The present status and performance of the 9 Public Sector Undertakings and 2 Multi-State Cooperative Societies under the administrative control of the Department of Fertilizers have been described in the succeeding paragraphs.

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6.1 FERTILISERS AND CHEMICALS TRAVANCORE LIMITED (FACT)

6.1.1 The Fertilisers and Chemicals Travancore Limited (FACT), India’s first large scale fertilizer unit, was set up in the private sector in 1943 at Udyogamandal, Cochin. In 1960, FACT became a public sector company. By the end of 1963, Government of India had become its major shareholder.

6.1.2 As on 31.3.1998, the paid-up capital of the company was Rs.354.77 crore against an authorised capital of Rs.500 crore.

6.1.3 FACT has grown and diversified into a multi-divisional/ multi-functional organisation with interest in manufacture and marketing of fertilizers and Petro-chemicals, Engineering Consultancy & Design and in fabrication and erection of industrial equipments. FACT recorded a turnover of Rs.1263.40 crore during 1997-98.

PRODUCTION

6.1.4 The production performance of the company during 1997-98 and during the current year is as under:

('000' Tonne)

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FINANCIAL PERFORMANCE

6.1.5 During 1997-98, FACT made a net profit of Rs.53.94 crore. During the period from April to November 1998, FACT has made a loss of Rs.85.71 crore. During the whole year, FACT is likely to incur a net loss of Rs.50.88 crore.

SALES PERFORMANCE

6.1.6 A total quantity of 12.61 lakh tonnes of fertilizers was sold during 1997-98. During the period from April 1998 to November 1998, the company sold 7.35 lakh tonnes of fertilizers. During the whole year, the company is likely to sell 12.10 lakh tonnes of fertilizers.

6.1.7 During 1997-98, the company sold 39,550 tonnes of caprolactam. 6187 tonnes of caprolactam was exported to countries like South Korea, China, Hong Kong and Taiwan. During the period from April 1998 to November 1998, the company sold 24,770 tonnes of caprolactam and during the whole year, the likely sale will be of the order of 38,040 tonnes.

PERFORMANCE OF DIVISIONS

6.1.8 The performance of individual units was as follows:

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UDYOGAMANDAL DIVISION

6.1.9 During 1997-98, the Division produced 1,84,556 tonnes of Ammonium Sulphate and 1,24,026 tonnes of Factomfos 20:20. During the period April-November 1998, the Division produced 96,627 tonnes of Ammonium Phosphate and 1,21,203 tonnes of Ammonium Sulphate. The production target for the year 1998-99 is 1,43,231 tonnes of Ammonium Phosphate and 1,69,034 tonnes of Ammonium Sulphate.

COCHIN DIVISION

6.1.10 During 1997-98, Cochin Division produced 2,74,200 tonnes of Urea and 5,18,693 tonnes of Complex fertilizers. During April 1998 to November 1998, the division produced 1,12,810 tonnes of Urea and 3,64,500 tonnes of Complex fertilizers NP 20:20. The production target for the whole year is 23,960 tonnes of Urea and 5,32,800 tonnes of NP 20:20.

PETRO-CHEMICAL DIVISION

6.1.11 During 1997-98, the Division produced 40,451 tonnes of caprolactam. During April-November 1998, the Division produced 25,709 tonnes of caprolactam. During the whole year, there is likely to be a production of 36,750 tonnes of caprolactam with a capacity utilisation of 73.5%. Poor off-take of caprolactam in the domestic as well as international markets leading to a high build up of inventory has forced the company to curtail production since September 1998.

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FACT ENGINEERING & DESIGN ORGANISATION (FEDO)

6.1.12 FACT Engineering and Design Organisation (FEDO) is engaged in the field of consultancy, design and engineering services for the construction of large fertilizer, petrochemical and chemical projects. FEDO is today executing major jobs for various clients like Indo-Gulf Fertilizers, Oil and Natural Gas Corporation Ltd. and Cochin Refineries Ltd. FEDO has received ISO 9001 re-certification for its activities. During the period from April 1998 to November 1998, FEDO received orders to the value of Rs.324.93 lakh.

FACT ENGINEERING WORKS (FEW)

6.1.13 FACT Engineering Works (FEW) has capabilities for manufacture of engineering equipment such as storage tanks, heat exchangers, process columns etc. FEW has also excelled in the field of fabrication and laying of cross country pipelines. FEW is also under audit to receive ISO Certification.

6.1.14 FEW has completed the fabrication and site erection of two large Extraction Tanks for Kerala Chemicals & Proteins Ltd. FEW has also undertaken the development and fabrication work of one set each of Convection Coil/Radiation Coil for FACT Cochin Division at a total value of Rs.69 lakhs. Till now these coils used to be imported by FACT. During 1998-99, FEW bagged order worth Rs.305 lakhs, upto November 1998.

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RESEARCH & DEVELOPMENT (R&D)

6.1.15 The Research and Development Division of the FACT has developed cleaning Powders "SHINE" and "SPARKLE" utilising Phosphogypsum, a waste product. The technology has been commercialised to M/s.Noah’s Arc, Bangalore who are taking steps to start manufacture of cleaning powders shortly. R&D Centre is co-ordinating a project to produce fibre reinforced Polymer Matrix Composite (PMC) from caprolactam for use as engineering plastic through pultrusion NYRIP process, a process developed by IIT, Madras.

6.1.16 A bio-fertilizer project with a capacity of 150 TPA is being implemented at the R&D premises, with the help of a one time grant of Rs.20 lakh from the Ministry of Agriculture.

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6.2 NATIONAL FERTILIZERS LIMITED (NFL)

6.2.1 National Fertilizers Limited (NFL) was incorporated on 23.8.1974 for setting up two nitrogenous fertilizer plants, one at Bathinda (Punjab) and another at Panipat (Haryana). On re-organisation of the Fertilizer Corporation of India (FCI), the Nangal Unit (including Nangal Expansion Project) of FCI was assigned to NFL with effect from 1.4.1978.

6.2.2 In June 1984, NFL took up implementation of a gas based ammonia-urea fertilizer project on the HBJ pipeline at Vijaipur in Guna Distt. of Madhya Pradesh, which started commercial production on 1.7.1988. Vijaipur Expansion Project for doubling its existing capacity from 7.26 lakh tonnes of urea to 14.52 lakh tonnes per annum started commercial production w.e.f. 31.3.97. With this, the total installed capacity of NFL has been enhanced to 13.7 lakh tonnes of nitrogen equivalent to 28.05 lakh tonnes of urea and 3.18 lakh tonnes of CAN.

6.2.3 The company also produces industrial products like nitric acid, ammonium nitrate, sodium nitrate/sodium nitrite, sulphur, methanol, liquid nitrogen, liquid oxygen etc. Besides, it is also producing bio-fertilizers at its lndore plant since January 1996. The company commissioned an Argon gas plant at Panipat unit in October 1997, designed to produce 120 NM3/Hr. of argon gas. Methanol Augmentation plant at Nangal was commissioned in October 1998, thereby enhancing the production capacity from 50 TPD to 67 TPD.

6.2.4 The authorised capital of the company as on 31.3.1998 was Rs.500 crore with a paid-up capital of Rs. 490.58 crore. The share holding of the Government of India has reduced to 97.65% by disinvesting the paid up capital amounting to Rs.11.54 crore in favour of financial institutions and others.

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PRODUCTION PERFORMANCE

6.2.5 During 1997-98, NFL produced 15.15 lakh MT of nitrogen as fertilizers, achieving a capacity utilisation of 110.5%.

6.2.6 The company during 1997-98 produced 19,016 tonnes of Methanol at its Nangal unit, achieving a capacity utilisation of 115.2%.

6.2.7 During 1998-99 (upto November 1998), the company produced 9.71 lakh tonnes of nitrogen. The urea production upto November 1998
was 20.33 lakh tonnes while CAN production was 1.45 lakh tonnes. The company also produced 13,713 tonnes of Methanol during this period. During the whole year, the company is likely to produce 14.78 lakh tonnes of nitrogen.

MARKETING

6.2.8 During 1997-98, the company sold 30.68 lakh tonnes of urea compared to 21.13 lakh tonnes in the previous year.

6.2.9 During Kharif 1998, the company has sold 14.11 lakh tonnes of urea. The urea sales for first two months of Rabi 1998-99 were 7.03 lakh tonnes. The CAN sales for the period April-November 1998 are 1.53 lakh tonnes.

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FINANCIAL RESULTS

6.2.10 The company during the year 1997-98 earned a gross profit of Rs.496.57 crore. The net profit for the year stood at Rs.189.01 crore. During current year upto November 1998, NFL has made a profit of Rs.46.86 crore (provisional). During the whole year, the company is likely to earn a net profit of Rs.77.44 crore.

6.2.11 During 1997-98, NFL declared a dividend at the rate of 20% of the post tax profit amounting to Rs.37.80 crore.

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6.3 PYRITES, PHOSPHATES & CHEMICALS LIMITED (PPCL)

6.3.1 Pyrites, Phosphates & Chemicals Limited (PPCL) was set up in March 1960 to exploit the pyrites deposits in the country. At present, the company is engaged in the mining of pyrites deposits and production of single superphosphate at Amjhore in Bihar and Saladipura in Rajasthan and mining of rock phosphate from the Mussoorie Phosphorite deposits in Uttar Pradesh. Pyrites is used as a substitute for sulphur in the manufacture of sulphuric acid and is also applied directly for reclamation of alkaline soils. The Company is engaged in trading of imported Fertilizers, also.

6.3.2 Against the authorised share capital of Rs. 100.00 crore, the paid-up share capital of the company was Rs.94.65 crore as on 31.3.98.

PHOSPHATIC FERTILIZER PLANT AT AMJHORE (BIHAR)

6.3.3 The Amjhore phosphatic fertilizer plant consists of a pyrites based sulphuric acid plant and a Single Super Phosphate (SSP) plant. The SSP plant was commissioned in November 1988 with bought out acid, while the pyrites based sulphuric acid plant was commissioned in November 1989. The installed capacity of the SSP plant is 2,64,000 MT of SSP per annum (equivalent to 42,240 MT of phosphate).

6.3.4 During 1997-98, the Amjhore unit produced 2,05,318 MT of SSP with a capacity utilisation of 78%. During 1998-99 (upto November 1998), the unit produced 60,215 MT of SSP. During the whole year, the unit is likely to produce 1,17,000 MT of SSP with a capacity utilisation of 44.5%.

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PHOSPHATIC FERTILIZER PROJECT, SALADIPURA, RAJASTHAN

6.3.5 The Saladipura deposits have reserves of about 120 million MT of medium grade pyrites, equivalent to 25 million MT of sulphur. With a view to exploiting these deposits for the production of sulphuric acid and SSP, PPCL had formulated a proposal for setting up an integrated project at Saladipura, consisting of a 600 MT per day (MTPD) SSP plant and a 240 MTPD pyrites based sulphuric acid plant. In the wake of the decontrol of phosphatic fertilizers and the consequent withdrawal of subsidy support, the viability of the project had to be reviewed because of the higher cost of production in the pyrites route as compared to the conventional sulphur based SSP units. As a cost reduction measure, the scope of the project was drastically reduced to exclude the facilities of production of sulphuric acid from the local pyrites deposits. Accordingly, PPCL took up a project for setting up a 300 MTPD SSP plant based on bought out sulphuric acid. The project was commissioned in November 1996.

6.3.6 During 1997-98, the unit produced 67,018 MT of SSP (equivalent to 10,723 MT of phosphate) with a capacity utilisation of 67.7%.

6.3.7 During 1998-99 (upto November 1998), the unit produced 30,867 MT of SSP. During the whole year, the unit is likely to produce 62,500 MT of SSP with a capacity utilisation of 63.3%.

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DEHRADUN UNIT

6.3.8 The company produced 1.23 lakh MT of Mussoorie Phos during 1997-98. Consequent on expiry of import substitution scheme w.e.f. 31.8.98, the mining operation has been discontinued w.e.f. 1.9.98. The production during April to August 1998 was 1222 MT of Mussoorie Phos.

TRADING ACTIVITIES

6.3.9 During 1997-98, PPCL imported/handled 1.1 9 lakh MT Urea, MOP etc. During 1998-99 (upto November 1998), the company had imported/handled 1.08 lakh MT of fertilizers. The sales during 1997-98 was 1.65 lakh MT of fertilizers. The sales during 1998-99 (upto November 1998) was 1.10 lakh MT of fertilizers.

FINANCIAL PERFORMANCE

6.3.10 PPCL incurred a net loss of Rs. 52.98 crore during 1997-98. The cumulative loss as on 31.3.98 was Rs.87.83 crore. During April-November 1998, the company has made a loss of Rs.33.97 crore. During the whole year, the company is likely to make a loss of Rs.40.16 crore.

6.3.11 Disinvestment Commission (DC), classifying PPCL as non-core PSU, has recommended sale/closure of Dehradun unit and clubbing of Amjhore Unit and Saladipura Unit together for sale to a strategic buyer. In case, sale of Amjhore unit is not possible, it may be made viable by switch over from the pyrites to sulphur route for sulphuric acid production for manufacturing SSP with budgetary support. After completion of switch over, disinvestment of GOI equity can be made. Recommendation of Disinvestment Commission is under examination. Meanwhile, the company has submitted a restructuring proposal to Govt. of India which is under process.

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6.4 PARADEEP PHOSPHATES LIMITED (PPL)

6.4.1 Paradeep Phosphates Limited (PPL) was incorporated on 24.12.1981 as a 100% Government of India Enterprise with an authorised capital of Rs.120 crore. A participation agreement between GOI and the Government of Nauru (GON) was signed on 26.5.1982 envisaging 40% equity participation by GON and 60% by GOI. In November 1985, it was decided to increase the participation of GON in the share capital from 40% to 49% with GOI holding balance 51 %. PPL has, however, again become a wholly owned GOI Undertaking with effect from June 10, 1993 as the 49% shareholding belonging to GON has been acquired by the Govt. of India.

6.4.2 The authorised capital of the company was increased from RS. 120 crore to Rs.467.65 crore consisting of 35,00,000 equity shares and 11,76,500 non-cumulative Redeemable Preference Shares of Rs.1000/each. The Preference Share Capital was created pursuant to the conversion of outstanding interest on GOI loan of Rs.117.65 crore as a measure of capital restructuring approved by the Government.

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PRODUCTION PERFORMANCE

6.4.3 The product-wise annual installed capacities of PPL are as under:

6.4.4 During the year 1997-98, the company produced 7,76,105 MT of DAP and 23,590 MT of NPK with 110% capacity utilisation, which is the record production achieved so far. During the year 1998-99 (upto November 1998), the company produced 4,87,100 MT of DAP and 3,095 MT of NPK. Production during 1998-99 is likely to be 7,54,195 of DAP/NPK, thus achieving a capacity utilisation of 106%.

6.4.5 During the year 1997-98, the company produced 3,02,440 MT of sulphuric acid with a capacity utilization of 45.8%, which is the record production achieved so far in a year. During the year 1998-99 (upto November 1998), the company produced 1,54,169 MT of sulphuric acid. It is estimated that during the year as a whole, 2,84,169 MT of sulphuric acid is likely to be produced, thus achieving the capacity utilisation of 43%.

6.4.6 The production of phosphoric acid is continuing with the availability of sulphuric acid and during the year 1997-98, 90,006 MT of phosphoric acid (P2O5) was produced, which is 40% of plant capacity utilisation and this is also the record production achieved so far in a year. During the year 1998-99 (upto November 1998), the company produced 41,354 MT of phosphoric acid. It is estimated that during the whole year, 85,354 MT of phosphoric acid will be produced, thus achieving capacity utilisation of 38%.

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SALES PERFORMANCE

6.4.7 During the year 1997-98, the company sold 13,13,055 MT of fertilizers. The turnover of the company during the year 1997-98 was Rs.1168 crore, which is the highest so far achieved in a year.

6.4.8 During the year 1998-99 (upto November 1998), the total volume of sales of fertilizers was 6,90,877 MT. It is estimated that during the whole year, a total quantity of 8,90,877 MT of fertilizer is likely to be sold.

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FINANCIAL PERFORMANCE

6.4.9 The company made a net loss of Rs.105.53 crore during 1997-98. During the period from April 1998 to November 1998, the company has made a loss of Rs.67.70 crore. During the whole year, the company is likely to make a loss of Rs.65 crore. The company has submitted a capital restructuring proposal for consideration of the Government.

REVAMPING OF SULPHURIC ACID PLANT

6.4.10 Due to persistent technical problems, the performance of sulphuric acid plant has been poor since commissioning. To improve the performance of the sulphuric acid plant, the revamping of one stream of sulphuric acid plant has been taken up which is scheduled to be completed by May 1999. The second stream of SAP is planned to be revamped in 1999-2000.

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6.5 INDIAN FARMERS FERTILISER COOPERATIVE LIMITED (IFFCO)

6.5.1 Indian Farmers Fertiliser Co-operative Limited (IFFCO) is a multi-state co-operative society engaged in production and distribution of chemical fertilizers. Registered on 3.11.1967, the Society commissioned its first two plants at Kalol and Kandla in Gujarat in 1975 for production of Urea and NPK/DAP, respectively. It expanded its production facilities in l98I by commissioning two additional streams of phosphatic fertilizers at Kandla and a new urea plant at Phulpur. A gas-based plant was commissioned in 1988 at Aonla, Uttar Pradesh. During the period from December 1996 to December 1997, the installed production capacity of urea was doubled by expanding the plant capacities at Aonla, Kalol and Phulpur from 16.2 lakh tonnes to 32.2 lakh tonnes. In addition, IFFCO has also set up one dry ice plant at Kalol. At present IFFCO’s installed capacity in terms of nutrients is 16 lakh tonnes of nitrogen and 3.09 lakh tonnes of phosphate per annum.

6.5.2 The authorised share capital of the Society as on 31.3.98 stood at Rs. 1000 crore with a paid- up capital at Rs.373.41 crore, including Rs.289.61 crore Government equity.

PRODUCTION PERFORMANCE

6.5.3 During the year 1997-98, IFFCO produced 14.97 lakh tonnes of nitrogen and 4.78 lakh tonnes of phosphate. The capacity utilisation in terms of nitrogen was 113.3% and in terms of phosphate it was 154.6%.

6.5.4 In year 1998-99 (upto November 1998), IFFCO produced over 12.02 lakh tonnes of nitrogen. During the same period, Kandla plant produced 3.18 lakh tonnes of phosphate. During the whole year, the Society is likely to produce 17.67 lakh tonnes of nitrogen and 4.44 lakh tonnes of phosphate.

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MARKETING

6.5.5 IFFCO sells its fertilizers exclusively through a network of about 34,421 cooperative societies spread over 17 States. During the year 1997-98, IFFCO sold 40.49 lakh tonnes of fertilizers and achieved a sales turnover of Rs.3413.00 crore. The Society has sold 28.02 lakh tonnes of fertilizers during
April-November 1998.

6.5.6 IFFCO has 167 Farmers Service Centres which provide all necessary inputs and
know-how to the farmers under one roof. IFFCO has also been attempting to bring in overall socio-economic development of villages through its village adoption programme. Some of the extension services of IFFCO are tribal and dry land area programmes, farmers integration programme, farm forestry, establishing farmers community centres in remote and backward areas, organising soil tests. The Society has reoriented its agricultural services to lay more emphasis on balanced use of fertilizers for sustainable agriculture.

FINANCIAL PERFORMANCE

6.5.7 IFFCO made a profit of Rs.474.53 crore before tax during 1997-98. After paying a tax of Rs.35.68 crore, the net profit for the year 1997-98 stood at Rs.438.85 crore. The net worth of the Society as on 31.3.98 was Rs.1817.00 crore. The Society declared 16% dividend during the year 1997-98.

6.5.8 The Society’s net cash profit during the period April-November 1998 was estimated at Rs.254.74 crore which includes prior period subsidy of Rs.41.39 crore. The Society is likely to make a profit of Rs.289.27 crore.

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INVESTMENT OUTSIDE IFFCO

6.5.9 IFFCO has invested Rs.97 crore in the equity of Krishak Bharati Cooperative Limited (KRIBHCO), Rs.7.97 crore in Godavari Fertilizers and Chemicals Limited (GFCL) and Rs. 7.80 crore as equity shares in ICS, Senegal, a joint venture with Govt. of India and SPIC. The ICS joint venture has planned expansion of its present capacity by another 3.13 lakh tonnes of phosphoric acid per annum at a cost of US $ 275 million. The Society has also invested Rs. 3.24 crore in Indian Potash Limited, Rs.10 lakh in Maharashtra State Cooperative Bank Ltd. and Rs. 1 lakh each in Indian Tourism Cooperative Ltd. and National Films and Fine Arts Cooperative Ltd.

PROJECTS ABROAD

6.5.10 IFFCO and KRIBHCO in association with Qeshm Free Area Authority (QFAA) are jointly exploring the possibility of setting up a fertilizer plant in Qeshm Island of Iran. The Feasibility Report for the establishment of 1500 MTPD ammonia and 2200 MTPD urea project at an estimated cost of US $ 470 million has been appraised and adopted by the joint venture partners. Bids for engineering procurement and construction of the plant were invited along with financial packages. Only one valid bid was received. The project authorities are evaluating the implications of opening the single bid.

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6.6 KRISHAK BHARATI COOPERATIVE LIMITED (KRIBHCO)

6.6.1 KRIBHCO was incorporated as a multi-state Cooperative Society on 17.4.1980 to implement the ammonia-urea fertilizer project at Hazira, based on natural gas from Bombay High/South Bassein. The Society commissioned its ammonia-urea plant in 1985.

6.6.2 The Hazira complex has two streams of 1350 MTPD ammonia capacity each and 4 streams of 1100 MTPD urea capacity each. The annual installed capacity of urea plants is 14.52 lakh MT (6.68 lakh MT in terms of nitrogen). The steam generation facility consists of 3 boilers and a 30 MW capacity captive power plant. In addition, the annual installed capacity of Bio-fertilizers plant in operation at Hazira has been increased from 100 MT to 250 MT.

6.6.3 As on 31.3.1998, the authorised capital of the Society was Rs.500 crore with a paid-up share capital Rs.463.61 crore, including Rs.328 crore of Government of India.

PRODUCTION PERFORMANCE

6.6.4 During 1997-98, KRIBHCO produced 17.72 lakh MT of urea (8.15 lakh MT of nitrogen) achieving a capacity utilisation of 122%. The Society also produced 168 MT of bio-fertilizers during the year.

6.6.5 During the year 1998-99 (upto November 1998), the Society has produced 10.3 lakh tonnes of urea (4.7 lakh tonnes in terms of nitrogen) and 147 MT of bio-fertilizers. During the whole year, the Society is likely to produce 6.93 lakh tonnes of nitrogen.

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MARKETING

6.6.6 During the year 1997-98, the Society sold 17.09 lakh tonnes of own urea. Besides own urea, the Society has sold 0.46 lakh tonnes of NFCL urea in the State of Andhra Pradesh and 0.62 lakh tonnes of surplus ammonia during 1997-98. It has also sold 165 MT of bio-fertilizers.

6.6.7 In the year 1998-99 (upto November 1998), the Society has sold 9.85 lakh tonnes of own urea and 0.35 lakh tonnes of surplus ammonia. Besides this, 0.12 lakh tonnes of NFCL urea was also sold upto November 1998.

6.6.8 The Society has also sold 136 MT of bio-fertilizers upto November 1998.

6.6.9 The Society organised a variety of extension activities such as Crop Seminars, Farmers Meetings, Field Demonstration on various Crops etc. In addition, soil and water samples were collected, tested and recommendations made available to the farmer. Under the Command Area Development Programmes, various programmes were organised for overall socio-economic development. KRIBHCO also provides services to the farmers through Krishak Bharati Sewa Kendras (KBSK).

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FINANCIAL RESULTS

6.6.10 During the year 1997-98, the Society made a net profit before tax of Rs.447.96 crore and a net profit after tax of Rs.299.61 crore.

6.6.11 During the year 1998-99 (upto November 1998), the Society made a profit before tax of Rs.283.43 crore (provisional) and a net profit after tax of Rs.194.45 crore (provisional). During the whole year, the Society is likely to make a profit of Rs.385.62 crore (before tax) and Rs.265.45 crore (after tax).

6.6.12 The Society declared a dividend @ 18% for the year 1997-98 and accordingly Rs.59.04 crore was paid to Government of India as dividend.

EXPANSION AND DIVERSIFICATION PLANS

(A) PROJECTS ABROAD

6.6.13 Government has approved investment of US $ 69 million by KRIBHCO and RCF to set up a urea plant in Oman in collaboration with Oman Oil Company to produce 14.52 lakh tonnes of urea and 3.30 lakh tonnes of Merchant Ammonia per annum. All major agreements have been finalised. Arranging banks which have been mandated to finalise the project have completed the due diligence process. Discussions are being held with the arranging banks to finalise the financing package.

6.6.14 IFFCO and KRIBHCO in association with Qeshm Free Area Authority (QFAA) are jointly exploring the possibility of setting up a fertilizer plant in Qeshm Island of Iran. The Feasibility Report for the establishment of 1500 MTPD ammonia and 2200 MTPD urea project at an estimated cost of US $ 470 million has been appraised and adopted by the joint venture partners. Bids for engineering procurement and construction of the plant were invited along with financial packages. Only one valid bid was received. The project authorities are evaluating the implications of opening the single bid.

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(B) PROJECTS IN INDIA

6.6.15 The following project proposals of KRIBHCO are being posed before the Public Investment Board (PIB): -

i) A third ammonia-urea stream at Hazira, Gujarat to produce an additional 7.26 lakh TPA of urea; and

ii) A new ammonia-urea plant at the existing site of FCI at Gorakhpur to produce 7.26 lakh TPA of urea.

6.6.16 The first stage clearance has been accorded for preparation of Detailed Feasibility Report (DFR) for setting up a 615 MW combined cycle power project at Pipavav (Gujarat).

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6.7. RASHTRIYA CHEMICALS & FERTILIZERS LIMITED (RCF)

6.7.1 RCF was incorporated as a separate company on 6.3.1978 consequent to reorganisation of the erstwhile Fertilizer Corporation of India Limited. At the time of its formation, RCF had only one operating unit at Trombay and two major projects under implementation, viz. Trombay-IV and Trombay-V Expansion. The gas-based Thal Vaishet fertilizer complex established by RCF at Thal Raigad District commenced commercial production on 1.6.1985.

6.7.2 As on 31.3.1998, the company had an authorised share capital of Rs.800 crore with a paid-up capital of Rs.551.69 crore. Consequent on disinvestment effected in 1991-92, 1993-94 and 1994-95, Government of India shares stand reduced to 92.5% of the paid up capital.

PRODUCTION PERFORMANCE

6.7.3 The annual installed capacity of all the units of RCF is 10 lakh MT of nitrogen and 1.20 lakh MT of phosphate. The production of the company during 1997-98 was 8.92 lakh MT of nitrogen and 1.01 lakh MT of phosphate. During the year, the Thal unit produced 14.02 lakh MT of Urea. During the period April-November 1998, the company has produced 5.64 lakh MT of nitrogen and 0.64 lakh MT of phosphate. During the whole year, the company is likely to produce 9.32 lakh MT of nitrogen and 1.07 lakh MT of phosphate.

6.7.4 Besides fertilizers, the company produces a number of industrial products such as Methanol, Concentrated Nitric Acid, Methylamines, Ammonium Nitrite and Dimethyl Formamide

SALES PERFORMANCE

6.7.5 The sale of fertilizers during the year 1997-98 was of the order of 8.57 lakh MT of nitrogen and 1.21 lakh tonnes of phosphate. During the period April-November 1998, the company sold 6.06 lakh MT of nitrogen and 0.67 lakh MT of phosphate.

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OPERATING RESULTS

6.7.6 During the year 1997-98, the company made a net profit of Rs.189.37 crore, out of which Rs.38.62 crore was distributed as dividend at the rate of 7% of the paid-up capital. During the period April to November 1998, the company has made a net profit of Rs.113.39 crore. During the whole year, the company is likely to make a profit of Rs.250.00 crore.

MODERNISATION/EXPANSION SCHEMES

6.7.7 The company has taken up the following modernisation programmes:

i) Revamp of two streams of Ammonia Plant at Thal (Retrofit Phase-II).

ii) Erection of Formic Acid Plant at Thal during 1998-99.

iii) Atmospheric Ammonia Storage Tank at Trombay.

iv) Mechanisation of Bagging Plant.

6.7.8 The company has submitted a proposal to set up an ammonia-urea plant with a capacity to produce 7.26 lakh TPA of urea. The proposal is being placed before the Public Investment Board (PIB).

PROJECTS ABROAD

6.7.9 Government has approved investment of US $ 69 million by KRIBHCO and RCF to set up a urea plant in Oman in collaboration with Oman Oil Company to produce 14.52 lakh tonnes of urea and 3.30 lakh tonnes of Merchant Ammonia per annum. All major agreements have been finalised. Arranging banks which have been mandated to finalise the project completed during diligence process. Discussions are being held with the arranging banks to finalise the financing package.

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6.8 MADRAS FERTILIZERS LIMITED (MFL)

6.8.1 Madras Fertilizers Limited (MFL) was incorporated in December 1966 as a joint venture between GOI and AMOCO India Incorporation of USA (AMOCO) with GOI holding 51 % of the equity share capital.

6.8.2 In accordance with the participation agreement between GOI, AMOCO and the National Iranian Oil Company (NIOC), NIOC acquired 50% of the shareholding of AMOCO in MFL on 22.11.1972. The shareholding pattern upto 21.7.1985 was as follows:

6.8.3 On 22.7.1985, the shares of AMOCO were purchased by GOI and NIOC in their respective proportions. The shareholding pattern upto May 11, 1997 was as under:

6.8.4 On May 12, 1997, MFL brought out its maiden Public Issue of 2,86,30,000 shares of face value of Rs. 10/- at a premium of Rs.5 per share. Of these, 2,58,09,700 shares were subscribed. After the public issue, the shareholding pattern is as follows

6.8.5 As on 31.3.1998, the authorised share capital of the company was Rs. 175 crore and the paid-up capital was Rs. 161.77 crore.

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PRODUCTION PERFORMANCE

6.8.6 The company had taken up a project for revamp of its plants at an estimated cost of Rs.601.43 crore. The project was commissioned in March 1998. With the commissioning of the project, the installed capacity has substantially been increased. The annual installed capacity before and after revamp are as follows:

                                                           Annual Capacity (MT)

6.8.7 During 1997-98, the company produced 106.4 thousand tonnes of nitrogen and 83.3 thousand tonnes of phosphate with a capacity utilisation of 52.7% and 68.1%, respectively. During the period from April to November 1998, the company produced 137.5 thousand tonnes of nitrogen and 81.7 thousand tonnes of phosphate. During the whole year, the company is likely to produce 224.3 thousand tonnes of nitrogen and 121.9 thousand tonnes of phosphate with a capacity utilisation of 88.3% and 85.2%, respectively.

6.8.8 During 1997-98, the company produced 325 tonnes of Bio-fertilizers. During 1998-99, the company is likely to produce 345 tonnes of Bio-fertilizers.

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SALES PERFORMANCE

6.8.9 The sales performance of the company during 1997-98 and during the current year is as under:

FINANCIAL PERFORMANCE

6.8.10 During 1997-98, the company made a net loss of Rs.55.35 crore. During the period from April to November 1998, the company has reported a loss of Rs.49.66 crore. During the whole year, the company is likely to make a loss of Rs.33.63 crore.

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6.9 HINDUSTAN FERTILIZER CORPORATION LIMITED (HFC)

6.9.1 HFC was incorporated on 14.3.1978 consequent upon the re-organisation of the erstwhile Fertilizer Corporation of India Ltd. (FCI). HFC owns production units at Namrup-Assam, Barauni-Bihar and Durgapur-West Bengal, besides the Haldia Project in West Bengal.

6.9.2 As on 31.3.98, the company had an authorised share capital of Rs. 1200 crore and a paid up capital of Rs.729.11 crore.

PRODUCTION PERFORMANCE

6.9.3 The total annual installed capacity of the 5 manufacturing units of HFC at Barauni, Durgapur & Namrup (I, II & III) was 6.53 lakh MT of nitrogen, which has been de-rated to 4.24 lakh MT w.e.f. 1.11.1994. The total production of the company during 1997-98 was 1.11 lakh MT of nitrogen at an average capacity utilisation of 26.1 %. During the period from April to November 1998, the company produced 35,700 tonnes of nitrogen. During the whole year, the company is likely to produce 67,500 tonnes of nitrogen at an average capacity utilisation of 15.9%. The performance of Namrup-I, Namrup-II and Barauni unit has not been satisfactory, mainly due to ageing of the plants and equipment/design deficiencies. The production in Namrup-II was suspended since 1.11.1994 due to shortage and unsteady supply of natural gas. Similarly, Durgapur plant has remained under shutdown since 24th June 1997 due to heavy fire on top of primary reformer caused by rupturing of dog tail.

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FINANCIAL PERFORMANCE

6.9.4 During 1997-98, the company made a net loss of Rs. 647.83 crore. During 1998-99 (upto November 1998), the company has made a net loss of Rs.452.19 crore and during the whole year, the estimated loss would be Rs.725.33 crore.

REFERENCE TO BIFR

6.9.5 In terms of Section 3(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, the case of the company was referred to the Board for Industrial and Financial Reconstructions (BIFR), which declared it a sick company on 12.11.1992. After evaluation of various alternatives, a revival package for HFC was formulated which envisaged the limited revamp of Durgapur, Barauni and Namrup units. However, the revival package could not be implemented for want of funds. The revival package of HFC reformulated on the basis of a fresh technical appraisal by an expert group led by ICICI from the stand point of the financial institutions were considered by the Government on 1.10.97. The Government has approved the proposal for the revamp of Namrup units at an estimated fresh investment of Rs.350 crore. The project is to be implemented within 30 months of award of Engineering, Procurement and Construction (EPC) contract. The groundwork for launching the project has started. To ensure timely implementation of the scheme, a plan budgetary support of Rs.70 crore has been made in the current year. The revival package in respect of the remaining units of HFC have been reviewed from the angle of unit-wise viability and tie-up of funding arrangements and are presently under Inter-Ministerial consultation.

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HALDIA PROJECT

6.9.6 Though the Haldia Fertilizer Project was mechanically completed in November 1979, due to a variety of equipment related problems, the suspension of commissioning activities had to be ordered in October 1986. Thereafter a number of options for its rehabilitation were explored by the Government but none of them were found to be economically viable. Government has, therefore, decided to hive it off. HFC is planning to engage SBI Capital Market as the Consultant so as to initiate actions in respect of various processes involved in hiving off the unit.

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6.10 PROJECTS & DEVELOPMENT INDIA LIMITED (PDIL)

6.10.1 Projects & Development India Limited (PDIL), an erstwhile division of the Fertilizer Corporation of India Ltd.(FCI), was registered as separate company in March 1978. The company has its registered office at Sindri, Bihar.

6.10.2 Against the authorised share capital of Rs.60 crore, the paid up equity of the company stood at Rs.53.52 crore as on 31.3.98.

6.10.3 PDIL has three divisions namely, Engineering and Consultancy Division, Catalyst Division, and Research and Development Division.

OPERATING RESULTS

6.10.4 The company made a net profit of Rs.6.09 crore during 1997-98. During the period April to November 1998, the company has made a net loss of Rs.3.49 crore. During the whole year, the company is likely to make a loss of Rs.3.07 crore.

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ENGINEERING & CONSULTANCY DIVISION

6.10.5 The Engineering and Consultancy Division is engaged in the design, engineering, procurement, inspection store management and supervision during construction and commissioning of fertilizer and chemical plants. The Consultancy Division also handles market research, project planning, non-destructive testing services, technical and inspection services. During 1997-98, PDIL has commissioned the following major fertilizer projects:

· Ammonia/Urea Plant of IFFCO Phulpur

· Ammonia/Urea Plant of NFCL, Kakinada

· Revamping of Ammonia Plant IFFCO, Kalol

6.10.6 The following major projects/assignments in the fertilizer sector are under execution:

i) Engineering Consultancy Services for Ammonia Plant revamp of Deepak Fertilizer and Petrochemicals Limited, Taloja.

ii) Providing of consultancy services for mixed fuel firing in primary reformer for IFFCO Aonla, IGFCCL-Jagdishpur and CFCL-Gadepan.

iii) Thal Retrofit-II project of RCF.

iv) New Ammonia Synthesis loop of fertilizer plant of Neyveli Lignite Corporation on LSTK basis.

v) Augmentation of New Naphtha handling & storage facilities at NFL-Vijaipur.

vi) Methanol Revamp Project at NFL-Nangal.

During 1997-98, the company has secured consultancy for revamping of HFC’s Namrup plants and Ammonia-I Synthesis Loop Revamp of RCF, Trombay.

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6.10.7 As a measure to expand its sphere of activities, PDIL has been making sustained efforts to diversify and secure jobs in other sectors, especially in the gas and oil sector. As a major break through during 1997-98, PDIL was awarded the job of consultancy services as a prime contractor for Product Pipeline Hook up from IOCL Gujarat Refinery at Vadodara to BPCL-Koyali Project Terminal and Engineering services for laying/hooking up of product pipeline from oil jetties of Kandla Port Trust to BPCL terminal at Kandla. Besides, PDIL in association with Fluor Daniel, USA and Mitsubishi Heavy Industries, Japan has prepared a Detailed Report on Feasibility of LNG Import Terminal at Cochin for M/s.Gas Authority of India Ltd.

6.10.8 PDIL has also been entrusted a prestigious project by the Defence Research and Development Laboratory (DRDL) of the Defence Research and Development Organisation (DRDO) to render engineering consultancy services for its SFD-DRDL project for improved quality rocket propellant fuel.

6.10.9 The following are some of the major jobs in oil and gas sector under execution:

i) Consultancy service for coastal oil installation, BPCL, Paradeep.

ii) Consultancy service for LPG bottling plant, IOCL Kandla & IOCL Delhi.

iii) Consultancy service for LPG Tank Trust loading at Karnal Bottling Plant.

iv) Mounded storage tanks for LPG, IOCL, Gujarat Refinery.

v) Mounded LPG storage facility at Mahul Refinery BPCL, Mumbai.

vi) LPG Import facilities Phase-I, IOCL, Haldia

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CATALYST DIVISION INCLUDING FABRICATION SHOP

6.10.10 After three decades of continuous efforts through in-house R&D, PDIL is now in a position to supply a wide range of catalysts required for the production of ammonia. The production of three main catalysts i.e. HT shift conversion, LT shift conversion and nickel based catalysts including Zinc Oxide and Sodium Nitrate during 1997-98 was 1003 MT as compared to 1000 MT during 1996-97. During 1998-99, the company is likely to produce 808 MT of catalysts, excluding Sodium Nitrate.

RESEARCH & DEVELOPMENT DIVISION

6.10.11 The Research & Development Division undertakes research projects including sponsored and client oriented schemes in the field of fertilizer and allied technology. The company receives an annual grant-in-aid of Rs.4.0 crore from the Government for R&D activities. The division has made considerable progress in the development of a range of new catalysts. PDIL is striving to improve and commercialise a number of products developed by the R&D Division. These include low pressure methanol synthesis catalyst, new supported multi-component HT shift catalyst, FCC catalyst and Improved Styrene catalyst.

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ISO CERTIFICATION

6.10.12 During 1997-98, PDIL has been awarded ISO-9001 certificate for Project Management and Engineering Consultancy including Design Engineering, Procurement, Construction, Commissioning, Third party Design review, Inspection, Life Expectancy, Assessment of plants and other related services. The certificate is valid up to 18.5.2001 which will further be renewed after thorough auditing.

BIFR STATUS

6.10.13 PDIL was declared a sick company by BIFR on 17.12.92 under Sick Industrial Companies (Special Provisions). Revival package for the company has been sanctioned by the BIFR which has been approved by the Government. The required actions for implementation of different provisions of the revival package have been completed. Under the approved package, 395 employees have been given voluntary retirement.

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6.11 FERTILIZER CORPORATION OF INDIA LIMITED (FCI)

6.11.1 Incorporated on 1st January 1961, FCI was reorganised with effect from 1.4.1978. It has four fertilizer manufacturing units, one each at Sindri (Bihar), Gorakhpur (Uttar Pradesh), Ramagundam (Andhra Pradesh) and Talcher (Orissa), with a total annual capacity of 5.87 lakh MT of nitrogen per annum. Besides, it has a mining unit known as the Jodhpur Mining Organisation, which is engaged in the mining and selling of gypsum. The authorised share capital of the company as on 30th November 1998 was Rs.800 crore with the paid up capital of Rs.723.74 crore.

PRODUCTION PERFORMANCE

6.11.2 During 1997-98, the company produced 188.5 thousand MT of nitrogen with an average capacity utilisation of 32.1%. During 1998-99 (upto November 1998), the company produced 102.4 thousand MT of nitrogen. The estimated production during 1998-99 is likely to be 166.2 thousand MT of nitrogen with a capacity utilisation of 28.3%.

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SINDRI

6.11.3 The Sindri Unit produced 95.9 thousand MT of nitrogen during 1997-98 with a capacity utilisation of 63.2%. During 1998-99 (upto November 1998), the unit produced 65.3 thousand MT of nitrogen. The estimated production during 1998-99 is likely to be 107.5 thousand MT of nitrogen with a capacity utilisation of 70.8%. The production during the period April 1998 to November 1998 was affected mainly due to interruption in supply of power from DVC.

GORAKHPUR

6.11.4 The Gorakhpur Unit has been closed since June 1990 following an accident. A new fertilizer plant is proposed to be established by KRIBHCO using existing infrastructure. Action is in hand for transfer of land and part of assets of Gorakhpur plant from FCI to KRIBHCO.

RAMAGUNDAM

6.11.5 During 1997-98, the Ramagundam unit produced 46.6 thousand MT of nitrogen with a capacity utilisation of 30.7%. During 1998-99 (upto November 1998), the unit produced 16.8 thousand MT of nitrogen, The estimated production during 1998-99 is likely to be 25.9 thousand MT of nitrogen with a capacity utilisation of 17.1%. The production during the period from April 1998 to November 1998 was affected mainly due to work-to-rule agitation from 8.6.98 to 30.7.98 resorted to by Officers’ Association and due to equipment problems in Steam Generation Plant.

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TALCHER

6.11.6 During 1997-98, the Talcher unit produced 46 thousand MT of nitrogen with a capacity utilisation of 30.3%. During 1998-99 (upto November 1998), the unit produced 20.3 thousand MT of nitrogen. The estimated production during the year 1998-99 is likely to be 32.8 thousand MT of nitrogen with a capacity utilisation of 21.6%. The production during the period April 1998 to November 1998 was affected mainly due to shutdown of the plant from 2.4.1998 to 6.5.1998 for repair of L.P.Turbine Rotor of Raw Gas Compressor by BHEL. The plant operation was also affected due to disruption in supply of power from GRIDCO.

SALES PERFORMANCE

6.11.7 FCI sold 4.02 lakh tonnes of fertilizers during 1997-98. During 1998-99 (upto November 1998), the company sold 2.26 lakh tonnes of fertilizers.

FINANCIAL RESULTS

6.11.8 During 1997-98, the company incurred a net loss of Rs.724.93 crore (after prior period adjustment). During 1998-99 (upto November 1998), the company incurred a net loss of Rs.573.63 crore (provisional). During 1998-99, the company is likely to make a loss of Rs.837.74 crore.

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REFERENCE TO BIFR

6.11.9 FCI was declared a sick company on 6.11.92 by BIFR under the Sick Industrial Companies (Special Provisions) Act, 1985. After evaluation of various alternatives, a revival package for FCI was formulated envisaging the limited revamp of Sindri, Ramagundam and Talcher units. However, the revival package could not be implemented for want of funds. The package was reformulated taking into account the consideration of unit-wise viability. The decision on the revival package was deferred. The proposals have been reviewed from the angle of unit-wise viability and tie-up of funding arrangements. The revised proposals are under Inter-Ministerial consultations.

6.11.10    The revamp of Gorakhpur unit has not been found to be techno-economically viable. KRIBHCO is processing a proposal for setting up a new ammonia-urea plant at the existing site at Gorakhpur using the existing infrastructure of FCI.