See 5% fall in sales of fertilisers this year: RCF

Rashtriya Chemicals and Fertilisers (RCF) has declared its second quarter results. Its net profit is at Rs 82.7 crore versus Rs 77.8 crore on year-on-year (YoY) basis.

In an interview to CNBC-TV18, RG Rajan, chairman and managing director, RCF says the company may be about five percent short in the overall sales of fertilisers this year. "I think we may be marginally short than last year. Last year, we have done close to 41 lakh tonne," he adds.

Below is the edited transcript of his interview with CNBC-TV18's Latha Venkatesh and Ekta Batra.

Q: Can you take us through the segments this time around? What did you deliver in terms of urea and as well as complex fertilisers? What sort of realisations did you clock this quarter because your income has increased 15 percent odd?

A: We have performed much better in overall manufacturing. We have produced more of urea and Nitrogen, Phosphorus, and Potassium (NPK), by around 15 percent as compared to last year. But, overall, there has been a drop of 10 percent in volume mainly because we handled less of imported urea this time.

Q: Can you just give us more perspective on the trading segment? The profits are at around Rs 7 crore versus a loss of Rs 9 crore, but the total revenues are down 20 percent. How exactly is the trading segment going to pan out for the remaining fiscal?

A: We have done some trading in Di-Ammonium Phosphate (DAP), Muriate of Potash (MOP). Ofcourse there has been limited trading in view of this poor monsoon in the first half of the Kharif season. Last year, we had made some losses. This year, we could make some profit in this sector in this trading business. In the coming year, we hope Rabi season will be better than the Kharif and the sales will pick up in the coming few months.

Q: What are you expecting in terms of sales in the second half?

A: I think we may be marginally short than last year. Last year, we have done close to 41 lakh tonne. This year, we may be about five percent short in the overall sales of fertilisers. That’s what we expect at the end of the year.

Q: What is your subsidy requirement for the fiscal?

A: Total will be close to around Rs 85,000 crore. I think an additional supplement requirement is there of around Rs 25,000 crore. Hopefully, we will get it in this supplementary budget.

Q: Have much have you got so far?

A: Rs 65,000 crore.

Q: Does this put any pressure in terms of working capital requirements? What are your finance costs looking like in this quarter and in the second half?

A: Definitely, I think we have to resort to more borrowings to meet our working capital requirements. That is putting some pressure on the interest costs. A lot of receivables are there from the government.