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Last Updated : Apr 03, 2017 09:51 AM IST | Source: CNBC-TV18

Trombay unit will get some benefit from urea policy: RCF's Suresh Warior

In an interview to CNBC-TV18, Suresh Warior, Director-Finance at Rashtriya Chemicals and Fertilisers (RCF) detailed the impact of the new urea policy.

In an interview to CNBC-TV18, Suresh Warior, Director-Finance at Rashtriya Chemicals and Fertilisers (RCF) detailed the impact of the new urea policy.

Below is the verbatim transcript of the interview.

Latha: What we now understand is that you get subsidy even if you produce beyond your capacity. So explain to us, are you producing over capacity and therefore how much more money will you make?

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A: Under the urea policy, production up to 100 percent is compensated based on the concession rate whereas beyond 100 percent the compensation is restricted to a maximum of the import parity price. However, during 2016-17 the import parity prices of urea dropped substantially low, it came down to as low as Rs 170-180 level. So as a result the production for some of the units for beyond 100 percent was not becoming viable. So, all these companies represented to the government that this policy needs amendment. So government has amended that policy for compensation above 100 percent and the impact will not be a very major amount for the fertiliser companies because there are only few companies which are getting affected for this.

However, RCF's Trombay unit is getting some benefit out of this. There are some other units like Gujarat State Fertilizers & Chemicals (GSFC), Gujarat Narmada Valley Fertilizers & Chemicals (GNFC), the units of National Fertilizers (NFL) - Nangal, Bathinda, Panipat all these units which were slightly on the higher cost side, will get the benefit.

Sonia: So for high cost manufacturers like yourself - can you quantify for us what the benefit will be. You said that your Trombay unit will benefit but any way to quantify?

A: It may be around Rs 25 crore and this is only for 2016-17.

Sonia: And going ahead?

A: In the policy one more thing that has been notified is that the department of fertilisers in consultation with the department of expenditure can take decision on such matters in the future. So they need not go to the cabinet again and again if urea prices drop in '17-18 and going further.

Latha: Can you tell me how much your subsidy is per tonne within that 100 percent and how much it will be beyond that 100 percent, the actual amount in rupees per tonne?

A: In Trombay our concession rate is around Rs 22,000 per tonne. So reducing about Rs 5,200 you will get about Rs 16,800 odd. Whereas for more than 100 percent, now with this formula it may be around Rs 17,000, so it will be Rs 17,000 minus Rs 5,000, which is about Rs 12,000 per tonne.

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First Published on Apr 3, 2017 09:51 am
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