Madras Fertilisers out of funds, to shut down from tomorrow

Our Corporate Bureau
31 January 2005

Chennai: The state-owned Madras Fertilisers Ltd (MFL) will be shut down from February 1, 2005 as it does not have money to pay for naphtha.

The government owes the company more than Rs200 crore as subsidy on urea and towards escalation of raw material costs. MFL's liabilities, including its dues to Chennai Petroleum Corporation Ltd (CPCL), which was supplying it naphtha, a feedstock, is Rs189 crore.

The company's management and its labour union have written to the petroleum ministry asking it to extend credit facilities to MFL so that it can continue to run its plant.

This situation has come about at a time when the company has reduced its loss in the third quarter of the financial year and also achieved higher operating efficiencies, according to MFL's chairman and managing director, Sukumar N Oomen.

Till now, CPCL was extending 50 per cent credit to MFL for naphtha, a facility it is no longer prepared to continue, according to Oomen.

"MFL is on the verge of closing down operations from February 1. It is only because we do not have money to pay for naphtha," he said.