PPL losses down Rs 30cr

Paradeep Phosphates Ltd (PPL), a leading phosphatic fertilser producer in the country, has ended up in the red despite significant improvement in production and plant performance.

The company's loss in 2003-04 at Rs 38.47 crore, however, was Rs 30 crore less than Rs 68.75 crore loss reported in the previous fiscal.

The company ended up in loss despite posting best-ever physical performance mainly on account of two reasons ""high overheads and abnormal interest costs on borrowings taken in the past to fund losses, said KK Gupta, managing director of the company.

High debts, particularly the Rs 200 crore government loan, is hurting the company, Gupta said. The government had extended this loan to the company to fund its losses when PPL was a PSU.

The loan carries an interest of 15 per cent against the current market rate of 7 to 10 per cent and the cost of excess interest is estimated at Rs 25 crore. He said, repeated appeals to the government to lower the interest rate has not yielded any result.

Similarly, the company is burdened with surplus manpower for which the management is spending an extra Rs 15 crore a year towards salaries and other benefits.

The company, at present, has 2,500 employees even after reducing headcount by 250 through VRS in last two years. Of this, 1500 employees are contract labourers while the remaining 1000 are departmental staff.

Meanwhile, a report prepared by consultants Hewitt & Associates, which was requisitioned by the company to do a study on manpower, has pointed out that half of PPL's contract labour and 28 per cent of its departmental staff are surplus.

In addition, Gupta said, the government policy of price control and subsidy given to the industry has compounded PPL's woes.

PPL's fertiliser production has gone up from 2.3 lakh tonnes in 2001-02 to 8.88 lakh tonnes in 2003-04 with 123 per cent capacity utilisation.

This has catapulted the company to the second largest phosphatic fertiliser producer in the country after IFFCO.

PPL's sulphuric acid and phosphoric acid plants ,which produce two main intermediates, achieved 96 per cent and 80 per cent capacity utilisation respectively as against eight per cent and five per cent before its privatisation.