TRUST.

9. IFFCO KISAN SEZ LTD.

10. INDIAN FARM FORESTRY DEVELOPMENT COOP. LTD.

11. INDUSTRIES CHIMIQUES DU, SENEGAL.

12. INDIAN POTASH LTD.

34

13. NATIONAL COMMODITY & DERIVATIVES EXCHANGE LTD.

14. NATIONAL COLLATERAL MANAGEMENT SERVICES LTD.

15. IFFCO FOUNDATION.

16. COOPERATIVE RURAL DEVELOPMENT TRUST.

17. LEGEND INTERNATIONAL HOLDINGS inc., AUSTRALIA.

LEGEND

18. GROWMAX AGRI CORP.

GROW MAX AGRI CROP

19. ARIA CHEMICALS (ORISSA) LTD.

Aria Chemicals

35

CREDIT RATINGS ASSIGNED TO IFFCO a) CRISIL Ratings: AA-(outlook stable) rating on IFFCOs Long Term Borrowing Programme. This rating indicates high degree of safety with regard to timely payment of interest and principal on the instrument. ii. P1+ rating to IFFCOs Rs. 100 Crore Commercial Paper Programme. This rating indicates that the degree of safety with regard to timely payment of interest and principal on the Instrument is Very Strong. iii. Governance and Value Creation (GVC) rating at GVC Level 2. This rating indicates that the capability of the Society with respect to wealth creation for all its stakeholders, while adopting sound corporate governance practices, is high.

i.

b) FITCH Ratings: Short Term Rating of F1+ (Ind) to IFFCOs working capital/short term borrowings. This rating indicates that the degree of safety with regards to timely payment of interest and principal on the instrument is very strong. ii. Long Term Rating of AA (Ind) (outlook stable) to the Long Term Debt Programme of IFFCO. This rating indicates high degree of safety with regard to timely payment of interest and principal on the instrument.

i.

c) CARE Ratings: PR1+ (PR one plus) rating to IFFCOs working capital facilities/ Short Term Loans having tenure upto one year. ii. CARE AA (Double A) rating to External Commercial Borrowings and other existing long term borrowings having tenure of over one year.

i.

36

Corporate Social Responsibility

In line with cardinal cooperative principles, as a leading cooperative Society, the Corporate Social Responsibility (CSR) in IFFCO is the commitment to contribute to the sustainable economic development, working with employees and their families, the local community and society at large to improve their quality of life in ways that are also good for IFFCO. In its endeavor to discharge its responsibility IFFCO has undertaken activities in the areas of community Development, Environment Protection & Horticulture, Health Care/Medical Facilities and Literacy enhancement/Empowerment programmes. During current financial year Society has undertaken various Social Development activities, which are as a under: a) Village Adoption: This programme was initiated by IFFCO with the objective of bringing about overall socio economic development in rural areas with particular emphasis on agriculture with correct, balanced and efficient use of fertilizers, use of quality seeds and better farm management. During the year, various promotional, social and community development programmes based on specific needs were organised. These included medical & veterinary check-up, training programmes for rural women and drinking water facilities etc.

b) Promotional Programmes and Farmers Extension Activities: Various promotional and extension programmes were organised with focus primarily on improving soil health, promote balanced use of fertilizers to improve N:P:K consumption ratio, educating farmers in the latest available technology so as to enhance crop productivity through efficient use of fertilizers, water conservation & thereby promoting sustainable agriculture. The society conducts field programmes, Sale point personnel training programmes, Crop seminars and agricultural campaigns.

c) Special Projects: `During the year 2010-11, the society worked intensively in 44 special projects on agricultural, social and Community development programmes in various states. IFFCO has launched, Save soil campaign with emphasis on Soil Rejuvenation and Crop Productivity Enhancement by undertaking various activities like Soil testing, Reclamation of problematic soils, on farm preparation of organic manure viz. Vermi
37

compost, Phospho-Sulpho-Nirtro Compost, Crop diversification, introduction of pulses in cropping system etc. Society is also promoting Installation of Drip Irrigation on farmers field, by providing financial assistance so as to increase water use efficiency. Society also gave thrust on development of water resources by undertaking repair and renovation of water bodies and check dam etc. to bring additional land under irrigation. All these efforts will assist in improving soil health and crop yield for sustainable agriculture.

d) Seed Multiplication Programme: The society has entrusted the Seed Multiplication Programme (SMP) to IFFDC. IFFDC has undertaken SMP on farmers field in states of Haryana, Uttar Pradesh, Punjab, Rajasthan, Madhya Pradesh and Orissa to augment supply of quality seeds. During 2010-11, 59,463 Quintals of wheat seeds were made available to farmers through IFFCO farmers Service Centers, IFFDC Kisan Seva Kendra (KSKs) and Primary Farm Forestry Cooperative Societies (PFFCS) etc.

e) IFFCO chairs in Agriculture: The society has instituted 18 IFFCO chairs at Agricultural Universities/Cooperative Institution in the disciplines of Agronomy, Soil Science, Agro Economics, Agricultural Extension, Cooperation and Fertiliser Technology to provide a link between these institutions in the areas of research, education and extension. The guidance of IFFCO Chair Professors is utilized in the areas of promotional Programmes based on research with thrust on current issues in agriculture.

f) Environment Movement: To set an example in environment protection, all the units and townships have attractive landscape surrounded by thousands of trees. IFFCO is committed to continuously improving the safety, health and environment in and around its manufacturing units in line with international norms.

g) IFFCO Kisan Seva Trust: The Society established a charitable trust known as IFFCO Kisan Sewa Trust to provide relief and rehabilitation to the victims in the event of natural calamities like floods, earthquakes, droughts, cyclones, landslides etc. and to

38

undertake programme for the welfare and critical medical attention of needy farmers including projects aimed at improving their quality of life. The trust undertakes variety of activities to assist needy farmers for providing medical assistance by organizing Eye camps, Health check up camps, Ayurvedic free check up camps, financial assistance to rural hospitals for distribution of medicines among farmers, providing medical equipments, arranging for blood through Red Cross Society and financial assistance to various hospitals for the treatment of farmers.

h) Indian Farm Forestry Development Cooperative Limited: IFFCO had promoted a separate Multi-State Cooperative Society named Indian Farm Forestry Development Cooperative Limited in 1993 with the prime objective of development of wasteland for tree plantation and to enhance socio economic status of rural poor through sustainable Natural Resource management by collective action. IFFDC in association with NABARD and concerned state governments has also been implementing Wadi Projects (Small Orchards) in Rajasthan, Chhattisgarh, Madhya Pradesh, West Bengal and Andhra Pradesh states to ensure economic and nutritional security in tribal areas. About 1, 29,260 plants of Mango, Aonla, Custard Apple and Cashew nut have been planted. IFFDC has been honoured by the government of Madhya Pradesh for excellent work on Watershed development at Sheopur, and by government of Rajasthan for best tableau on environment conservation at Udaipur.

i) Corporate Governance: IFFCO has consistently followed transparent, democratic and professional practices in corporate governance since Inception. IFFCO has carved out a strong Cooperative identity and is making sincere efforts to uphold the Cooperative values by cherishing Cooperative Principles.

39

Highlights of IFFCO Performance 2010-11

1) Highest Production of Fertilisers 85.83 lakh MT * (Previous best 81.98 lakh MT in 2009-10)

2) Highest Production of Urea 44.02 lakh MT (Previous best 43.24 lakh MT in 2009-10)

3) Highest Production of NP/NPK/DAP 41.81 lakh MT * (Previous best 38.74 lakh MT in 2009-10)

4) Highest Sales of Fertilisers 125.88 lakh MT ** (Previous best 118.27 lakh MT in 2009-10)

5) Highest Sale of Urea 68.23 lakh MT (Previous best 63.35 lakh MT in 2009-10)

6) Highest Sales of NP/NPK/DAP 57.65 lakh MT ** (Previous best 54.92 lakh MT in 2009-10)

7) Highest Profit Before Tax Rs 1025.78 Crore (Previous best Rs. 807.09 crore in 2002-03)

8) Highest Profit After Tax Rs. 791.49 Crore (Previous best Rs. 557.21 crore in 2002-03)

9) Sales Turnover Rs. 21195.16 Crore (Best Rs 32933 crore in 2008-09)

10) Highest Plant Productivity 1710 MT/Employee (Previous best 1669 MT/Employee in 2005-06)

40

11) Highest Marketing Productivity 8622 MT/Employee (Previous best 7885 MT/Employee in 2009-10)

12) Lowest Composite Energy Consumption 5.814 Gcal/MT Of Urea (Previous lowest 5.832 Gcal/MT of Urea in 2009-10) 13) Highest Fertiliser Dispatches 126.55 lakh MT (Previous best 117.66 lakh MT in 2009-10) * Includes 2385 tonne of Urea Phosphate at Kandla Unit ** Includes 3873 tonne of Water soluble fertilizers

41

Product wise Sale of IFFCO Fertiliser in Maharashtra

Year 2008-09 2009-10 2010-11 2011-12 Urea DAP/MAP Complex 185010 197792 417438 309758 257620 371454 243007 194452 570075 215822 132236 480280 WSF Total 77 800317 218 939050 1403 1008937 671 829009

Note: In above figure we see that sale of fertilizer was more in two years i.e. 2009-2010, 20102011 this was because government has Stored material in buffer stocks in these two years.

Total Urea Sales of IFFCO in last Four Years in Maharashtra

Total Urea Sales of IFFCO in last Four Years in Maharashtra

350000 300000 250000 200000 150000 100000 50000 0 2008-09 2009-10 2010-11 2011-12 185010 Urea 309758 243007 215822

Source: FMN, Fertiliser Statistics 2008-09 a) The stats above show overall urea consumption in last four years, in 2008-09 it was 185010 and in 2011-12 it is 215822 but consumption in 2009-10 & 2010-11 was 309758 & 243007 respectively. This shows that consumption has not increased but decreased.

Reason for less sale in last two years: a. Allocation to state by government of India was less. b. Imported less Urea.

42

Total DAP/MAP Sale of IFFCO in Last Four Years in Maharashtra

Total DAP/MAP Sale of IFFCO in Last Four Years in Maharashtra

300000 250000 200000 150000 100000 50000 0 2008-09 2009-10 2010-11 2011-12 197792 257620 194452 132236

Source: FMN, Fertiliser Statistics 2008-09 b) In case of DAP/MAP also consumption has not increased, in 2008-09 it was 197792, 2009-10 it was 2576 20, in 2010-11 it was 194452 and in 2011-12 it was 132236.

Reason for less sale in last two years: a. Fluctuation in Dollar value b. climatic conditions

43

Total Sale of IFFCO Complex Fertiliser in last four years in Maharashtra

Total Sale of IFFCO Complex Fertiliser in last four years in Maharashtra

600000 500000 400000 300000 200000 100000 0 2008-09 2009-10 2010-11 2011-12 417438 371454 570075 480280

Source: FMN, Fertiliser Statistics 2008-09 c) In case of complex fertiliser, during 2010-11 Government of Maharashtra has procured fertiliser buffer storage through MAIDC and federation and has procured less Buffer stock in 2011-12.

Reason for less sale in last two years: a. Fluctuation in Dollar value b. climatic conditions

44

Total Sale of IFFCO's WSF in last four years in Maharashtra

Total Sale of IFFCO's WSF in last four years in Maharashtra

1600 1400 1200 1000 800 600 400 200 0 77 2008-09 2009-10 2010-11 2011-12 218 671 1403

Source: FMN, Fertiliser Statistics 2008-09 a) In case of Water soluble fertilizers, the reason of decline in fertilizer sale was less WSF was supplied by the Plant.

45

Area wise sale of IFFCO fertiliser in 2011-12

(MT) Year 201112 158203 87444 243042 195743 144577 829009

Area Aurangabad Kolhapur Nagpur Pune Nasik Total

This Table shows the area wise sale of IFFCO fertiliser in Maharashtra. In Aurangabad sale of IFFCO fertiliser was 158203MT in Kohlapur it was 87444MT in Nagpur it was 243042MT in Pune it was 195743MT in Nasik it was 144577 MT. A total sale of IFFCO fertiliser in 20112012 was 829009MT.

46

Last 12 year turnover of IFFCO

Turnover
35000

Sales (Rs. In Crore)

30000

25000

20000 32933.3 15000 25598.97 10000 12162.82 9942.9310330.11 21195.16 16808.57 6274.92 6090.08 7396.98

5000

Source: IFFCO Annual Report 2010-11

47

Marketing Channels of IFFCO in Maharashtra

IFFCO is distributing fertilisers through agencies like Federation MSCMF(DMO), Maharashtra Agro Industries(MAIDC), Cooperative societies, Jalgaon jilla Cotton (JJSCMF), Vidarbha Cooperative Marketing (VCMF), NAFED IFFCO Agency wise Share during 2011-12: The agency-wise share is: Federation (DMO) 30%, Maharashtra Agro Industries (MAIDC)18 %, Cooperative societies 31%, Jalgaon jilla Cotton(JJSCMF) 1%, Vidarbha Cooperative Marketing (VCMF) 18%, NAFED (1 %) and FSC is nil during 2011-12. IFFCO Agency wise Share during 2010-11: The agency-wise share is: Federation(DMO)42%, Maharashtra Agro Industries(MAIDC)-15%, Cooperative societies-31%, Jalgaon jilla Cotton(JJSCMF)-2%, Vidarbha Cooperative Marketing(VCMF) 9%, NAFED (1 %) and FSC is nil during 2010-11.

Different Agencies through Which IFFCO is Selling Fertilisers in Maharashtra

1. Special features of Sugar Factories a) Total Sugar factories in Maharashtra are 193, out of which 168 are cooperative and 25 are Private. b) They purchase fertiliser as per the planting season of sugarcane. Constraints: a) They do not purchase fertilisers regularly. b) They call the tenders for purchase of fertiliser. c) They distribute the fertiliser only to their members.

2. Special features of MAIDC a) Engaged in massive procurement operations off food grains and building of buffer stock. b) They have also set up agro processing units like oil mills, rice mills etc. c) MAIDC has 12 regional offices in Maharashtra and all districts are covered by Asstt. Managers and Field Representatives. d) MAIDC having own mixing unit of 18:18:0, total capacity is around 2 lakhs MTs.
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Constraints: a) MAIDC is selling 97% of fertiliser to private traders and cooperative and 3% to cooperatives. b) MAIDC do not invest their funds in trading fertilisers. c) MD is IAS and frequently changed. It affects the marketing of IFFCO fertilisers

3. Special features of VCMF: a) VCMF has got 3 mixing units of 18:18:0, total capacity is up to 1 lakh MT b) VCMF is having strong distribution channel in Vidarbha with their own system of Fund generation. c) VCMF operated 21 retail points (8000 MT of sale). Constraints: a) VCMF is also selling fertiliser to private traders.

4. SPECIAL FEATURES OF COOP. SOCIETIES: a) Cooperative Societies were allowed to purchase the fertiliser from any manufacturer like RCF, KRIBHCO, IFFCO, IPL, GNFC, GSFC etc. b) Coop. Soc. are free to take retail or wholesale license from the Govt. c) There is no control from Govt. on business of societies d) Only Audit is done by Govt.

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COMPETITORS ANALYSIS Various competitors of IFFCO in Maharashtra are as follow:

COMPANY Coromandel international ltd Zuari Industries ltd Deepak fertilisers & petro chemicals corporation ltd Rashtriya chemicals & fertilisers ltd Gujarat state fertilisers and chemicals ltd Gujarat Narmada valley fertilisers co. Ltd Krishak Bharti Coop. Ltd Hazira Urea Bharuch Urea, CAN Vadodara Urea, AS Trombay Nitrophosphate, ANP Zuari Nagar, Goa Taloja DAP, NP(APS)/NPKs ANP LOCATION Visakhapatnam, Kakinada PRODUCT DAP, APS/NPKs

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Share of different companies in sale of Complex fertilisers in Maharashtra

HINDALCO, 0, 0% ZIL, 83014, 4% KPRF, 1106, 0% NFCL, 46675, 2% IFFCO, 0, CHAMBAL, 0, 0% 0% FCSP, 0, 0% Chambal, 5955, 0% RCF GNVFC GSFC IPL, 171134, 9% RCF, 349106, 18% PPL MCFL DEEPAK FERT. GSFC, 63943, 3% PPL, 65404, 3% IFFCO, 480280, 25% MCFL, 13304, 1% CFLK ZUARI IFFCO KRIBHCO CHAMBAL IPL IFFCO NFCL KPRF FCSP ZUARI, 156447, 8% CFLK, 246618, 13% ZIL HINDALCO Chambal GNVFC, 15766, 1%

KRIBHCO, 35884, 2%

DEEPAK FERT., 225394, 11%

Source: FMN, Fertiliser Statistics 2010-11 The above pie chart shows share of different companies in sale of complex fertilisers. Here we see that IFFCO occupies the first place with 25% share in sale of complex fertilisers then Rashtriya chemical fertiliser occupy the second place with 18% share and Coromandel fertilisers Kakinada occupy third place with a sale of 13%.
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Share of different companies in sale of Urea in Maharashtra

CFLK, 12884, 1% MCFL, 21181, 1% CHAMBAL, 13178, 1% GSFC, 29033, NFCL, 1% 170248, GNVFC 7% , 59330, 2% IFFCO, 215822, 8% NFL, 101383 , 4% ZUARI, 138292, 5% IPL, 225625, 9% RCF KRIBHCO ZUARI NFL IFFCO RCF, 1220637, 48% GNVFC GSFC NFCL CHAMBAL MCFL IPL KRIBHCO, 334990, 13% CFLK

Source: FMN, Fertiliser Statistics 2008-09 Here we see that maximum share has been occupied by Rashtriya Chemical fertilisers i.e. 48%, second highest is Krishak bharati Cooperative limited with 13%, Indian potash limited stands third with 9% share and fourth place has been secured by IFFCO with 8% share.

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Share of different companies in sale of DAP in Maharashtra

TAIPL TCL 0% 0% KRIBHCO 3% RCF 3%

KPRF GREENSTAR 0% 2%

MOSAIC 2%

ZUARI GSFC CFLK IFFCO ZUARI 34% HINDALCO PPL MCFL GNVFC IPL CHAMBAL

NFCL 6%

CHAMBAL 1% IPL 10% GNVFC 0% MCFL 2% PPL 8%

RCF KRIBHCO GSFC 4% NFCL TCL TAIPL KPRF

HINDALCO 5%

IFFCO 12%

CFLK 8%

Source: FMN, Fertiliser Statistics 2010-11 In case DAP, Zuari Fertiliser secure first position with 34% share, IFFCO stands at second place with 12% Share and Indian Potash Limited stands third with 10% share.

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Research Methodology
The type of research used in this study was descriptive research. The findings of the study are based on both primary and secondary information. The data analysis is based on primary data. The main objective of the study is analysed on the basis of secondary information. Data Collection Data collection was done through both primary and secondary methods. a) Secondary method: Secondary data is collected through books, magazines, journals. b) Primary method: Primary method used for data collection was questionnaire. Questionnaire included both open ended and close ended questions. This is based on the following hypothesis: i. ii. iii. iv. Farmers are aware of the IFFCO fertilisers in the Market. Farmers are aware of the Promotional programme carried by IFFCO. Dealers are satisfied with the IFFCO fertilisers in terms of Quality. Dealers are satisfied with the IFFCO fertilisers in terms of Packaging & Weight.

Sample Design: Sample size of Primary data: 50 respondents. Source of sample: Dealers of IFFCO fertilisers were the respondents who filled the questionnaire. Maharashtra state is divided into 5 regions; these regions are Khandesh, Western Maharashtra, Konkan, Marathwada, Vidarbha. From each region 10 questionnaire were filled. Scope of the study: It is limited is Maharashtra state only. Tools of Analysis: Data collection through questionnaire resulted in availability of the desired information but these were useless until these were analyzed. Various steps required for this purpose were editing, coding and tabulating. Tabulating refers to bringing together similar data and compiling them in an accurate and meaningful manner. The data collected from questionnaire database was analyzed, interpreted with the help of table and pie chart. The tools of analysis used in this study were percentages, graphs and tables to analyze the collected data.

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Data Analysis

Question 1: Are you aware of Fertilisers manufactured by IFFCO?

0%

YES NO

100%

Analysis and Interpretation: From the above pie chart it can be analyzed that 100% of the respondents who were surveyed, know about the fertilizers being manufactured by IFFCO.

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Question 2: Are you into selling of IFFCO fertilisers?

0%

YES NO

100%

Analysis and Interpretation: From the above pie chart it can be analyzed that 100% of the respondents who were surveyed, were into selling of fertilisers manufactured by IFFCO.

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Question 3: Which companies product is demanded more by farmer?

Result

13% 21%

KRIBHCO IFFCO Deepak Fertlisers Zuari Fertilisers 19% 40% Rashtriya Chemical & Fertilisers

7%

Analysis and Interpretation: From the above pie chart it can be analyzed that 40% of the respondents who were surveyed, said that IFFCOs product is demanded by the farmers, after IFFCO it was Rashtriya chemicals & fertilisers with 21% market share then it was Zuari fertilisers with 19% market share then KRIBHCO with 13% Market share and last is Deepak fertilisers with 7% of Market Share.

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Question 4: What kind of problems do you face?

Result
0%

20%

0%

Timely availaibility Purchasing Power Quaity Issues Storage Facilities 22% 58% Any other

Analysis and Interpretation: From the above pie chart it can be analyzed that 58% respondents said that timely availability of product is major problem faced by them, 22% said that Purchasing Power is the problem, Distributer financially is not that much capable to purchase fertilisers in bulk quantity and 20% of the respondents said that they do not have much space to store the fertilisers.

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Question 5: What are the Problems faced by Farmers?

26% Not aware of how to use fertilisers Purchasing Power Lack of irrigation facilities Any other

40%

34%

Analysis and Interpretation: From the above pie chart it can be analyzed that 40% of the Farmers are not aware of how to properly use the fertilisers, 34% of farmers are financially not so sound to purchase fertilisers and 26% of the farmers face problems related to irrigation.

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Question 6: Are you satisfied with the overall services of IFFCO?

0%

YES NO

100%

Analysis and Interpretation: From the above pie chart it can be analyzed that 100% of the respondents who were surveyed are satisfied from the services that are being provided by IFFCO.

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Question 7: How do you rate IFFCO Fertilisers in terms of Quality?

0% 0% 0%

16%

Very Good GOOD Average Bad Very Bad

84%

Analysis and Interpretation: From the above pie chart it can be analyzed that 84% of the respondents said that quality of IFFCO fertilisers is Very Good and remaining 16% said that the quality of fertilisers is good.

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Question 8: How do you rate IFFCO fertilisers in term of Packaging & Weight?

0% 0% 2% 20%

Very Good GOOD Average Bad Very Bad

78%

Analysis and Interpretation: From the above pie chart it can be analyzed that 78% of respondents said that packaging & Weight of IFFCO fertilisers is very good, 20% said that packaging & weight of IFFCO fertilisers is very good and remaining 2% said that it is average.

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Question 9: What is Your Opinion about pricing of IFFCO fertilisers?

0% 10%

15%

Less Affordable High Very High

75%

Analysis and Interpretation: From the above pie chart it can be analyzed that 75% of the respondents said that IFFCO fertilisers are affordable, 15% respondents said that prices of IFFCO fertilisers are high and remaining 10% said that prices of IFFCO fertilisers are less.

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Question 10: Are the Farmers aware of the Promotional Programme carried on by IFFCO?
0%

YES NO

100%

Analysis and Interpretation: From the above pie Chart it can be analyzed that 100% of the respondents who were surveyed, were aware of promotional programme carried out by IFFCO.

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Question 11: Would you like to give any suggestions for Improvement?

Suggestions For Improvement

Credit facility for farmers Timely availibility of fertilisers

3% 3% 6%

8%

Storage facility

Packing Quality should be Good 8% 23% 6% Iffco factory product are more demanded by farmers Then imported products hooks 6% 3% 34% soil testing Sufficient Supply

Tell farmer on how to do farming on dry land. farmers not aware of micronutrient

Analysis and Interpretation: From the above the pie chart it can be observed that 34% respondents say that there should be sufficient supply of IFFCO fertilisers, 23% respondents say that there should be timely availability of IFFCO fertilisers, 8% respondents say that there should credit facility should be provided both to farmer and distributor of fertiliser, 8% respondents say that hooks should not be used on urea bags, 6% respondents say that IFFCO factory fertiliser are more demanded by farmers instead of imported fertiliser, 6% respondents say that soil testing facilities should be given and remaining 6% state that storage facilities should also be given.

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Findings

1. IFFCO should build up a mechanisam to quickly to respond to the demand of fertilisers by the distributors before starting of each season. 2. To improve the brand awareness, IFFCO should put road hoardings and banners in different villages projecting its farmers friendly programmes and advertise its new product. 3. Request government on reviving its policies & Practices related to agriculture:
a. b. c. d. e. f. Fixation of minimum sale price of farmers produces with the market retail price. To install latest weather forecasting technique. Building of irrigation facilities. To change the norms related to packaging of fertiliser bags. To improve loan/credit facilities for farmers. To build more warehouses.

Ways to Increase Market Share of IFFCO in Maharashtra

1. Timely availability of Fertilizers. Fertilizers must be made available to the agencies as soon as demand arises. Timely availability of fertilizers will ensure loyalty and trust of all the distributers and agencies. 2. Pricing: There Should be Relaxation on sale terms a) Sales can be increased by selling products on credit basis, cash discounts etc as other manufacturers are doing. b) Micro financing for small farmers. 3. Logistic facilities Fertiliser is produced around the clock while its demand is seasonal. As a result, fertilisers have to be placed in warehouses well in advance of consuming seasons and in a properly distributed manner at all the demand centers. The area of coverage being very large and the leads of destinations from production centers being long, the bulk of fertiliser material has to be moved by rail. However, railways cannot provide door to door services. Therefore, the secondary movement from rake points to warehouses and onwards has to be done by road. Also, the areas around the production center within the range of 200 kms are mostly served by road due to road transport being more economical
66

within this range. At times, road transportation is resorted to for longer distances too due to economic as well as market factors. IFFCO has to transport large quantity of fertilisers from its production units/ports to the consumption centers. The strategy required to ensure timely and adequate supply of fertilisers to all the users involves making use of a judicious mix of various modes of transportation. A plant has to send its product to a very large number of rake points spread over length and breadth of the country making it complicated movement. The transportation of fertiliser is complex process mainly because of fertiliser production and its demand. Fertiliser material cannot be moved in loose bulk. It has to be moved in the bags of different sizes ranging from 25kg to 50kg. The material is hygroscopic commodity and therefore its transportation has to be done with great caution. Besides, the movement of urea is guided by the ECA and the movement order is given by the Deptt. of fetilisers. A close day to day monitoring is done in this regard. Own your wagon scheme IFFCO has Purchased 8 rakes of good quality high speed covered BCNA wagons by investing Rs. 40 crores under the own your wagon scheme. This has assured IFFCO a better availability of wagons and under better availability of IFFCOs NPK/DAP to the far flung destinations from the Kandla Unit. Better logistic facilities will lead to better handling of transportation of fertilizers. Fertiliser is produced around the clock while its demand is seasonal. As a result, fertilisers have to be placed in warehouses well in advance of consuming seasons and in a properly distributed manner at all the demand centers. The area of coverage being very large and the leads of destinations from production centers being long, the bulk of fertiliser material has to be moved by rail. However, railways cannot provide door to door services. Therefore, the secondary movement from rake points to warehouses and onwards has to be done by road. We are operating almost 28 rake points all over Maharashtra. After arrival of rake, We are supplying material to the farmers in each district by road. Handling and Transportation cost has increased very high. Mathadi labour union is dominating. So, they have their monopoly. In some rake points, infrastructure is not good. We have to put

67

effort to break the monopoly of transporters. We have also requested to Railways to improve the infrastructure of Railway Platform. 4. Warehouse Management The production of fertiliser takes place throughout the year, while the consumption is restricted to a few months only. Also the storage capacity of plants silos is restricted to about three to six weeks production. It is, therefore, necessary to undertake movement from plant to the consuming centers regularly. Fertiliser material is to be made to the farmers at their door steps at the time of basal dose as well as for top dressing. This is possible only when there is a widespread network of field warehouses, from where village cooperative societies could be provided fertilizers as and when required to supply for farmers. Warehouse Planning assumes great importance. Micro level exercises are therefore carried out, state wise, district wise, and rake point wise. The location and storage capacity will be kept at the optimum level, taking into consideration various factors like anticipated increase in the fertiliser production and the share of cooperatives in the sale of IFFCOs fertiliser. Warehousing plan is finalized keeping in view proposed sales plan, constraint in availability of rakes and advance stocking of fertilisers. Feeder Warehouses The cooperatives normally insist on supply of fertilizers on door delivery basis. This system will entail hiring of Godowns in remote areas and also Taluka/Block level, from where supplies can be organized to various societies. This process requires efficient transport system from rake points to different godowns in the periphery of 100 KMS or more, depending upon the topography of the state, in order to minimize further transportation to consumption points. Therefore IFFCO would encourage cooperative societies to develop warehouse in the interior areas in large numbers to make the product available to farmers at the right time. This additional warehousing capacity could be hired by IFFCO as and when required.

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Buffer Warehousing This system will help in delivery fertilisers during the peak periods of demand. The main advantage of maintaining buffer stock is: a) b) c) Effective management in handling of fertiliser bags. Regularising supplies to the cooperative system in the interior areas. Better management of inventory and scheduling of delivery operations.

Better Storage Facilities can be provided for keeping fertilizer in the lean season so that we can supply fertiliser during the peak season. The production of fertiliser takes place throughout the year, while the consumption is restricted to a few months only. Also the storage capacity of plants silos is restricted to about three to six weeks production. It is, therefore, necessary to undertake movement from plant to the consuming centers regularly. Fertiliser material is to be made to the farmers at their door steps at the time of basal dose as well as for top dressing. This is possible only when there is a widespread network of field warehouses, from where village cooperative societies could be provided fertilizers as and when required to supply for farmers. Warehouse Planning assumes great importance. Micro level exercises are therefore carried out, state wise, district wise, and rake point wise. The location and storage capacity will be kept at the optimum level, taking into consideration various factors like anticipated increase in the fertiliser production and the share of cooperatives in the sale of IFFCOs fertiliser. Warehousing plan is finalized keeping in view proposed sales plan, constraint in availability of rakes and advance stocking of fertilisers. IFFCO had hired space all in Maharashtra to make fertilisers available at the doorstep of the farmers. Different warehouses are: a) Central warehousing corporation b) Maharashtra State warehousing corporation c) Co-operative societies godown Effective management in handling of fertiliser bags.

69

Regularising supplies to the cooperative system in the interior areas. Better management of inventory and scheduling of delivery operations. 5. Creating Awareness a) b) To disseminate the latest agricultural technology. To educate farmers about fertiliser and agriculture through various promotional

programmers. c) Creating awareness among farmers about balanced fertilization i.e. Importance of

soil testing, use of organic & inorganic fertilisers, biofertilisers and green manure etc. 6. Publicity and Advertising Wide publicity of the product through Radio Jingles, television, wall paintings, pamphlets, exhibition can help in creating more awareness among the agencies and distributers and can increase the sales. 7. Customer Loyalty Winning customers loyalty toward our product by selling good quality product and by after sale services. Customers do not shift to any other competitor if the company is able to provide best quality products. 8. Communication a) b) Face to face contact with cooperative personals. Frequent contact and good rapport with our own institutional agencies like MAIDC, Federations and VCMF. Collect Contact Information And Use It To Follow Up. 9. Scope of Area Maharashtra is the largest producer of Sugarcane. So, we should timely supply fertilizer to sugar factories for further processes. Maharashtra has good scope for horticulture crops. So here we can increase the sale of our water soluble fertilisers/ specialty fertilisers as the yield increases by using water soluble fertilisers. 10. Training Training to cooperative personnel, dealers & offering gifts can help improving the sales of the company. 11. Strengthening of cooperative societies Own member societies should be given training of fertilisers like storage, usage, handling and financial assistance.
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Conclusion
Based on the study of various aspects of IFFCO and data analysis of the survey, following conclusions have been drawn with respect to analysis of Ways to increase market share of IFFCO in Maharashtra: 1. Ensure adequate supply of fertilizers: Adequate amount of fertilizers should be given to distributors before the starting of sowing season so as to meet the demand of fertiliser and allow the distributor to sell the fertiliser on time. From the survey it can be concluded that sufficient amount of fertiliser is not been provided in time to the distributor. Sometime, even the amount of fertiliser demanded by the distributor, is not supplied.

2. Brand image of IFFCO needs to be Improved: From the survey it was clear that many of the respondents were not happy with the packaging of goods. Packaging of goods should thus be improved. To improve the packaging following should be considered: a) Increase in the density of HDP bags. b) Avoid hooks at the time of loading and unloading of fertilizers. c) Use fertiliser bags that are not affected adversely during the transportation of fertiliser.

3. Win favour of distributors and farmers by undertaking following activities:

a) Provision of more soil testing vans: Soil testing becomes very important because if farmer is aware of soil health, he/she can use the right amount of nutrient at the right time. This will help to get better quality food grains from the soil in more quantity. This would result in increase of farmers purchasing power.

b) Conducting more qualitative Promotional programme: Though programme carried out by IFFCO have been appreciated by each distributor, additional programmes which make the farmer aware of activities to improve their standard of life should also be conducted. Programmes like proper sowing, women training on health,
71

tailoring, food preservation, free medical checkups, free veterinary checkups etc. will enhance the image of IFFCO in the eyes of its customers.

c) Educating farmers on the loans that are being provided by different financial institutions: District cooperative banks, NABARD and other nationalised banks should be encouraged to give training to cooperative personnel about the procedure of borrowing loan, so that cooperative personnel can tell this to farmers who need financial support. In majority of talks with distributor, I have come to know that the farmers dont have correct knowledge on loans given by banks and thus they are mislead by local shahukars, who give them money on high intrest rate.

4. Request government on following things: a) Improving irrigation facilities: Water resources in Maharashtra are very scarce. Government should give more stress on building up artificial sources of water like lake, ponds, tube wells etc so that farmers are able to increase productivity. b) Request government to install latest weather forecasting system. This would help farmer to take correct decision about the time of sowing in the fluctuating weather. c) Linking fixation of minimum sale price of farmers produce with the market retail price: This would increase the purchasing power of the farmers and will result in increasing the consumption of fertiliser's.

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Suggestions
1. IFFCO should build up a mechanisam to quickly respond to the demand of fertilizers by the distributors before starting of each season. 2. To improve the brand awareness, IFFCO should put road hoardings and banners in different villages projecting its farmers friendly programmes and advertise its new product. 3. Request government on reviving its policies & practices related to agriculture: a) Fixation of minimum sale price of farmers produces with the market retail price. b) To install latest weather forecasting technique. c) Building of irrigation facilities. d) To change the norms related to packaging of fertiliser bags. e) To improve loan/credit facilities for farmer. f) To build more warehouses.

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Ways to increase sales of IFFCO

Name of Cooperative Society: Village/Taluka/District: Address: Contact Info:

1. Are you aware of Fertilisers manufactured by IFFCO? a) Yes b) No 2. Are you into selling of IFFCO Fertilisers? a) Yes b) No 3. Which Companies Product demanded more by Farmer? a) KRIBHCO b) IFFCO c) Deepak fertilisers d) Zuari Fertilisers e) Rashtriya Chemicals & Fertilisers 4. What kind of problems do you face? a) Timely Availability b) Purchasing Power c) Quality issues d) Storage facilities e) Any other 5. What are the Problems faced by farmers? a) Not aware of how to use Fertilisers properly b) Purchasing Power c) Lack of irrigation facilities d) Any other
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6. Are you satisfied with the overall Services of IFFCO? a) Yes b) No 7. How do you rate Iffco Fertiliser in terms of Quality? a) Very Good b) Good c) Average d) Bad e) Very Bad 8. How do you rate Iffco Fertiliser in terms of packaging & weight? a) Very Good b) Good c) Average d) Bad e) Very Bad 9. What is your opinion about pricing of IFFCO fertilizers? a) Less b) Affordable c) High d) Very High 10. Are the farmers aware of the Promotional programme carried on by Iffco? a) Yes b) No 11. Would you like to give any suggestions for improvement?

Thank you for Your Cooperation.

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Glossary 1. FAI: Fertiliser Association of India 2. FCO: Fertiliser Control Order 3. ECA: Essential Commodities Act 4. MT: Metric Tonne 5. TC: Tariff Commission 6. FSC: Farmer Service Center 7. MAIDC: Maharashtra Agro Industries Development Corporation 8. VCMF: Vidarbha Cooperative Federation 9. N: Nitrogen 10. P: Phosphorous 11. K: Potassium 12. DAP: Diammonium Phosphate 13. AMP: Ammonium Mono Phosphate 14. MAP: Mono Ammonium Phosphate 15. MOP: Muriate Of Potash 16. BC: Box Covered Wagon 17. CAN: Calcium Ammonium Phosphate 18. DOF: Department Of Fertilisers 19. CAB: Cost Accounts Branch 20. SSP: Single Super Phosphate 21. CFR: Cost And Freight 22. RPS: Retention Price Scheme 23. BICP: Bureau Of Industrial Cost And Prices 24. ERC: Expenditure Reforms Commission 25. Vermi Compost: Compost Made Of Earthworm And Chemicals. 26. Compost: organic/inorganic fertilisers 27. PFFCS: Primary Farm Forestry Cooperative Societies 28. KSK: Kisan Seva Kendra 29. SMP: Seed Multiplication Programme 30. IFFDC: Indian Farm Forestry Development Cooperative Limited
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BIBLIOGRAPHY
Website: 1. http://www.fao.org/docrep/009/a0257e/A0257E00.htm#TOC 2. ftp://ftp.fao.org/agl/agll/docs/fertuseindia.pdf 3. http://indiabudget.nic.in 4. http://www.scribd.com/rahul191187/d/30737199-Kribhco 5. http://ec.europa.eu/agriculture/publi/map/03_07.pdf 6. http://www.iffco.coop/ 7. http://urvarak.co.in/ 8. http://www.faidelhi.org/ 9. http://www.iksl.in/

Books: 1. The Fertiliser (Control) Order, 1985. (As amended up to June 2010) 2. 43rd Annual Report 2010-11 3. Indian Journal of Fertilisers a) Vol. 7 No. 10 October 2011 b) Vol. 7 No. 12 December 2011 c) Vol. 8 No. 4 April 2012 d) Vol. 8 No. 5 May 2012 4. Fertiliser Marketing News a) Vol. 42 December, 2011 b) Vol. 43 March, 2012 c) Vol. 43 June, 2012 5. Fertiliser Statistics 2008-09

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