Naftiran Intertrade Co Ltd (Nico), an affiliate of the National Iranian Oil Company and a co-promoter of Madras Fertilizers Ltd (MFL), has objected to the Government of India’s proposal to convert the latter’s loan into equity.
The government loan and accrued interest to MFL is worth Rs 390.79 crore.
MFL officials were not available for comment and a mail sent to Nico remained answered. However, MFL’s annual report stated, during the hearing on May 7, 2012, Nico had objected to conversion of GoI’s loan into equity.
According to the company’s website: “The government of India holds 59.50 per cent stake in the company, while Nico has 25.77 per cent and rest is held by public.”
Chennai-based MFL’s accumulated losses as of March 31, 2012, stood at Rs 505.20 crore compared with Rs 617.19 crore, a year ago.
The company, in 2009, was declared sick and the SBI was appointed the operating agency. MFL, in a communication to its shareholders, attributed the losses to the government’s unfavourable policy during April 2003 and March 2009, cost and time overrun during revamp of ammonia and urea plants, delay in stabilisation of revamped plants due to technology-related problems, higher energy consumption and deterioration in reliability of plants due to poor maintenance for want of funds among other.
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The company has prepared a draft rehabilitation proposal, which has been forwarded to the operating agency for further view.
Meanwhile, the company said after a gap of about four years, production of complex fertilisers could be started.
It produced 486,750 mt urea, which is the total installed capacity, as of March 4, 2012. The previous best utilisation was in 2010-11 at 478,834 mt, which is 98.4 per cent of the total manufacturing capacity.
It has also started initiatives for feedstock conversion from naphtha to natural gas. The company has sought allocation of 1.54 mmscmd natural gas.
It is also examining if it could source gas from the KG-D6 field, LNG terminal at Ennore and GAIL’s Kochi terminal among others.