In an interview to CNBC-TV18, RG Rajan, CMD of Rashtriya Chemicals and Fertilisers (RCF) spoke current subsidy burden and the road ahead.
With the rupee now stablising at around 62-63/USD, RG Rajan, CMD, Rashtriya Chemicals and Fertilisers Ltd (RCF) rules out any price hike and expects better days in the coming quarters.
Finance ministry clearing Rs 5500 crore susbsidy for fertiliser units will only help clear part of their outstanding, says Rajan.Current outstanding for RCF stands at Rs 1500 crore.
Below is the verbatim transcript of his interview on CNBC-TV18
Q: Could you just give us an update on how the Thal and the Trombay plant are functioning, what is the capacity utilization at this point in time and what is your gas utilization, is it only being sufficed from KG-D6?
A: Both the plants are functioning at more than 100 percent load. Gas is being supplied from KG basin and also from the administered price mechanism (APM) gas. Besides, a small portion of the gas is through regasified liquefied natural gas (RLNG).
Q: Earlier there were reports indicating that there could have been a diversion of some amount of your gas from the Thal plant to private producers. Was that the case and has that gone through?
A: No nothing has been diverted so far.
Q: We believe that finance ministry has cleared Rs 5500 crore subsidy to fertilizer units. How much of that will come to RCF and National Fertilisers?
A: Our outstanding at RCF is Rs 1500 crore, so this amount cleared by FinMin will only partially meet the outstandings but a lot more is required to clear all the outstandings.
Q: Your Q1 net profit was down 31 percent, is that likely to be the trend for the full year?
A: Since the rupee is now stabilising at 62-63/USD and hopefully, the coming days will be better than the first quarter.
Q: Coming back to fertilizer subsidy, in terms of urea subsidy for the entire FY14 - what is your expectation of how much the industry needs and how much has the government dolled out and by what form?
A: The total subsidy requirement including last year’s backlog is around Rs 95,000 crore. There is a shortfall of Rs 30,000 crore in the budget provisioning and that needs to be made up either through backing arrangement or through a supplementary in the winter session of parliament.
Q: Is there an expectation that there could be a change in the complex fertilizer space at all in terms of any sort of hike in complex fertilizer prices? What is the price movement that you all are working with or the industry is working with?
A: I don't think there will be any price rise now because the rupee has now stabilized and the prices are coming down. So hopefully in the rabi season the current prices will continue.