Thursday, June 4, 2009

[Investors Please Listen] Research Views


Fertiliser ministry is not too keen on divestment as of now

In an interview, Fertilizer Secretary Atul Chaturvedi gave his opinion about the fertiliser industry. Few takeaways from the conversation are –

Ministry is working to make conducive policies for the companies like FACT, NFL etc which has big idle capacities. With increasing gas availability, conditions of these companies' can be improved significantly. However it may take 3-4 years for FACT but NFL is likely to start complex fertiliser production from next month.

Fertiliser subsidy bill was almost Rs 1200 bn previous year which should come down to Rs 600 bn current year, reducing it by whopping 50%.

Disinvestment in fertilizer sector has not been discussed till now. Since there are not big capacities available except RCF and NFL.  Ministry has no proposal in hand for disinvestment of RCF or NFL yet.

On gas availability from KG basin, all the 15 units have started lifting their allocated quantities and gas supply from KG 6 Basin is on track and all agreements are in place.

There is need for change in existing system in fertiliser and it has to be reviewed. Government may think on reducing inefficiencies of various units in the sector.

Urea production was 20mt last year which is expected to increase by 1.5-2 mt because of de-bottlenecking of certain plants.

Standoff on rock phosphate has been resolved and regular supplies have resumed since March'09.


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