FERTILIZER CORPORATION OF INDIA LTD. (FCI)

The Fertilizer Corporation of India Ltd. (FCI) was set up in 1961. It was reorganised alongwith National Fertilizers Ltd(NFL) in April, 1978 into five companies namely,FCI,NFL,Hindustan Fertilizer Corporation Ltd(HFC),Rashtriya Chemicals & Fertililzers Ltd(RCF) and Projects & Development India Ltd (PDIL). At present,FCI has the following manufacturing units:

1. Sindri in Bihar
2. Gorakhpur in Uttar Pradesh(lying closed since 10.06.1990 following an accident)
3. Ramagundam in Andhra Pradesh.
4. Talcher in Orrisa

2. FCI is also engaged in the mining of gypsum in Rajasthan. As on 31^st March, 1998,FCI had an authorised share capital of Rs.800.00 crore and a paid up capital of Rs.707.74 crore..

3. In view of the continued technological and equipment problems in the two coal based units at Ramagundam and Talcher, the annual installed capacity of each of these plants has been reassessed at 151800 tonnes of Nitrogen,bringing down the overall annual installed capacity of FCI to 656800 tonnes of Nitrogen as against 808600 tonnes..

4. The details of the capital schemes under implementation in FCI are given in Statement-I.

5. OPERATING RESULTS

Against the target of 235100 tonnes of Nitrogen for the year 1997-98,the actual production was 208600 tonnes of Nitrogen. During the year 1998-99,the actual production of Nitrogen upto Oct.1998 was 56120 MT against the corresponding target of 60260 MT. Thus achieving 93.13% of the target. The production target for the year 1998-99 has been fixed at 112700 tonnes of nitrogen. The shortfall in production during 1997-98 and 1998-99 was mainly due to the followings reasons.

i) Sindri Modernisation

During 1997-98,Sindri Unit could produce only 116020 tonnes of Nitrogen against 139740 tonnes of Nitrogen in the previous year. The production was low mainly due to frequent power interruptions from DVC,problem in air compressor and due to problem in air separation unit.

ii) Gorakhpur

The Plant remained under shut down throughout the year as a result of an accident in Co-conversion Section on 10.6.1990.

iii) Ramagundam

The plant produced 46600 tonnes of Nitrogen during the year 1997-98 as against 31900 tonnes in the previous year. The production during 1997-98 was higher compared to previous year. It could have been still better but for shut down of plant for about 37 days in October-November,1997 for undertaking critical maintenance jobs and frequent problems in Air compressors. During the year 1998 -99, the cumulative production of Nitrogen upto Oct.1998 was 11224 MT against the corresponding of 15180 MT. Thus achieving 73.94% of the target. The production target for the year 1998-99 has been fixed at 50600 tonnes of Nitrogen.

iv) Talcher

The plant produced 46000 tonnes of Nitrogen during the year 1997-98 as against 61600 tonnes of Nitrogen in the previous year. The production during the year 1997-98 was lower compared to previous year mainly due to problems in synthesis gas compressor, Raw gas compressor and gas holders. During the year 1998-99, the actual production of Nitrogen upto October 1998 was 14076 MT, against the corresponding target of 17020 MT, thus achieving 82.7% of the target. The production target for the year 1998-99 has been fixed at 46000 tonnes of Nitrogen.

6. MARKETING OPERATION

The sale of fertilizers during the year 1997-98 was around 402000 tonnes against 457000 tonnes in the previous year. The corporation also sold 24000 tonnes of bought out products in the state of West Bengal, Bihar and Orissa against 27000 tonnes in the previous year.

Apart from this, the Corporation sold major industrial products like nitric acid, ammonium bicarbonate, ammonium bicarbonate, ammonium nitrate etc. aggregating Rs.36 crore against Rs.35 crore in the previous year. In the year 1998-99, t he corporation sold major industrial

Products aggregating to Rs.69.5 crore upto October 1998.

With a view to educate the farmers regarding scientific use of improved package of agricultural products, Corporation has undertaken various need based promotional activities in the States of Orissa and Bihar.

7. FINANCIAL RESULTS

For the year 1997-98, there was a loss of Rs.735.69 crore (after charging interest of Rs.457.45 crore, comprising interest and penal interest of Rs.237.13 crore, and Rs.186.50 crore respectively on GOI loans, interest of Rs.19.00 crore on loans from PSUs and others and interest of 14.83 crore on Cash credit). The revised projected loss for the year 1998-99 is Rs.837.74 crore, comprising interest and penal interest Rs.289.18 crore and Rs.238.10 crore respectively on GOI loans, interest of Rs.20.42 crore on loans from PSUs & others and interest of Rs.16.00 crore on cash credit. During the current financial year, accumulated loss of the company upto October 1998 was reported to Rs.75.19 crore. The reasons for increase in loss are :-

1. higher incidence of interest,

2. higher input costs particularly in respect of power tariffs by respective State Electricity Boards and higher consumption not reimbursable from FICC.

For the year 1998-99, the estimated loss is Rs.970.46 crore, comprising interest and penal interest of Rs.342.06 crore and Rs.296.80 crore respectively on GOI loans, interest of Rs.21.88 crore on loans from PSUs and others and interest of Rs.16.00 crore on cash credit . The projected loss for the year 1998-99 is more as compared to 1997-98 mainly due to expected higher incidence of incidence of interest in 1999-2000 compared to 1998-99.

8. REFERENCE TO BIFR

In accordance with Government guidelines , in April, 1992, the Corporation was referred to the Board for industrial & Financial Reconstruction ( BIFR) under the Sick Industrial Companies ( Special Provisions) Act, 1985. In the fifth hearing held on 21-9-1995, Ministry of Chemicals & Fertilizers submitted that in principle decision has been for revamping of the corporation.However, the availability of funds was still being looked into. Government requested for further time upto October, 1995 for finalising tie-up arrangement for finance. BIFR directed the Government to make available all information to ICICI the Operating Agency for analysing the practicability and viability of proposals being worked out. In view of the request of Government for time upto October 1995, the Operating Agency  was directed to assess their schemes from the point of view of acceptability within the same period and convey to the Bench by middle of November 1995 its status note covering the entire progress made.

The Government looked into the techno-economic viability of the revival package and constituted a committee in February 1996 consisting of ICICI, IDBI, FCI and HFC with ICICI having the nodal responsibility for assisting in formulation of the revival package. This Committee desired a fresh appraisal of the revival package by independent agency. On behalf of the Committee. ICICI appointed FEDO as consultant in July,1996 for undertaking the assessment of the health of the plants and technical viability of proposed rehabilitation scheme of FCI plants to Government on 24.2.1997. Thereafter, a hearing was held on 23.4.1997 in the office of BIFR. BIFR desired OA to submit a draft rehabilitation proposal for FCI considering Gorakhpur as hived off. The OA,as desired by BIFR,submitted its report in May,1997. In the last BIFR hearing on 22.10.1997, the bench directed OA to prepare revised/updated scheme for the company as a whole which should include latest development regarding Gorakhpur Plant which is to be closed down with KRIBHCO stepping into set up another unit in the same premises. Bench also directed OA to submit note containing proposed treatment for Gorakhpur unit within one month.

Statement-II, Statement-III, Statement-IV.