Centre Likely To Extend Interest Holiday To Paradeep Phosphates

The Centre is likely to extend the time limit of interest holiday to the beleaguered public sector unit, Paradeep Phosphates Ltd (PPL), by another three years.

Paradeep Phosphates chairman and managing director H Mishra said here yesterday the extension of interest holiday is part of a capital restructuring plan to turn around the company.

The company has appealed to the Centre to convert the balance Rs 230 crore outstanding of the Central loan into equity.

Though conversion of loan into equity is a complicated process and may take some time, we are hoping for an immediate response from the government regarding the extension of interest holiday to 2000, said Mishra.

 

During the first phase of capital restructuring in 1994, a substantial portion of its government loan had been converted into equity and the company was granted interest holiday, the deadline of which expired on March 31, 1997. The concessions, however, yielded little results and the company is still in the red. The company has, thus, requested for a second dose of financial sops to take the restructuring programme to its logical end. Mishra said the annual interest payment of Rs 34 crore and principal repayment of Rs 23 crore (due from the current year) will place a heavy burden on the company.

Although the company eventually wants the entire balance of Rs 230 crore converted into equity, it hopes the government will immediately allow a degree of conversion that will bring the firms paid-up capital on a par with the authorised capital. The paid-up capital, after the last restructuring, stands at Rs 327 crore as against the authorised capital of Rs 466 crore.

This means, only Rs 100 crore of the Rs 230 crore loan could be converted into equity.

In 1996-97, the company recorded a loss of Rs 48 crore.

Mishra attributed the loss to low capacity utilisation and protracted strike by the plants contract labours during the first three quarters of the last financial year.

He said the loss could have been more but for the all-round improvement in performance in the last quarter.

The plant recorded a 36 per cent capacity utilisation between September and December as against 60 per cent in the first eight months of last fiscal.

Similarly , the off-season sale of DAP (di-ammonium phosphates) in the last quarter was up by 893 per cent over the previous corresponding period.

As a result, the company, known to carry an inventory of Rs 400-500 crore during off-season, could manage to reduce it by 124 per cent by the end of the year.

The company intends to step up its production and sale during the current year. It has targeted to produce 8 lakh tonnes of DAP against a rated capacity of 7,20,000 tonnes (capacity utilisation of 111 per cent) during the current year.

This, along with the companys plan to handle imported fertilisers, such as, 250,000 lakh tonnes of DAP, 100,000 tonnes of nitrate of potash and 500,000 tonnes of urea, is expected to take the total turnover to Rs 1,200 crore in 1997-98, as against only Rs 600 crore achieved during the last year.

In keeping with this target, the company achieved its highest-ever monthly performance of 77,180 tonnes, recording a capacity utilisation of 129 per cent in April.