NFL reported a net loss of Rs 107.04 crore for the quarter ended March due to shut down of its three units.
State-owned National Fertilizers Ltd (NFL) reported net loss of Rs 107.04 crore for the quarter ended March. CMD RG Rajan pointed out that this loss was due lower production on the back of shutdown in three units - Nangal, Panipat and Bathinda. These were kept shut as the company was switching to gas-based feedstock from fuel oil.
Also, the company had to shell out an additional purchase tax of Rs 56 crore levied by the government of Madhya Pradesh earlier. Further, he expects the government to announce a revision in the fixed cost for urea producers soon, which will help the company reap around Rs 70-80 crore per annum.
Meanwhile, a decision on divestment of some of government's stake in the company is likely soon, he added. The government currently holds around 97 percent stake in the company and may offload 7.64 percent of it.
Below is the verbatim transcript of RG Rajan’s interview on CNBC-TV18
Q: Could you just take us through your quarterly numbers? What has led to the poor revenues and losses?
A: The lower revenue and loss this quarter is mainly due to the fact that three units at Nangal, Panipat and Bathinda had taken a shut down for change of fuel oil to natural gas. Hence, lower production and there has been a loss this quarter.
Q: There was lack of production on a couple of new units for example your Nangal unit - can you take us through all three units in terms of what exactly was the production outtake from them this quarter?
A: For revenue, we have booked Rs 6.5 lakh as against 8.5 lakh last year from the three units. This is why during commissioning we got higher energy expenses. During commissioning you got more energy consumption. So, all this facts put together have led to a loss in this quarter.
Q: What has led to the exceptional loss of Rs 57 crore, what is this purchase tax?
A: There was some purchase tax levied by the government of Madhya Pradesh in the earlier years and has not been reimbursed by the government of India. We had gone to Supreme Court for the same but it has not been dismissed so that loss has been booked in this quarter.
Q: While gas availability is a big issue for companies like you, is your company receiving gas from Reliance Industries? Currently, what is your gas requirement?
A: The total gas requirement at Vijaypur is 4.3 mscmd out of which around 0.6 mscmd gas is received from Reliance Industries. At Panipat, Nangal and Bathinda the total gas requirement is around 2.8 mscmd of gas
Q: Do you think government is taking steps to support your company? It could vary all the way from urea– policy being decontrol to maybe some other forms of fuel supply, can you just update us on that?
A: The entire urea industry is asking the government to revise the fixed cost, which was fixed way back in 2003. We are hopeful that the government will announce shortly a revision in the fixed cost for urea producers which will benefit us to the tune of around Rs 70-80 crore per annum.
Secondly, we are asking the government to allocate domestic gas for Nangal, Panipat and Bathinda. Once we get domestic gas allocation at Nangal, Panipat and Bathinda the units will become more profitable
Q: Any consideration in terms of divestment which the government might be thinking considering that they hold around 97 percent stake?
A: Yes. Some discussions are going on with the department of disinvestment. I think a decision will be taken soon.
Q: What percentage of the total holding is being considered for sale?
A: It will be around 7.64 percent