MADRAS FERTILIZERS LIMITED (MFL)

MFL was incorporated in December,1966 as a joint venture between Government of India (GOI) and AMOCO India Incorporation of USA(AMOCO),with the GOI holding 51% of the equity share capital.

In accordance with the participation agreement between GOI, AMOCO and the National Iranian Oil Company (NIOC) acquired 50% of the share holding of AMOCO in MFL on 22.11.1972. The share holding pattern upto 21.07.1985 was as follows:

GOI 51.0%

AMOCO 24.5%

NIOC 24.5%

In 1985 AMOCO disinvested their share holding which were acquired by the Government of India & NIOC in their respective proportions on 22.07.1985. The revised share holding patter was GOI 67.55%,NIOC 32.45%.

On 12.5.1997 MFL came up ,with its maiden public issue of 2,86,30,000 shares of face value of Rs.10/- at a premium of Rs.5/- per share, out of which 2,58,09,700 shares were subscribed . After the public issue,MFL's share holding patter is as under:

As on 31.3.1998 the authorised share capital of the company was Rs.175 crore and the paid up capital was Rs.161.77 crore.

2. PRODUCTION PERFORMANCE

The company has produced 2.04 LMT of Nitrogenous, 1.29 LMT Phosphatic & 1.15 LMT of Potassic fertilizers upto October' 1998 during 1998-99. The details of target and actual production during the production during 1998-99; as also the estimated production during 1999-2000 alongwith corresponding figure of capacity utilisation are given in Statement-II.

3. FINANCIAL PERFORMANCE

During 1997-98, the company's operations resulted in a loss of Rs.55.35 crore as against the targeted profit before tax of Rs.66.18 crore per MOU. The operations for 1998-99 are expected to result in a loss of Rs.21.99 crore per MOU. The loss is mainly due to extended shut down of ammonia and urea plants upto the end of September' 1997 which resulted in la very low capacity utilisation, steep increase in prices of Naphtha & Fuel Oil, weakening of Indian Rupee against US Dollar, reduction in Adhoc Concession on P&K Fertilizers by GOI from Rabi 1997-98, delay in announcement and disbursement of Adhoc Concession on P&K Fertilizers for Rabi 1997-98 resulting in increase in the interest cost.

The company has incurred a loss of Rs.60.29 crore upto October' 1998.

4. AMMONIA/UREA REVAMP PROJECT

The performance of Urea Prill Tower modified as part of the revamp has not been satisfactory which is leading to the problem of High Urea Prill Temperature. Even after one year of operation, this problem is persisting resulting in average capacity utilisation of urea plant to around 65%. To find solution to the low capacity utilisation problem, MFL has contacted other reputed consultants including M/s. Urea Casale Switzerland, Toyo Engineering Corporation, Japan and PDIL for the rectification of Urea Prill Tower. As it will be uneconomical to operate the Urea Plant at existing average capacity utilisation of 65%, company proposes to immediately take up the short term rectificaton work which would ensure capacity utilisation of nearly 85% within the next 9 months.

The Revamp Project has been completed at an estimate cost of Rs.601.43 crore with a cost over run of approx. Rs.14 crore. Owing to the liquidity problem the Company's current liabilities have gone up to nearly Rs.400 crore.

Due to the liquidity problem with erosion of working capital and substantial under recovery faced by the company, an Inter-Ministerial  Meeting was convened on July 15, 1998 in the Department of Fertilizers, where in it was decided that a financial restructuring proposal will be prepared by the company with IDBI is presently engaged in finalising the package.

A proposal for financial assistance and restructuring is expected to be shortly submitted to Department of Fertilizers.

5. Project schemes under implementation/proposed for implementation and provided for in the Budget ; estimates of internal and extra budgetary resources; and performance indices are given in Statement-I, Statement-III &  Statement-IV respectively.