Madras Fertilizers Ltd (MFL) has devised a new strategy to produce NPK complex fertilizer to sustain in the market, following the stoppage of urea production at its Manali unit since October.
The new plan to offset the revenue losses, includes producing NPK complex fertilizer, trading organic manure, marketing neem-based pesticides, granulated mixtures and bio-fertilizers.
According to a company official, the company might end the year with a total production of 2.2 lakh tonnes of fertilizers against the target of 4.5 lakh tonnes. “Since Friday, we have started producing NPK complex fertilizer that would net a margin of Rs.2,000 per tonne amounting to Rs.44 crore. We will refurbish the plant to increase the annual production capacity to 7.5 lakh tonnes next year that would fetch Rs.150 crore. With this, we will be able to wipe out the negative net worth of over Rs.200 crore.”
The official said, MFL had been trading manure in the last three years, and this year it had decided to trade 10 tonnes. This was expected to yield a margin of Rs.1.10 crore. Trading of neem-based pesticides would fetch an additional Rs.2.50 crore.
The BIFR-referred company had a negative net worth of Rs.206 crore as of March 31, 2014. It was depending largely on urea production to wipe out the losses within two years. However, urea production was suspended as Centre stopped extending subsidy from October 8.
Besides MFL, two other units in South – Mangalore Chemicals and Fertilizers and SPIC, Tuticorin – stopped producing urea for the last one month. This led to production as well as revenue loss to these firms.
Logistics park
MFL is confident of awarding the Logistics Park contract to the successful bidder before March 2015. The bidder has to make a one-time upfront payment of Rs.66.66 crore. It would further help the cash-strapped firm, he said.
“Meanwhile, we have urged the Centre to allow production of urea using naphtha as feedstock till gas connectivity is provided to us. We are expecting a favourable reply,” he said.