Indo Gulf Fertilizer, a subsidiary of Aditya Birla Nuvo is planning to exit low margin fertilizer business. Last month only, Tata Chemicals had sold its fertilizers business to Norway's Yara Chemicals for Rs 2670 crores.
Tatas and Birlas are large established players in fertilizer industry and they are leaving the industry means a serious condition. Infact Government is not fulfilling it's promises. There is no guarantee of capital gain which was promised. Subsidy payments get delayed for several months due to which companies faces cash flow problem. Birla fertilizers had earnings of Rs 209 crores on revenues of Rs 2498 crores which comes to a return of 11% in FY16. One can earn this much of money from bank deposit without taking any tension of running a large factory.
Indo Gulf Fertilizer is India's 8th largest Urea producer and they are thinking to leave the industry. As per a banking source, sale would be complete by the next financial year.
On the other hand some of the industrialists are pouring huge amount in the fertilizers industry. Chambal group is investing Rs 5000 crores to set up a plant and a multinational purchasing Tata Chemicals.
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