Godavari Fertilisers marks turnaround

Reports profit before tax of Rs 10 crore for 2003-04

Less than a year after being taken over by the Chennai-based $1.2 billion Murugappa Group, Godavari Fertilisers and Chemicals Ltd (GFCL) has turned around and reported a profit before tax of Rs 10 crore on a turnover of Rs 887 crore for 2003-04.

This apart, the Murugappa Group has initiated expansion moves that will see the combined production of fertilisers, between Coromandel Fertilisers Ltd (CFL) and GFCL, touch three million tonnes from the present two million tonnes.

CFL itself reported revenues of Rs 1,222 crore and a profit before tax of Rs 71 crore for 2003-04.

Speaking to a select media gathering in the city, A Vellayan, director (marketing), Murugappa Group, said that the route to profitability for GFCL lay in the quick synergies that were realised between the operations of GFCL and CFL.

"The most significant achievement was that market discipline in terms of pricing was arrived at. Both the companies are now operating without discounts being offered. Earlier discounts up to Rs 250 per tonne were being offered," Vellayan said.

This apart the companies also rationalised the fertiliser product mix between them and now certain products are being manufactured only at one of the plants, and not both "� as was the case earlier.

CFL and GFCL have also,Vellayan said, started selling directly to the farmers and at present 10 per cent of the total sales of the company come in the form of direct sales.

"This has a direct impact on our bottomline as we save close to Rs 150 per tonne apart from creating entry barriers for competition," he said, and pointed out that the two entities were also saving substantially on transportation costs.

"Finally, we have been able to merge the raw material buying requirements of the two companies which translates again into substantial gains for the two companies," Vellayan said.

Vellayan pointed out that the company would be expanding its combined capacity between the two companies from the present two million tonnes to about three million tonnes over the next 10 months.

"The total cost would be around Rs 40 crore and this will be totally met through internal accruals," he said.