Decontrol of urea beneficial to govt, industry: GNFC

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There are rumours going around that RIL may renegotiate its gas prices or completely decontrol it. However, according to KC Jatania, Executive Director and Chief Financial Officer of GNFC , this decision is taken by the Government of India, not RIL. GNFC has contract with RIL for supply for gas, which will last for about five years he added.

"The government is seriously considering decontrolling urea. It will be beneficial both to the government as well as to the industry" Jatania said in an exclusive interview to CNBC-TV18.

Below is an edited transcript of his interview with Ekta Batra and Reema Tendulkar. Also watch the accompanying video.

Q: We understand that there are some rumors doing the rounds that RIL might actually renegotiate gas pricing or they might decontrol it. Just wanted to understand from an industry perspective, is this even possible?

A: I don't think so because gas price is controlled by Government of India. I don't think it can be straight away deregulated.

Q: How long is the contracted signed for with regards to RIL for that fixed price?

A: This contract is for quantity commitment but the price is determined by government of India.

Q: Can you give us a timeline of the contract?

A: It is a long term contract so I don't exactly have the length/time for the contract, but it is a long term contract which will be for about 5 years.

Q: How do you expect dispatches to be this year?

A: Dispatches would be fine both in terms of fertilizers as well as chemicals. The plants are operating very nicely, especially in this second quarter and operation is very good.

Q: Could you just quantify what the growth would be on a year to year basis?

A: Growth would be about 5% higher compared to the last year.

Q: Can you give us a break up in terms of your sales of complex fertilizers and urea?

A: We sell about 6-6.5 lakh tonne of urea and we produce about 1.7 lakhs of ENP, which is a complex fertilizer.

Q: How hopeful are you in terms of improving your financials once urea decontrol does come in completely?

A: The government is seriously considering decontrolling urea. It will be beneficial both to the government as well as to the industry. So we are hopeful that it will come through soon.

Q: There is also an expectation that the realizations would increase in complex fertilizers. Do you think that would happen and if it does how much it would be?

A: So far as complex fertilizers are concerned, they are already decontrolled. So gradually units are improving and adjusting the price depending upon the market. GNFC has also adjusted the prices of fertilizers based on the market situation and our cost of production.

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