Jaiveer Srivastava, CMD of state-run Fertilisers and Chemicals Travancore (FACT) hopes to see significant jump in the company’s fertiliser production capacity for FY17 to nearly one million metric tonne from six lakh metric tonne in the last fiscal. He is also optimistic the company will turn operationally profitable during the year.
The company had recently received Rs 1000-crore loan package from the government for its revival and expansion of production capacity during the next fiscal.
In an interview to CNBC-TV18, Srivastava says, the fertilisers industry, particularly urea, has benefited from certainty and uniform volumes of gas, the key raw material, coupled with stable pricing.
Fertiliser industry output grew 23 percent in March and 11.5 percent in the full year FY16.
There has been some reduction in subsidy but not much impact is likely as there is a parallel reduction in the material costs as well, he says.Below is the transcript of Jaiveer Srivastava’s interview with Nigel D’souza and Reema Tendulkar on CNBC-TV18.Nigel: All these data points are looking quite good, but are you expecting a turnaround in the business, are you seeing production levels go up as well and give us some details in terms of the loan package. Have you received it? Could you give us a status update on that? A: Yes, everything is very welcome as far as this financial year is concerned, 2016-2017. Our sector is going to be better off than last year’s data. And especially FACT is going to produce at least one million metric tonnes of fertilizers that is especially cosmetic fertiliser. There is overall reduction in the price of the raw material. On the other side, from Nutrient Based Subsidy (NBS) there is a reduction in the subsidy, but even then it is not going to affect us much because of the reason that price reduction is also there as far as all the raw materials are concerned.Reema: But what led to this kind of an improvement? 23 percent jump in fertiliser output in March. In fact, for the full year, fertilisers clocked in a 11.5 percent growth in FY16, significantly better than the flat growth that we have seen in the prior years. What contributed to this kind of an improvement and do you believe that it can sustain or improve from here on – the industry fertiliser output. A: You are right, as far as the fertiliser and especially the urea is concerned, there is a good growth this year, last year rather and it is mainly because of the reason that gas price was very stable, rather it was only 3.06 as far as domestic gas is concerned. And overall, you can say it is because of the gas pooling. This has helped a lot and industry is going to come up out of the red. Earlier, there was no stability of getting the gas. Now gas is coming very uniformly and on a uniform pricing also.Nigel: If things are improving and everything is going as per plan, can we see an operating profit come in from FACT? Maybe in the next one year also, in any of the quarters, do you see an operating profit come in? And secondly, could you tell us what exactly is the finance cost likely going to be like and how does you balance sheet look?A: As far as 2016-2017 is concerned, we are quite optimistic that we are going to get definitely operational profit this year, number one. Number two, as far as Rs 1,000 was concerned, we have got this money on March 29 and as for our borrowings from the banks were concerned, it is now almost clear for all the eight packs. And as far as working capital is concerned, it is available. And already LNG is signed for the production in this particular quarter. The first half of the April was also very good. And, we are quite hopeful that we are going to produce minimum one million metric tonne of our product. And it is right from last year, we were able to do only six lakh metric tonne. So, it will be a big growth as far as FACT is concerned.
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