Excerpts from the chairman’s speech

Net loss of Rs 58 crore in the first quarter ending June 2007 (Q1 of FY 2008) compared with a loss of Rs 30 crore in Q1 of FY 2007. Sales stood at Rs 201 crore in Q1 of FY 2008 as against Rs 288 crore in Q1 of FY 2007.

Operations were crippled by the shutdown of ammonia and urea units in April 2007 and shutdown of complex fertilisers (NPK) unit. The shutdown of NPK unit is largely on account of raw material limitation.

Out of the three soil nutrients namely nitrogen, phosphate and potash, indigenous raw material is available mainly for nitrogen. This is due to limited availability of rock phosphate and sulphur in the international market along with paucity of domestic raw material. There are no commercially exploitable reserves of potash in the country, hence the entire requirement of potash nutrients for direct application as well as for production of complex fertilisers is largely met through imports.

Plans to convert to liquified natural gas (LNG) as feedstock instead of naphtha. The implementation of changing over to LNG as feedstock can be done with minimum capex and in a short span of time.

A financial restructuring proposal has been put forward to make operations viable by providing adequate compensation for production. This step followed the relief recommendations of Board for Reconstruction of Public Sector Enterprises (BRPSE) in its meeting held on 17 March 2005 and subsequent consideration of the recommendations of BRPSE by COS in its meeting held on 22 March 2006.

Produced 2.81 LMT ammonia, 4.73 LMT urea and 0.57 LMT NPK in 2006-07 with a capacity utilization of 81.2%, 97.2% and 6.8% respectively.

Sold 5.42 LMT of fertilisers in 2006-07. Net loss stood at Rs 114.78 crore on 31 March 2007, the total accumulated loss is Rs 513.70 crore.

With the availability of gas, which is a critical feedstock for urea production, projected to improve in the country from 2008-09 onwards, active discussions and deliberations are on in the Department of Fertilizers on New Urea Investment policy aiming at self-sufficiency. The basic principle proposed in the new policy for investment in the urea sector, both greenfield and brownfield, is it should be based on an open door policy with price of urea benchmarked to the import parity price.