Toyo Engineering wins Chambal Fertilizer plant contract in India

Toyo Engineering is building what would be one of the world’s largest fertilizer plants in India as the country moves to boost its self-sufficiency in the material to stabilize agricultural output for continued economic growth.

The Japanese company won a roughly 70 billion yen ($626 million) turnkey contract from Chambal Fertilisers and Chemicals for a new plant in the northern state of Rajasthan. The facility will have a daily capacity of 4,000 tons of urea, a key agricultural fertilizer, and could come online as early as 2019.

The Indian government had restricted companies from expanding capacity to control the supply-demand balance of fertilizer while doling out subsidies to ensure a cheap supply. But Prime Minister Narendra Modi, as part of his campaign for economic reform, scrapped the government approval system for new plants in October 2014. This will be the first time a large plant is constructed in 20 years.

Toyo Engineering’s plant would increase India’s output capacity of urea by about 7%. India is pushing fertilizer makers to boost production and competitiveness, and the government hopes to cut back its subsidy scheme as well.

The primary sector, which consists mainly of agriculture, accounts for 20% of India’s gross domestic product and 50% of its labor. A cheap, stable supply of fertilizer will help the country boost food production as well.

Toyo Engineering has patented technology for urea production. It entered India in 1963 and has built 14 fertilizer plants in the country. The company logged a net loss for the fiscal year ended in March 2015 on its flagging petrochemical business in Brazil and other factors. Toyo Engineering is making further inroads in the fertilizer business, where it is highly competitive, to boost its earnings.