MARKETING AND TRANSPORTATION OF IFFCO FERTILISERS

N.K.SALHOTRA CHIEF MANAGER (Mktg.)

SALIENT FEATURES : INDIA

Agriculture continues to be the mainstay of Indias economy. Agriculture Contribution to GDP is 16%. Two Third of population lives in the villages. 57% of population depends on Agriculture Sector. With growing population, land man ratio is declining.

POPULATION ( Number)
2007-08 2008-09 2009-10 2010-11 2011-12 : : : : : 114 crore 116 crore 118 crore 121 crore 123 crore

FOODGRAIN PRODUCTION
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 : : : : : :

217.3 mill te. 230.8 mill te. 234.5 mill te. 218.2 mill te. 244..8 mill te 250.0 mill te.

FERTILISER CONSUMPTION (N+P+K)

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

: : : : : :

217 Lakh te. 226 Lakh te 249 Lakh te 265 Lakh te 281 Lakh te 290 Lakh te.

With growing population, land man ratio is declining. Chances of bringing additional land under Cultivation are remote. Future increase in agricultural production has to come by way of increasing productivity of land already under cultivation.

SALIENT FEATURE : INDIA (Contd..)

Future increase in agricultural production has to come by way of increasing productivity of land already under cultivation. Vital role of fertilizers for increasing agricultural productivity is universally recognised. Share of fertilizers for increasing foodgrain production is 50%.

SALIENT FEATURES : INDIA

Geographical Area
Number of Villages Agricultural Holding

:
: :

329 mill ha.

6 lakh 120 million

Small & Marginal Farmers < 2ha :

Farmers Having Land < 2ha Net cropped Area : :

81 %
39 % 141 mill ha.

Gross Cropped Area

Cropping Intensity Gross Irrigated Area

:
: :

196mill ha.
139 87 mill. Ha

Share of Gross Irri. Area

45%

FERTILISER PRICING - INDIA

Presently, urea is under control and as such its production, distribution and prices are controlled by GOI. Phosphatic and Potassic fertilisers have been decontrolled w.e.f. 25th August,92. GOI is giving fixed subsidy on Phosphatic and Potassic fertilisers and manufacturers have the freedom to fix prices of these fertilisers.

FERTILISER CONSUMPTION IN INDIA

YEAR Fertiliser Cons. (000 te) N 1951-52 1971-72 1991-92 1992-93 2002-03 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 59 1798 8046 8427 P 7 558 3321 2844 K 0 301 1361 884 1601 2061 2413 2335 2636 3313 3632 TOTAL 66 2657 12728 12155 16094 18398 20340 21651 22570 24909 26486 21.8 7.1 4.7 2.8 5.7 8.6 8.3 4.7 4.7 3.2 24.9 9.7 -14.4 4.1 7.3 12.5 6.5 -0.5 18.0 11.8 26.5 7.3 -35.0 7.3 13.5 17.1 -3.3 12.9 25.7 9.6 22.9 7.7 -4.5 3.5 6.9 10.6 6.4 4.2 10.4 6.3 Annual Growth Rate over previous Period (%) N P K TOTAL

10474 4019 11714 4624 12723 5204 13773 5543 14419 5515 15090 6506 15580 7274

PER HECTARE CONS. IN INDIA

YEAR CONSUMPTION (Kg./ha) N 1951-52 1971-72 1991-92 1992-93 2002-03 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 0.4 10.9 44.2 45.4 55.1 61.6 66.0 71.1 73.6 77.1 79.6 P 0.1 3.4 18.2 15.3 21.1 24.3 27.0 28.6 28.2 33.2 37.1 K 0.1 1.8 7.5 4.8 8.4 10.8 12.5 12.1 13.5 16.9 18.5 TOTAL 0.5 16.1 69.8 65.5 84.6 96.7 105.5 111.8 115.3 127.2 135.2 Consumption Ratio N 7.9 6.0 5.9 9.5 6.5 5.7 5.3 5.9 5.5 4.6 4.3 P 0.9 1.9 2.4 3.2 2.5 2.2 2.2 2.4 2.1 2.0 2.0 K 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0

ALL INDIA PRODUCTION, CONSUMPTION, GAP & IMPORT UREA

LAKH MT

YEAR 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

CONS. 192 199 185 197 207 223 243 260

PROD. 196 190 186 190 202 201 203 199

GAP -4 9 -1 7 5 22 40 61

IMP. 2.2 1.2 1.4 6.4 20.6 47.2 69.3

2008-09
2009-10

266
267

199
211

67
56

56.7
52.1

ALL INDIA PRODUCTION, CONSUMPTION, GAP & IMPORT DAP

Lakh MT

YEAR
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

CONS. PROD.
59 62 55 56 63 68 74 75 92 105 49 51 53 47 52 46 47 42 30 42

GAP IMP.
10 11 2 9 11 22 27 33 62 63 8.6 9.3 3.8 7.3 6.4 24 29 27 62 59

ALL INDIA PRODUCTION, CONSUMPTION, GAP & IMPORT MOP Lakh MT

YEAR
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

IMPORTS
26.5 28.1 26.0 25.8 34.1 45.8 34.5 44.2 56.7 52.9

CONSUMPTION
18.3 20.0 19.1 18.4 24.1 27.3 25.9 28.8 40.8 46.3

IFFCO PLANTS
Plants Kalol Phulpur Aonla Kandla Paradeep Year of Expand Location Production ed in Gujarat U.P. U.P. Gujarat Orissa 1975 1981 1988 1975 Acquired in Sept 2005 1997 1997 1996 Annual Production Capacity (in Lakh MT) Urea Urea Urea 5.45 14.16 17.29

1981 & DAP/NPK 24.15 1999 (in bulk) DAP/NPK 19.2

IFFCOs PRODUCTS
KANDLA NPK 10:26:26 ( GR-I ) NPK 12: 32:16 ( GR II ) DAP 18: 46 : 00 Urea Phos. 17: 44 : 0 NPK 10: 26: 26 NPK 20:20:0:13 DAP UREA UREA UREA

PARADEEP

KALOL PHULPUR I & II AONLA I & II

IFFCO PRODUCTWISE PRODUCTION PERFORMANCE

(Lakh MT)
COMPLEX UREA 70.12 64.35 TOTAL 68.47 71.68 81.98 85.81

43.24 37.18 27.17 37.86 32.26 28.84 39.63 40.68 31 38.74

44.02 41.79

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

SHARE OF COOPERATIVES IN FERTILISER PRODUCTION

(000 Tonnes)

ITEM ALL-INDIA IFFCO

2008-2009 N P2O5 10900 3417 2329 918 26.9 26.9 918

2009-2010 N P2O5 11924 4374 2585 819 3404 21.7 28.5 1194 1194 27.5 27.5

OTHERS 802 COOP. TOTAL COOP. 3131 IFFCO (%) COOP. (%) 21.4 28.7

GROWTH IN PRODUCTION CAPACITIES

50 45 40 35 30 25 20 15 10 5 0
4.16
5

(in lakh MT)

Urea NPK/DAP
24.91 42.42 36.89 32.18 32.18 43.35 23.43 16.17 19.74 8.91 3.96 8.81 4.16 4.16
8 Au g. '97 Au g. '99 Ap r. ' 01 Ap r. ' 02 Se p. '81 Ap r. ' 04 De c. '96 De c. '97 De c '0 8 Ju l.'8 ct '0 5

36.89

36.89

36.89

43.35

21.91

24.15

8.91 8.81 8.81 8.81 8.81

16.00

Ap r. ' 75

Ja n. '7

ar .'8 1

DEFINITION OF MARKETING
MARKETING IS THE PROCESS OF PRODUCTION AND EXCHANGE THAT IS CONCERNED WITH FLOW OF GOODS AND SERVICES FROM PRODUCERS TO CONSUMERS.
IN POPULAR USAGE, IT IS DEFINED AS DISTRIBUTION AND SALE OF GOODS. HOWEVER, SELLING IS ONLY THE TIP OF THE MARKETING ICEBERG. SOME DEFINED IT AS THE COMMERCIAL FUNCTION INVOLVED IN TRANSFERRING GOODS FROM PRODUCER TO CONSUMER.

AS PER PHILIPS KOTLER

Marketing is defined as a task of creating, promoting, and delivering goods & services to the consumers and business.
Also marketing deals with identifying and meeting human and social needs. Meeting needs profitably.

DEFINITION OF MARKETING
IN BROADER SENSE MARKETING INCLUDES THE ACTIVITES OF ALL THOSE ENGAGED IN THE TRANSFER OF GOODS FROM PRODUCER TO CONSUMER i.e. NOT ONLY THOSE WHO BUY AND SELL DIRECTLY, WHOLESALE AND RETAIL, BUT ALL THOSE WHO DEVELOP, WAREHOUSE, TRANSPORT, INSURE, FINANCE, OR PROMOTE THE PRODUCT, OTHERWISE HAVE A HAND IN THE PROCESS OF TRANSFER.

SET-UP OF IFFCO MARKETING DIVISION

MARKETING

DIVISION IS HEADED BY MARKETING DIRECTOR. SUPPORTED BY SR. EXEC. DIR. (TPTN), GMs/ Jt. GMs IN VARIOUS DISCIPLINES AT MKCO. THERE ARE DISTN., TPTN, MKTG. SEVICES, AGRI. SERVICES, MKTG. ACCOUNTS, HANDLING & TPTN, P&A, COMMERCIAL, PUBLIC RELAION, TRAINING AND SYSTEM DEPARTMENTS.

SET-UP OF MARKETING DIVISION

IFFCO IS OPERATING IN 29 STATES & UTs. TOTAL MARKETING AREA HAS BEEN DIVIDED INTO 5 ZONES NAMELY: NORTH - PUNJAB, HARYANA, RAJ., J&K,H.P. WEST - GUJARAT, M.P., MAH, CHHATISGARH NORTH CENTRAL U.P., UTTARANCHAL, BIHAR & JHARKAHND EAST - WEST BENGAL, ASSAM & ORISSA SOUTH - A.P., KAR., TAMIL NADU & KERALA EACH STATE IS HEADED BY STATE MARKETING MANAGER SUPPORTED BY ACCOUNTS, P&A, SYSTEM AND AGRI. SERVICES, HANDLING & TPTN AND PUBLIC RELATION DEPTTS.

SET-UP OF IFFCO MARKETING DIVISION

EACH

STATE HAS BEEN DIVIDED INTO NUMBER OF AREA OFFICES RANGING FROM 1 TO 12 DEPENDING UPON THE POTENTIAL AS WELL AS MKTG. TERRITORY OF H.P., J&K, JHARKHAND, ASSAM AND KERALA HAVE NO AREA OFFICES.

STATES

U.P.

STATE HAVE 12 AREA OFFICES.

SET-UP OF IFFCO MARKETING DIVISION

AREA

OFFICE IS HEADED BY AREA MANAGER & SUPPORTED BY DY. AREA MANAGER/ FIELD OFFICERS & OTHER RELATED STAFF. NUMBER OF FIELD OFFICERS DEPENDS UPON THE POTENTIAL OF THE AREA. IN SOME DISTRICTS, THERE MAY BE TWO OR MORE FIELD OFFICERS. A FIELD OFFICERS MAY BE LOOKING TWO OR MORE DISTRICTS ALSO.

IFFCO SALES PERFORMANCE

(000 MT)

13500 12500 11500 10500 9500 8500 7500 6500 5500 4500 3500 2500 1500
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 3702 2352 3670 2794 6054 6464 5010 3181 5241 3369 5429 3894 5869 5389 8191 9323 8610

12587

COMPLEX

UREA

TOTAL

11827 11258

6335 5492

6823 5764

2010-11

IFFCO & INDUSTRY SALES

YEAR IFFCO YEAR 2008-09 YEAR 2009-10 INDUSTRY YEAR 2008-09 YEAR 2009-10 26651 26448 7122 8203 9903 10392 43676 45043 5869 6335 2447 2795 2942 2697 11258 11827 UREA NPK DAP/MAP TOTAL

IFFCO SHARE IN INDUSTRY( % ) YEAR 2008-09 YEAR 2009-10 22 24 34 34 30 26 25.8 26.3

MANUFACTURER-WISE RANKING IN SALES

2009-10

Rank
I

UREA
IFFCO (24)

DAP*
IPL(29)

NPK
IFFCO (35)

II III
IV V

NFL

(13)

IFFCO(26) GSFC (9)

PPL (9) CFL (6)

CFL (24) FACT (9)

RCF (6) ZIL (5)

KRIBHCO (11)
RCF NFCL (11) (8)

* Including MAP & TSP

( ) PER CENT SHARE

MARKETING CHANNEL
Every manufacturer need a link with the
customers to sell his products.

The set of intermediates forming this

important link is called marketing/distribution channel. the

Selecting the right channel is the most

important, complex and challenging task for every business organisation.

MARKETING CHANNEL
Marketing Channel in India for Fertilisers can
broadly classified into three categories : Institutional Agencies Private Trade Company owned outlets

Private trade accounts for 60%. Institutional agencies including

accounts for 35%.

cooperatives

Manufacturers own 5% As a matter of Policy, IFFCO is channelising

its products thru the Cooperative Channels.

Cooperative Channels

State Level Federations : 29 District Level Mktg. Soc. : 171 PACS : 86,500 Dealing in Fert. : 41,650 Primary Agricultural Cooperative Societies (PACS) are the backbone of the coop. mktg. System. PACS are well spread and cover about 97% of the villages and 95% of the farming families.

FERTILISER SALEPOINTS IN INDIA AS ON 31.3.2010

Total Salepoints 276,313

Private
Instit. Agencies

215,666 (78%)
60,647 (22%)

CHANNEL-WISE DISTRIBUTION OF IFFCO FERTILISERS IFFCO PLANT

APEX MKT. FEDERATION

32%

60%

4%
Institutional Agencies

4%
FARMERS SERVICE CENTRES

Distt./Block Level Mktg. Societies

Distt./Block Level Societies

RETAIL OUTLETS

Village Level Coop Mktg. Soc. (PACS)

FARMERS

MARKETING CHANNELS
Distribution of fertilisers mainly through the Cooperative System: State level Apex Cooperative Marketing Federation acts as wholesaler Direct supplies to Societies in some States IFFCO-NCDC Cooperative Societies Small quantities to institutional agencies like Agro Industries Corporation etc 158 IFFCO Farmers Service Centres

COOPERATIVE STRUCTURE
Coop. Structure differs from state to state and societies at different levels (district/ taluka/

village) perform different functions in different states. Generally, the coop. network operates through a 3 tier system. However, in some states such as Haryana, the coop. marketing system operate on 2 tier basis, while in some others like Gujarat a 3 tier system exists.
At the State Level, Apex Cooperative Marketing Federations act as wholesalers; Marketing Societies at district/taluka level as Sub-Wholesalers while PACS, PAMS at grass root level act as Retailers.

FARMER SERVICE CENTRES (FSC)

The

basic idea of opening FSCs is to provide all inputs under one roof i.e. fertilisers, seeds, agro-chemicals etc. These Centres also provide technical knowhow to the farmers. At present, there are about 158 FSCs. The total sales thru FSCs during 2009-10 was 5.49 lakh MT ( 4.7% of total sale ) with turnover of Rs. 377 crore.

FERTILISER DISTRIBUTION

Fertilisers are produced at 139 locations in the country. Volume of fertiliser ( indigenous and imported) despatched in the country during 2009-10 was 53 million MT. Volume of IFFCO fertilisers despatched during 2009-10 was 11.77 million MT(22 % of Industry). Av. Daily despatch of IFFCO is 15 Rakes. Distribution of above quantities to the Farmers scattered in about 6 lakh villages in the country is a Herculean Task. Fertiliser is further scattered in each nook & Corner of the Field. This is more so due to the fact that fertiliser production is a continuous process whereas consumption is highly seasonal and confined to 3-4 months in a year and that too split into two seasons namely Kharif and Rabi. Fertiliser being a bulk commodity, its logistics is complex activity.

TRANSPORTATION

Fertilisers are moved by Rail (73%) & Road (27%) only. IFFCO RAIL share is 90%. Rail transport is suited for larger volume and economical for longer distances. Fertiliser Movement is done by rakes only i.e. BG Rake - 2500 to 2700 MT for covered wagons and upto 3000 MT for open wagons & MG rake -700 to 800MT Number of Fertiliser rakepoint : 730 out of which used by the Industry is 400-500. Coastal Movement share is negligible. However, IFFCO has despatched some quantity from Paradeep unit thru coastal movement .

WAREHOUSING
Warehousing

is essential as consumption of fert. is highly seasonal. IFFCO utilizes the services of Central/ State Warehousing Corporations and Cooperatives Godown. CWC/SWCs Godown are hired mostly at the Rakepoint. Cooperative Godowns are located mostly at Village Level.

STORAGE SPACE RESERVED BY IFFCO 2009-10

Agency CWC SWC COOPERATIVES No of Warehouses 63 141 2180 Space (MT/ Month) 77000 (9%) 162000 (19%) 607000 (72%)

TOTAL

2384

702200

IMPORT OF FERTILISERS BY IFFCO

IFFCO is handling three types of import:

OMIFCO Urea ( H&T at Port Rs. 939 per tonne). Imported Urea on GOI A/c New Mangalore - Rs. 983 per tonne Pipavav - Rs. 1063 per tonne Kakindada Deep Water - Rs. 891 per tonne Krishnapatnam - Rs. 870 per tonne Plus Transportation as per Statewise per tonne Rates Imported DAP

PORTS UNDER OPERATION

1.

2.
3. 4. 5. 6. 7. 8.

KANDLA MUNDRA PIPAVAV NEW MANGLORE KAKINADA DEEP WATER PORT KRISHNAPATNAM VIZAG TUTICORIN

IMPORTS BY IFFCO
Lakh Tonne
PRODUCT 2006-07 2007-08 2008-09 2009-10 2010-11

UREA
DAP/MAP TOTAL

13.65
7.16 20.81

15.12
2.19 17.31

17.36
21.83 39.19

20.52
15.88 36.40

24.51
16.11 40.62

* Including 1.36 lakh MT imported NPK

DISCHARGE OPERATION

Loading into Trucks

Bagging & Weighment

THANK YOU