Yara Expects to Find `Interesting' Fertilizer Assets in India in 3-5 Years

Yara International ASA, the largest publicly traded nitrogen-fertilizer maker, expects to find “interesting assets” in India within three to five years, Chief Executive Officer Joergen Ole Haslestad said.

India, the biggest potash importer, ended price controls in February, allowing companies to set rates for fertilizers other than urea to ease the burden on the state of rising subsidies. Agriculture accounts for as much as a fifth of the economy.

“There are things happening in India,” Haslestad said in an interview today, after presenting the company’s first-quarter results. “I wouldn’t say that we are going into India and buying something tomorrow. It will be an area where I do believe we see interesting assets coming up in the years to come.”

India’s government fixes the price at which fertilizer is sold to farmers, pays companies the difference between the costs and selling price and guarantees a post-tax return. The average subsidy on a ton of urea makes up about three-quarters of the total cost, according to the fertilizers ministry.

The government’s share of the subsidy on nutrients like nitrogen, phosphorus, potash and sulfur, was fixed as of April 1, and farm gate rates will fluctuate with global levels, Information and Broadcasting Minister Ambika Soni said Feb. 19.

“India is opening up for NPK,” or nitrogen, phosphorus and potassium fertilizers, Haslestad said. “The new subsidy scheme is paving the way for other nutrients.”

Yara, based in Oslo, currently sells 10,000 metric tons of speciality fertilizer to India a year, making its activity in the country “marginal,” Yara spokesman Asle Skredderberget wrote in an e-mailed response to questions today.

Biggest Importer

India was the biggest potash importer last year, according to Fertecon, a Tunbridge Wells, England-based consultant. The country imported 5.09 million tons, while Brazil bought 3.57 million tons and China purchased 1.59 million tons.

Yara is looking at assets in North America, Latin America, Eastern Europe and there are “some pockets” of Western Europe “where we could potentially buy something, but that is a bit challenging because we do have such a high market share,” Haslestad said. The management will use “financial discipline” as it takes part in industry consolidation, he said.

The company on March 12 decided against raising an offer for U.S.-based Terra Industries Inc. after CF Industries Holdings Inc. outbid Yara with a $4.71 billion proposal.

Yara fell to a five-month low in Oslo trading today after reporting first-quarter sales that missed analyst expectations.

The shares slid as much as 5.5 percent to the lowest since Nov. 20 after revenue dropped 14 percent to 14.7 billion kroner ($2.49 billion), missing the 16.9 billion-krone average of 21 estimates compiled by Bloomberg. Yara was trading down 8.6 kroner, or 3.7 percent, at 222.5 kroner by 2 p.m. in Oslo.

To contact the reporter on this story: Meera Bhatia in Oslo at mbhatia2@bloomberg.net.

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