Madras Fertilizers Ltd (MFL) will tie-up with Indian Oil Corporation (IOC) to source natural gas as a feedstock to produce urea, said its Chairman and Managing Director I. Vijayakumar.
Till recently, MFL was toying with the idea of either tying with IOC or Gas Authority of India to source natural gas. While the IOC’s Ennore-LNG terminal is likely to become operational by 2017, doubts have been raised regarding the completion of GAIL pipeline (Kochi-Koottanad-Mangalore-Bangalore). Hence, MFL has opted for the former.
Continue subsidyMeanwhile, MFL has requested the Centre to continue with the subsidy policy for naphtha-based units for some more time, as the deadline expires on Tuesday.
“We have not been given instructions officially or unofficially to continue with our operations. The closure and re-opening of the unit will create unnecessary tension and result in an additional expenditure of Rs.15 crore. We are unable to draw medium- or long-term plans, and banks are reluctant to extend credit,” he said.
Back in blackThe BIFR-referred company at present has a negative net worth of Rs.206 crore and accumulated losses of Rs.381 crore.
Mr. Vijayakumar said the continued losses and consequent sickness were due to cost and time overrun of revamp of ammonia and urea plants, delay in stabilisation of revamped plants due to technology related issues, higher energy, poor reliability, lack of maintenance of existing plants for wants of funds and unfavourable pricing policies up to March 2009. MFL had submitted a Draft Rehabilitation Scheme (DRS) to Board for Restructuring of Public Sector Enterprises. The next meeting will be held on October 6.
“As part of the DRS, we have sought waiver of outstanding loan liabilities and interest of Rs.900 crore payable to GoI. We will end the current fiscal with a profit of Rs.80 crore. With the help of loan waiver and profit, we will come out of sickness and start paying dividend in two-three years,” he said.
