IFFCO profit may drop by 50 pc in FY’14 on subsidy arrears

NEW DELHI, Nov 17:  Co-operative IFFCO, the country’s largest fertiliser firm, expects its profit to fall by 40-50 per cent this fiscal due to sharp rise in finance cost because of subsidy payment arrears with the government.
Lower sales of crop nutrients would also hit profit.
“Profitability is already down by 50 per cent to 60 per cent as government does not have money to pay subsidies,” Indian Farmers Fertiliser Cooperative (IFFCO) Managing Director U S Awasthi told.
IFFCO has around Rs 4,500 crore of subsidy receivable from the government, he added.
In 2012-13 fiscal, IFFCO had posted a net profit of Rs 782.72 crore over a turnover of Rs 21,673.36 crore.
Besides arrears, Awasthi attributed lower sales to affect the co-operative’s profit. “Sales are already down by 25 per cent to 30 per cent”.
IFFCO Joint Managing Director & Chief Financial Officer (CFO) Rakesh Kapur said: “Subsidy delays have raised our finance cost by few folds and as result, at present it seems that our profits for this fiscal will come down by 40 per cent to 50 per cent.”
Kapur said the co-operative is optimistic about second half of the current fiscal, but profits would still fall sharply as compare to last year.
“Bottom line is badly affected mainly due to large subsidy receivables and sluggish sales due to oversupply in the market,” Kapur said.
IFFCO has recommended decontrol of urea to solve problems plaguing the sector. “…I have given a suggestion that you please decontrol urea and give fertiliser subsidy directly to farmers, this is the only solution of fertiliser industry,” Awasthi said. (PTI)
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