Nagarjuna Fertilizers to expand capacity

Nagarjuna Fertilizers and Chemicals Limited (NFCL), the flagship company of the Hyderabad-based Nagarjuna group, has embarked upon a Rs 180-crore expansion plan, which is expected to be completed by April 2009.

The company proposes to expand the combined capacity of its two urea plants at Kakinada in Andhra Pradesh by 2.4 lakh tonnes per annum (tpa), taking the total capacity to 15.6 lakh tpa.

To part finance the expansion project, NFCL intends to go for external borrowing of $30 million. "We have applied for loans and finished the paper work in this regard," company's director and chief operating officer, RS Nanda, told Business Standard.

The expansion project involves setting up a new CO2 recovery plant at a cost of Rs 96 crore and making improvement in the existing plants at a cost of about Rs 80 crore.

Following this, Nanda said, NFCL would become more environmental-friendly and would be able to secure carbon credits and higher productivity. There would be a 3 per cent saving in energy consumption leading to Rs 30 crore saving per annum in the cost of production.

Nanda said that Nagarjuna Oil Corporation Limited, which is setting up a six-million tonnes a year refinery at Cuddalore, was all set to achieve financial closure shortly. "The equity has been tied up and the debt portion will be finalised in a couple of months," he said.

Tata Sons had picked a 26 per cent stake in the refinery, while the Nagarjuna group had invested Rs 700 crore for its 51 per cent share in the Rs 1,370 crore equity of the project. The debt portion of the project is estimated at Rs 3,380 crore.