MFL's record turnover, profit

By Our Special Correspondent

CHENNAI, APRIL 25. Madras Fertilisers Ltd. (MFL) has on the anvil plans for a joint venture captive power project, expansion of NPK capacity by 3.5 lakh tonnes, a captive berth at Ennore and use of liquefied natural gas (LNG) as feedstock to sustain its competitiveness in the years to come, according to Mr. N. Y. Mahajan, Chairman and Managing Director.

Besides, MFL, a joint venture of the Union Government (which retains 58.7 per cent of equity) and the National Iranian Oil Company (NIOC), is awaiting Cabinet clearance of its financial restructuring and government guarantee to reduce interest costs arising from implementation of the Rs. 601-crore modernisation, Mr. Mahajan said.

Addressing a press conference on Tuesday, the CMD said the company had achieved a record turnover of Rs. 1,224 crores and the highest profit of Rs. 27 crores in 1999-2000. The turnover recorded a growth of 5.4 per cent over the previous year and 78 per cent over the highest turnover of Rs. 686 crores recorded in 1995-96 before the revamp of the plant. Production of ammonia registered an increase of 16 per cent (to 3.01 lakh tonnes), 23 per cent in the case of urea (to 4.03 lakh tonnes), and 11 per cent (to 8.1 lakh tonnes) in the case of NPK during 1999-2000.

However, because of poor and uneven performance of the monsoon in the core marketing territory of MFL, namely, Tamil Nadu, Andhra Pradesh and Karnataka, total sales of fertilizer during 1999-2000 were only 10.52 lakh tonnes against 11.15 lakh tonnes in 1998-99. Urea sales registered an impressive increase of 31.4 per cent. It had inventories worth Rs. 200 crores, while subsidy dues from the Government were Rs. 110 crores.

Mr. Mahajan said once the quantitative restrictions on the import of urea were removed, it would have a significant negative impact on the domestic fertilizer industry, as the present non-tariff barriers would be converted to tariff, with the maximum bound rate being 100 per cent. At present, the import duty was a little above five per cent. ``I sincerely hope that the Government would take necessary steps to ensure continued viable operation of domestic urea producers and prevent dumping'', he said.

As for complex fertilizers, these were the major strengths of MFL in terms of share in revenue and were already under open general licence for import. With India's AMS (aggregate measure of support) to agriculture being in the negative, continuation of the fertilizer subsidy would not be a problem.

The MoU signed by MFL with the Department of Fertilisers on March 31 this year, envisaged a nine per cent increase in fertilizer production during 2000-01, besides reduction in the energy consumption.

The MoU also spelt out a road map for the company to meet the challenges of globalisation and phasing out of subsidies under the retention price scheme. MFL, which had appointed a consultant for implementing total quality management (TQM), was committed to obtain ISO 14001 by March 2001.

The Government had increased the maximum retail prices of urea, DAP and MOP by 15 per cent, seven per cent and 15 per cent, respectively with effect from February 29, 2000 with reduction in subsidies by a like amount and this did not affect the profitability of the company.

At present, nearly 75 per cent of MFL's power requirement was met from the Tamil Nadu Electricity Board. The company had, therefore, initiated a proposal for setting up a full capacity captive power plant along with the option of co-generation of steam, which would also help in phasing out the 29-year-old utility boilers.

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Captive berth on anvil

MFL proposes to expand its complex fertilizer capacity by about 3.5 lakh tonnes by installing a new NKP train. It has also been talking with the promoters of the LNG terminal project at Ennore near Chennai and registered a demand of six lakh tonnes. Switch- over from naphtha and furnace oil to cost-effective and eco- friendly LNG as feedstock would be achieved without major expenditure.

The Ministry of Surface Transport (MOST) has allotted in principle a fertilizer berth at the Ennore port terminal to MFL. Techno-economic feasibility study for the captive berth of two million tonnes annual capacity has been completed. The berth would be set up as a joint venture.

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