NFL plans to increase di-ammonium phosphate (DAP) production capacity by 1 million tonnes from current 2 lakh tonnes in the next couple of years, says CMD Manoj Mishra of NFL.
Fresh from a stellar third quarter ended December 2016, NFL hopes to continue the momentum. NFL plans to increase di-ammonium phosphate (DAP) production capacity by 1 million tonnes from current 2 lakh tonnes in the next couple of years, said Chairman and Managing Director Manoj Mishra.
Speaking to CNBC-TV18, Mishra said the company has for the first time clocked fertiliser sales of over 13 lakh tonnes in one quarter and fourth quarter is an off season for sales.
The company reported strong earnings for Q3 FY17 with revenue increasing 7.9 percent at Rs 2,526.6 crore versus Rs 2,341.2 crore in corresponding quarter last fiscal. Profit was up 57.4 percent at Rs 73.2 crore from Rs 46.5 crore in year ago period.
Below is the transcript of Manoj Mishra's interview to Mangalam Maloo and Sumaira Abidi on CNBC-TV18.
Mangalam: Your margins have increased. Your net profit has increased by nearly 57 percent this quarter. What is the trajectory for the future? What can you see in terms of revenue growth coming in for FY18 and the fourth quarter?
A: Let me first explain the third quarter a bit. This is the first time that we have clocked a fertiliser sale of over 13 lakh tones in one quarter which is an increase of almost 21 percent. Even sale of urea was higher by 10 percent. You could say this is a controlled commodity, so what is happening is that in case gas prices go up, the turnover goes up, gas prices come down, turnover comes down. So, this is a quarter, when quarter-to-quarter I compare gas prices have come down by 20 percent. In spite of that the total sale revenue is higher by 8 percent.
So, we will continue to do like this in the fourth quarter also. But you remember fourth quarter is an off season for sales. After January is over, mid-February, March is definitely off season. So, to that extent, we will have to take care of that. All quarters are not same.
Sumaira: I was actually seeing your nine month revenue has come in at about Rs 5,000 crore odd out of which I guess, half of it is done in the third quarter itself. What are you hoping to wrap up the year with? And also, there are some reports that suggest that you are looking to double your turnover by 2020. What would that be based on? Is there some additional capacity that you are looking at?
A: Right now, for indigenous urea, we are about 16 percent of the market share we are having with 38 lakh tonne of urea. So, we already have a strong marketing presence there for urea. So same marketing channel we want to utilise and harness for sale of other products. Of course, at present, we do not have an investment proposal for investing in non-urea right now though we are looking at some of the proposals, we will come to that when we actually form up the proposal.
So, this we will do by trading. This is again, almost more than two lakh tonne Di-Ammonium Phosphate (DAP) we have produced so our plan is to increase this rapidly another couple of years to at least one million tonne of DAP and other fertilisers. So, this will give us a topline.
Mangalam: Tell us a little about your debt in your balance sheet because in this quarter, your finance costs came off by about 18 percent. As of September, your debt was Rs 2,800 crore. What is the debt position right now and when is the company likely to be debt free?
A: Our debt consists of two parts. One is debt taken for Capex, for energy saving or capacity addition. That is in any case coming down slowly. It is less than Rs 1,000 crore, that debt. But the other debt is our receivable on account of pending subsidy. This actually entirely depends upon the subsidy budget of the government of India. So I am actually happy, for this year, the amount has been lower. That is why my interest expenditure has also come down apart from our own fund management thing. So subsidy is lower, that is why my debts are also lower. December 31, it was about Rs 2,800 crore.
Mangalam: What is the subsidy which is remaining with the government, subsidy in arrears, if you must?
A: Actually, as on December 31, it was something around Rs 1,600 crore of which, because of the special banking arrangement (SBA), we already realised close to Rs 1,200 crore. But each month, my subsidy bill also keeps on increasing, so you cannot straightaway from reduce from Rs 1,600 crore to Rs 1,200 crore. So, right now on subsidy front we are much better as compared to how we were last year.
Sumaira: One final word on the divestment, is there anything more that you might have heard? Earlier there were indications that NFL divestment could be in FY17 itself. Any indications whether it has been pushed forward?
A: Actually, this is a divestment of government equity. So, whatever was told to us, we have done. We have done roadshows, all the information has been uploaded. Now the decision of timing and pricing rests with the department of disinvestment, Department of Investment and Public Asset Management (DIPAM). So whenever they are ready, we are ready with 15 percent. So we have already done our roadshow in Mumbai as well as Chennai.
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