Industrial Development Bank of India (IDBI) and the Industrial Finance Corporation of India (IFCI) have together sanctioned Rs 1,050 crore for the Rs 3,200 crore, 6.5 million tonne refinery project being set up by the Nagarjuna group of the Rajus.
The group is also in talks with overseas financial institutions for funding the mega project, being put up under Nagarjuna Fertilizers & Chemicals Ltd (NFCL) subsidiary Pennar Refineries. Pennar Refineries has become a Nagarjuna subsidiary during 1997-98. The project is expected to go on stream by the last quarter of 2001.
The group is also in the final stages of the EPC contract and the power purchase agreement for its 1000 mw power plant coming up in Mangalore under group company Nagarjuna Power Corporation. Pennar Refineries has also signed a MoU with Caltex Petroleum Corporation of the US for technical assistance in implementing and operating the refinery project. Detailed discussions are also under way for finalising the various agreements.
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Pennar Refineries proposes to relocate an existing refinery from Woerth, Germany, hitherto owned by Mobil Marketing Raffinerie, Gmbh, to Cuddalore, Tamil Nadu, with the help of leading international and domestic contractors.
The dismantling engineering activities are expected to commence by the end of 1998. The company says that while IDBI and IFCI have sanctioned just over Rs 1000 crore, the balance funds would also be tied up shortly.
On another front, Nagarjuna Fertilizers has issued warrants on preferential basis to the promoters, who have subscribed to 6.95 crore warrants. The promoters would be entitled to convert each warrant of Rs 15.71 into one equity share of Rs 10 each within 18 months from the date of allotment. NFCL's expansion project involving the doubling of its fertiliser manufacturing facilities at Kakinada has been completed within the estimated cost. Commercial production also commenced on March 19, 1998. The project was financed by internal accruals and FI loans.
The two NFCL joint ventures, Nagarjuna Palma India Ltd and Nagarjuna Haifa India Ltd have also moved ahead. While the former, a joint venture company with Palma of Israel has commenced commercial production of integral drip lines, the latter, a venture with Haifa Chemicals of Israel has also begun establishing itself as a reliable supplier of water soluble fertilisers.
NFCL's turnover during 1997-98 was Rs 795.88 crore against Rs 922.49 crore the previous year. Profit after tax stood at Rs 122.10 crore against Rs 161.20 crore the previous year. According to the company, the second half of the 1997-98 fiscal saw the its activities being curtailed to comply with government of India restrictions on the offtake of urea to be limited to 115 per cent capacity.