According to sources, the strategy has to take into account the fact that though the company falls in a category of partially-decontrolled fertilisers, there is a subsidy which is fixed by the government. This tends to affect the demand of various products within the category of partially-decontrolled fertilisers.

Between 1992 and 1996, the demand first shifted from diammonium phosphate (DAP) fertiliser to complex fertilisers and subsequently, based on revision in subsidies, demand surged in DAP as against complexes. The present subsidy announced seems to favour complex fertilisers once again.

Hind Lever Chemicals is a DAP major with an over 70 per cent market share and dominates markets like WestBengal, north-eastern states and Uttar Pradesh. The company plans to provide the entire range of partially-decontrolled fertilisers like DAP, SSP, other NPs and NPKs. At the same time, it will continue to concentrate on its core markets.

With the centre dilly-dallying on policy decisions on fertilisers, no clear-cut scenario seems to be emerging, say industry analysts. They feel that uncertainty regarding subsidies for decontrolled fertilisers has forced most companies to evaluate other options. Similarly in urea, which is the only controlled fertiliser, the delay in formulating a growth-oriented policy has led to most urea companies to defer or stall expansion plans and diversify product portfolios. Widening of product portfolio to achieve flexibility is fast catching up with fertiliser companies, say analysts.

Hind Lever is also expanding its capacity from 2.5 lakh tonnes to as much as seven lakh tonnes of DAP/NPK complexes with the latest pipe-reactor technology. Hind Lever Chemicals also manufacturessodium tripolyphosphate, a crucial ingredient for detergents manufactured by Hindustan Lever. Analysts said that the company's move to expand the product portfolio to other decontrolled fertilisers will enable the company achieve flexibility.

INSIGHT
Shareholders stand to benefit

The management's initiative seems to suggest that they will like Hind Lever Chemicals to have a balanced product portfolio between two types of phosphatic fertilisers, that is, DAP and SSP. The government is known for frequently changing its subsidy policy on the two phosphatic fertilisers. To immunise itself from any risk arising from policy decisions, the company seems keen to spread the risk over a wider portfolio. So far, the increase in retail prices in Punjab and Haryana for DAP fertilisers has not resulted in enhanced consumption for SSP fertilisers. The recent price increase in the two states has been such that the farmer's phosphate requirements could have been met more cheaply by SSP, but farmers wereshowing a strong reluctance to do so. The same may not hold for any future increase in price. Hence, the company's present proposals will benefit shareholders.