DAP is not economically viable for us to produce, says GSFC, a Gujarat-govt PSU

Red-flagging the rising input costs, the Gujarat State Fertilizers and Chemicals Ltd (GSFC) — a State government-owned entity that set up India’s first Di-Ammonium Phosphate (DAP) fertilizer complex on west coast of Gujarat — has said the company is finding production of the widely used fertilizer DAP “economically unviable.” 

Pointing to the 150 percent year-on-year rise in Sulphuric Acid and Phosphoric Acid prices, SK Bajpai, senior vice president (finance and legal) and Chief Financial Officer, GSFC Ltd say, “Prices of Sulphuric Acid and Phosphoric Acid have risen a lot and that is the reason DAP is not economically viable for us to produce. There is a lot of shortage of DAP in the market also.” Sulphuric Acid is a key ingredient used in the production of DAP. It is reacted with phosphate rock to produce phosphoric acid which is then reacted with ammonia to produce DAP.

The company is expecting some relief in the form of a possible revision in the subsidy provided by the government which is due from October 1. “I presume that the Government of India will take note of these high prices of the Phosphoric and Sulphuric Acid. And they will pick some higher subsidy for the Phosphoric and sulfur based fertilizers,” Bajpai told investors earlier this month. GSFC has 6 lakh tonnes per annum capacity to produce DAP of which 2.16 lakh tonnes is at Vadodara and another 2.96 lakh tonnes is at Sikka near Jamnagar.

The company also produces Ammonium Sulphate and Ammonium Phosphate Sulphate fertilisers and the impact of rising input cost have led to a squeezing of margins for both these fertilizers too. GSFC already has four sulphuric acid plants. “The company is already in the process of establishing a fifth Sulphuric Acid plant, which is due to be commissioned in two months from now. So, till now, we are getting the long-term arrangement with the companies who are supplying the Sulphuric Acid at Vadodara complex as well as the Sikka complex for Ammonium Sulphate Phosphate. But after commissioning of the fifth Sulphuric Acid plant, we will be having the required quantity of Sulphuric Acid for production of Ammonium Sulphate,” the official added.

Published on August 19, 2025