Revival plan of Madras Fertilisers delayed as BRPSE lacks members

The company is one among the four public sector fertiliser companies reported sick

The revival plan for Madras Fertilizers Ltd (MFL), a sick unit under the Department of Fertilizers, was returned by the Department of Public Enterprises (DPE) as several seats, including that of the chairman, remains vacant at the Board for Reconstruction of Public Sector Enterprises (BRPSE), which has to consider and approve the revival plan.

Minister for Chemicals and Fertiliser Hansraj Gangaram  informed the Lok Sabha that “a comprehensive proposal seeking financial restructuring of MFL to address the issue of sickness was submitted to the Department of Public Enterprises (DPE) to place it for the consideration/approval of the BRPSE. However, the DPE returned the proposal in July, 2014, stating  the post of Chairman, BRPSE, and several other members are vacant,” said the minister in a written reply.

He stated that the government has laid a roadmap for achieving self-sufficiency in production of the fertiliser by reviving defunct fertiliser units across the country and establishing units along the route of the Natural Gas Grid.

Four of the nine public sector fertiliser companies under the administrative control of the Department of Fertilizers are reported sick, including Fertilizer Corporation of India Limited (FCIL), Hindustan Fertilizer Corporation Limited (HFCL), Madras Fertilizers Limited (MFL), Fertilizers And Chemicals Travancore Ltd. (FACT) and Brahmaputra Valley Fertilizers Corporation Ltd. (BVFCL). Of these, the units of FCIL and HFCL have remained closed from 2002. The MFL, FACT and BVFCL are operational, but sick companies.

The company has proposed a restructuring proposal consisting of waiver of loan worth Rs 554.24 crore as on December, 2013, and outstanding interest worth Rs 331.6 crore along with penal interest till the same period, apart from liberal and flexible government policy.

MFL is a JV between the Government of India and Naftiran Intertrade Co Ltd (NICO) with shareholding of 69.78 per cent and 30.22 per cent respectively.

MFL started incurring losses in 2003-04 and was declared sick in 2009.

The company, which commenced commercial production in 1971, with an annual installed capacity of 247,500 MT of ammonia, 292,050 MT of urea and 540,000 MT of NPK carried out a major revamp in 1998 for Rs 601 crore thus enhancing its annual installed capacity to 346,500 MT of Ammonia, 486,750 MT of Urea and 8,40,000 MT of NPK, according to the department data.

It also says stoppage of subsidy for naphtha-based urea plants from July 1, 2014, is a major strategic issue, having a very high impact on the viability of the MFL plant. Conversion to natural gas feedstock depends upon the availability of LNG at Chennai. At present, the company markets Vijay Organic Manure and Vijay Neem along with bio-fertiliser produced by it.