Madras Fertilizers mulls revamp, expects nod very soon

Satish Chandra, Chairman, Madras Fertilizers speaking to CNBC-TV18, spoke about the latest happenings in the company and the road ahead. 

He said, "We have prepared a Board for Reconstruction of Public Sector Enterprises (BRPSE) note and that is under circulation of the inter-ministerial consultation. We hope to get the approvals soon." "And as far as the conversion of this old plant is concerned, we need around Rs 360 crore to replace old parts and to change over from naphta to natural gas," he added. Below is the verbatim transcript of his interview with Udayan Mukherjee and Mitali Mukherjee of CNBC-TV18. Also watch the accompanying video. Q: Can you give us an update on where the financial restructuring stands now? A: We have prepared a BRPSE note and that is under circulation of the inter ministerial consultation. We hope to get the approvals soon. In the meanwhile we have cleared all the loans of all our lenders, we have nearly paid to IDBI Rs 58 crore and cleared all the loans. We have paid to IFCI, IIBI, totally amounting to Rs 110 crore. We are making a profit in 2010-11 and this profit thing will continue in this current year also. Along with that we want to changeover the feed stock from naphta to gas and for that total investment required is of the order of Rs 360 crore. We have spent some amount in in 2009-10, 2011 and also in 2011-12, for all these three years put together, the total expenditure would be around Rs 250 crore. In 2012-13 we would be spending around Rs 100 crore, entire money is coming from government of India as plant loan assistance which we would be repaying subsequently. So with this, our changeover of the feed stock project also will be implemented and will be ready by July 2012 end. Q: We believe the committee of secretaries meets today take a final call on NBS for urea. What is the formula that the COS has arrived at and when do you think a final ratification will come through? A: Committee will be meeting so, we will come to know about the final formulation only after the committee approves that. Q: Can you also take us through any waivers of loans from the government and what the plan of investment for revamp of that old plant that Madras Fertilizers is? A: Loan from Government of India along with interest amounts to around Rs 550 crore.  We have sent the proposal for the waiver of principal along with the interest. So that is under consideration of the BRPSE. In the meanwhile BRPSE has asked us to get the approval of the various departments including department of expenditure. So it is under circulation. And as far as the conversion of this old plant is concerned, we need around Rs 360 crore to replace old parts and to change over from naphta to natural gas. That project is under implementation and we will complete everything by 2012-13 and government of India is giving loan for the entire project. Q: From an operational perspective have you turned around fully, because you have made a Rs 66 crore profit for the first 9 months of this fiscal? Once the balance sheet is restructured, you think operational you can continue to report good profitability? A: Yes, we are 100% sure about that. We have already achieved a turnaround. We have implemented the pay revision of 2008 wage revision and also we are in position to pay the arrears of 1997 pay revision which were not paid to the employees of the MFL. Q: And just to go back to the policy expectation, I believe 10% hike in urea prices may be recomemded, is that something that will go down well with the industry or did they ask for a higher hike? A: I don