HINDUSTAN FERTILIZER COPORATION LIMITED (HFC)

Hindustan Fertilizer Corporation Ltd.(HFC) was incorporated on 14 March,1978 in pursuance of the decision of the Government of India to reorganise the erstwhile Fertilizer Corporation of India(FCI). The units of Namrup,Barauni,Durgapur and Haldia Project, the Eastern Marketing Zone,Fertilizer Promotion and Agricultural Reseach Centrel, Purchase and Liaison Office, Calcutta and agronomy wing of FP&ARD at Sindri came under the control of HFC. As on 31st March,1998 the Company had an authorised capital of Rs.1200 crore and subscribed and paid up share capital or Rs.729.00 crore.

2. The Salient features of the Haldia Project, which, technically is still under implementation are as under :

3. The Haldia Fertilizer Project was mechanically completed in November, 1979. However, this project could not be brought to successful commissioning due to various reasons. This has been dealt with separately in Chapter-III.

PRODUCTION PERFORMANCE

4. The Company has five operating plants i.e. 3 plants at Namrup ( Namrup-I,II,III), one each at Durgapur and Baruni. The annual installed capacity of the operating units of HFC is 6.53 lakh tonnes of nitrogen which has ben derated to 4.24 lakh tonnes w.e.f. 1.11.1994.

5. The details of the actual production during 1996-97 & 1997-98 and target of production for the year 1998-99 along with the corresponding figures of capacity utilisation for the respective years are given in Statement-II.

FINANCIAL PERFORMANCE

6 The Company has incurred a loss of Rs.532.64 crore during the year 1996- 97 and during the year 1997-98 and 1998-99 the company is expected to incur a loss of Rs.580.70 crore and Rs.707.62 crore, respectively.

DERATING OF THE NAMEPLATE CAPACITY OF THE PLANTS

7. Having regard to the fact that the HFC plants had not been able to achieve their rated capacity. Order were issued on 22.11.1995 for derating the capacities of Durgapur, Barauni and Namrup I & II units to 52.42%, 55.76% and 57.57% respectively of the existing nameplate capacities. In the case of Namrup I, it has been decided to 65% of the nameplate capacity. The revised retention prices based on the derated capacity of these plants will take effect from 1.11.94.

REFERENCE TO BIFR

8. In terms of Section 3(1) of the Sick Industrial Companies (Special Provisions) Act,1985 the case of the company was referred to the Board for Industrial and Financial Reconstruction (BIFR), which declared it a sick company on 12.11.92. The BIFR has appointed Industrial Credit and Investment Corporation of India Limited(ICICI) as the Operating Agency directing it to evaluate independently the various alternatives from the angles of technical, financial, and commercial viability. After evaluation of various alternatives, a revival package of HFC was formulated which envisaged the limited revamp of Durgapur,Barauni and Namrup lunits. However, the revival package could lnot be implemented for want of funding arrangements. The revival package was again reformulated by the Government taking into account the unitwise viability and was submitted for obtaining the approval of the competent authority in the Government in August,1997. The Government has, in a decision taken on 1.10.97, approved the revival package in respect of only Namrup units of HFC at an estimated fresh investment of Rs.350 crore. The management of HFC is engaged in the implementation of the revival package.

9. The data in respect of Project/schemes under implementation,production performance, estimates of internal resources and performance indices are given in Statement-I, Statement-III and Statement-IV respectively.