Michael Porter’s

Five Forces
Model:
Fertilizer Industry
Of
India

Submitted by :
Yogesh Sharma (37), Sagar Shinde (38), Shiraj Sherasia (39), Shruti Gupta
(40),
Shruti Srivastava (41), Swati Randhawa (42)
 Michael Porter …
“An industry’s profit potential is largely determined by the intensity


of competitive rivalry within that industry.”

Porter’s Five Forces
VARIOUS THREATS ASSOCIATED
WITH FIVE FORCES:-

1. SUBSTITUTES -Threats of substitutes

2. SUPPLIERS - Supplier power

3. POTENTIAL ENTRANTS -Threats of mobility

4. BUYERS - Buyer power

WHAT ARE FERTILIZERS?

Fertilizers are chemical compounds applied to

promote plant and fruit growth.

Types of Fertilizers

1.Organic
Biofertilizers, Manure, Green Manure, Vermicompost

1.Inorganic
Urea, SSP, DAP, MOP, SOP etc
 Introduction to Fertilizer Industry
•
• As per the GOI in March 2007, Indian Fertilizer industry had made a
production of 120.61 LMT of Nitrogen and 56.59 LMT of Phosphatic
nutrients.
• The installed capacity if Urea in India is estimated to be 207.57MT. The
production of urea in India has reached near self sufficiency.
• India is the 3rd largest fertilizer producer in the world.
• The raw materials and intermediates products for phosphoric fertilizers are
imported in large scale to meet the requirements of domestic market. The
requirement of Potash is entirely met entirely through imports.
 Future Trends
• 2007-08 Demand was 26 million MT
• 2008-09 Demand 29 million MT against supply of 20 million MT
• 2011-12 Expected production 35.5 million MT
• Gujarat is expected to play a leading role in fertilizer production

Factors affecting Fertilizer availability

Demand factors
Price
Input prices
e.g. Fertilizers and other agriculture related input prices
Output prices
e.g. Crop prices
Weather, Irrigation, HYV seeds, Credit availability, Promotion and Awareness
 Factors affecting Fertilizer availability
• Supply Constraints
Production

– Technology/Equipment problems
– Raw material shortage
– Power shortage
– Labor shortage
– Stringent Government Policies
 Import
 High International Prices
A. SUBSTITUTES - Threats of substitutes
•
Substitutes :

1. Bio Fertilizers

2. Manures.

E.g. FYM, cattle dung

3. Organic Fertilizer

4. Green Manure

E.g. Vegetable and Household waste

5. Vermicompost

E.g. Roundworms

•
Substitutes are taking the place of chemical fertilizers at a
very fast pace for the following reasons:-

1. Reduce expenditure on chemical fertilizers.

2. Increase crop yield.
3. Increase soil microbial activity.
4. Enhances overall soil fertility.
5. Tolerant to low pH and high salt.
6. Contains and produces growth promoting substances.
7. Increase germination of seeds.
 Production of Biofertilizers
2003-04 9789.89 GOI financed Production
Tons Units Capacity
2004-05 10600.70 71 Units 8025 Tons
Tons
2005-06 10764.42 Others Production
Tons Capacity
2006-07 16145.26 80 Units 10175 Tons
Tons
2007-08 20111.05
Tons
2007-08
Capacity of Actual Production
Production
67162 Tons 18974.065 Tons
B. SUPPLIERS - Supplier power

Public sector companies approximately cover 35% of the market share.

Some of the companies are listed below:-

NFL, FACT, RCF, SAIL, NLC, PPL, HFC, Brahmaputra Valley Fertilizers etc.

Cooperative fertilizer companies (2% of the market share)
IFFCO and KRIBHCO

Private companies.(63% of the market share)
Oswal, TATA, Indogulf, Chambal, Nagarjuna, Coromandal, Zuari, Sreeram etc.

Though the major chunk of the market share is occupied by the private
companies the government organizations exercise certain power over the
buyers by providing subsidies on fertilizers.
C. Potential Entrants -Threat of mobility.

Potential entrants in this sector are various companies
Monsanto and Syngenta who feel that rural markets are still
not penetrated to a considerable extent.

Second set of potential entrants are retailers like

GODREJ ADHAR and HARYALI

KISAN BAZAR who as of now are retailing the products

but are planning of BACKWARD

INTEGERATION : Once these companies get involved into

manufacturing the Competition will get even more intense.
D. Buyers - Buyer Power:

Buyers for the FERTILIZER SECTOR are the FARMERS .

1.Spectrum of substitutes available to the farmers is large.

2.There are myriad organizations in this sector i.e. Public, Private and Co-
operative.
5.Since the buyers are from the rural sections of the society they can impose
pressure on the government organizations to provide subsidy.
RURAL MARKETING IS
DEVELOPMENTAL
MARKETING!!!!!!