RCF seeks govt nod to buy plants

Mumbai: The public sector Rashtriya Chemicals and Fertilisers (RCF) has approached the Union government to convert a part of its equity holding (92.5 per cent) into long-term loans in order to meet the growing requirement of finances for acquisition of two fertiliser plants and one chemical plant in the next three-to-six months.

RCF intends to acquire about 74 per cent equity stake each in Paradeep Phosphate, Rourkela Fertiliser project and Hindustan Organic Chemicals for which the expression of interest letters were submitted to concerned authorities.

RCF CMD D K Varma said the reduction of government equity level would also help the company to fulfill the aspirations of shareholders, who preferred to get higher dividend from the company following its improved performance in the last five consecutive years.

In last five years, the company has enhanced its turnover from Rs 1,100 crore to nearly Rs 2,500 crore. In 2000-01, its net profit was up by 85 per cent at Rs 65 crore, he said. This was achieved mainly due to the modernisation and expansion of existing plants at Trombay, Mumbai, and Thal in Raigad district of Maharashtra.

Further, it has made sustained efforts to reduce the cost of production by 15 per cent through rationalisation of manpower and cutting the cost of energy inputs, Varma said. Discussing business expansion, he said the proposed Rs 300-crore di-ammonium phosphate project in joint venture with Hindustan Zinc and Rajasthan State Mines and Minerals is at the final stage of implementation -RCF holds 50 per cent stake in the project while other two partners hold 25 per cent equity each.

Besides, the company is implementing two major expansion programmes of urea production at Thal at an estimated cost of Rs 1,446 crore. However, the success of this expansion plan would largely depend on the government''s new policy on fertiliser trade and also the availability of feedstocks such as liquefied natural gas at competitive rates.

For the current financial year, there are plans to achieve urea production at 17.8 lakh metric tonne (lmt), complex fertilisers at 6.13 lmt and chemical products at 150 lmt. The expansion at Thal would provide an additional production of 7.68 lmt of urea annually in future, he said.

He said the board of RCF has decided to put each of its operational unit at home and abroad under the direct responsibility of an executive director, who would be accountable for the performance of the unit.

Elaborating on the organisational restructuring process of the company, Varma said: We are fixing responsibility and accountability on the newly-posted executive director at each unit such as Thal and Trombay. The executive director would directly report to the board on the performance of the unit.

This was a part of the overall streamlining measures initiated by the management in order to double the turnover from the current Rs 2,500 crore to Rs 5,000 crore in the next five years and further to Rs 10,000 crore by the end of next year.