On raw material dependence, backward integration, and why India’s farms are going digital faster than anyone expected.
As geopolitical tensions ripple through global commodity markets, India’s fertilizer industry finds itself at a crossroads, navigating import dependence on one side and a rapidly modernizing agricultural landscape on the other. At the center of this story is Arun Alagappan, Executive Chairman of Coromandel International, the Rs 25,000-crore Agri-solutions giant, who says the sector’s single biggest vulnerability is the same as it has always been: raw materials.
“Whether we like it or not, the fertilizer industry imports most of its raw material. This comes with a certain amount of risk,” Alagappan said. The conflict in West Asia has put that risk under a harsh spotlight, raising concerns about supply disruptions just ahead of the kharif sowing season. Urea, a significant portion of which passes through the Strait of Hormuz, is particularly exposed. However, Alagappan remains measured in his outlook, noting that most companies, including Coromandel, are adequately covered for the immediate quarter, and the government is in regular contact with the industry to monitor the situation.
Building Backwards to Move Forward
Coromandel’s response to this structural vulnerability has been deliberate and long in the making. The company has pursued a backward integration strategy that is increasingly paying off. A key move was acquiring a phosphate mine in Senegal, securing a domestic supply of rock phosphate, a critical raw material for phosphoric acid.
The company now also manufactures sulphuric acid in-house, a significant shift from its previous position as one of the country’s largest importers of the chemical. At its Kakinada facility in Andhra Pradesh, set to become India’s largest phosphatic plant, operations run on steam generated through sulphuric acid production, eliminating any dependence on LNG entirely.
This integrated positioning, Alagappan argues, is not just an operational advantage but a strategic moat. Beyond fertilizers, Coromandel has fortified its crop protection business through the recent acquisition of Nagarjuna Agrochem, making it the third-largest player in that segment. Add to this its retail network, bio products and nano fertilizer range, and the company is betting on a full-spectrum farm solutions model.
Nano Fertilizers and the Drone Revolution
Perhaps nowhere is the transformation more striking than on the ground. Nano fertilizers, long discussed but slow to take off, are now finding genuine traction among Indian farmers, according to Alagappan. Easy to apply and effective when used correctly, they are increasingly being deployed via drones, a technology that has seen explosive adoption in recent times.
Coromandel’s own drone network tells the story plainly: two-and-a-half years ago, the company covered roughly 40,000 acres through drone-based application. This year, that number has crossed one million acres. “The farmers have used our nano fertilizers and continue to endorse its effectiveness,” Alagappan said.
A Generational Shift in Agriculture
This technological leap is being driven, in part, by demographic. Younger farmers are entering the sector with a fluency in digital tools, AI, IoT and drones, all of which are reshaping Indian agriculture. For Alagappan, who spent much of his career in financial services at Cholamandalam Investment and Finance before moving to Coromandel five years ago, this has been a revelation. “I did not expect it to be so interesting,” he admits.
The infrastructure is playing its part too. The Polavaram irrigation project in Andhra Pradesh is expanding the total arable land under cultivation, while state-level planning is pushing farmers towards diversified, higher-value crops, from fruits and vegetables in Rayalaseema to produce tailored to specific district-level demand profiles.
Cautious Confidence
For investors who have watched Coromandel stock deliver multi-bagger returns over the past fifteen years, the current environment warrants attention but not alarm, Alagappan suggests. Currency movements and import dependence remain variables to watch, but the company’s raw material coverage is solid for the near term. Seasonal panic-buying, the notes, can distort market signals. Fertilizers and crop protection products are uniquely time-sensitive inputs, and the fear of missing a narrow application window drives artificial stockings.
The broader message from Alagappan is one of cautious confidence: an industry grappling with real structural risks, but one that is simultaneously sitting on significant long-term opportunity, provided it continues to innovate, integrate and stay close to the farmer.
