India's agrochemical companies halt buying raw material as rupee takes a knock

The agrochemicals and edible oil companies are reeling under the impact of rupee depreciation. Agrochemical companies, whose raw materials are derived from crude oil, have stopped purchase of raw materials for the time being, or are buying in cash according to immediate requirement, and not opening letter of credit (LC) with banks to import raw materials.

Farmers are facing the brunt of rupee depreciation this Kharif as they have to shell out more for fertilisers because agrochemicals prices have shot up.

"Currently, we are holding our purchase and making most of what is available with us. We are assessing the situation frequently and taking decisions accordingly. We are planning to buy in cash rather than on LC to avoid further increase in price due to future depreciation of rupee," said S.K. Chaudhary, founder & director, Safex Chemicals, an agrochemical firm. "Oil price hike is felt twice by our industry as it is not only used in transportation but also in manufacturing of various chemicals such as solvents," he added.