Normative transportation rate for 2009-10: Details

Sept 2: The FICC has has extracted a weighted average normative transportation rate of Rs 160.49/MT (base 2007-08) from the Tariff Commission's draft report and inflated it with the composite road transport index to arrive at the rate for 2009-10.
 8The normative rate is for transportation from rake point.
 8The 2009-10 rate works out to a 7% increase.
 8The figure works out to Rs 171.7 TMT.
 Click on our Reports section.

Rama Phosphates to get fresh promoters equity

Sept 2: The promoters of Rama Phosphates Ltd (RPL) would infuse Rs 9.3 crore into the company within the framework of its rehabilitation scheme sanctioned by Board for Industrial and Financial Reconstruction (BIFR).
 8The company today informed the Bombay Stock Exchange that its securities allotment committee would meet on 3 September to issue and allot 30,11,787 equity shares of Rs. 10/- each for cash at a premium of Rs. 20/- per share aggregating to Rs. 9.30 crore to the promoters and their associates pursuant to the Debt Rehabilitation Scheme sanctioned by BIFR.
 8In August 2009, BIFR had sanctioned the Rehabilitation Scheme granting the company various reliefs and concessions.
 8RPL produces single super phosphate, NPK mixed fertilisers, oleum and edible oils.
 Click our reports section to view RPL’s disclosure to the BSE.

CFCL calls for revamp of urea and gas policies

Sept 2: Chambal Fertilisers and Chemicals Limited (CFCL) has said that the government should improve its urea investment policy and gas allocation policy to enable it to commit funds for its urea expansion project.
  8In its Annual Report for 2009-10, the company says: “clarity and improvement in some parameters in government policy is required for committing further investments.”
  8The report notes: “there is an urgent need to augment gas supplies domestically or come to a formula wherein potential investors are assured of a cost neutralization of inputs beyond a level. The government is currently working on a suitable amendment to this policy to take care of industry concerns and the company is actively tracking these developments.”
  8CFCL has pointed out that re-gasified LNG (RLNG) currently constitutes a major quantum of gas supplies for its urea production complex and the prices under the contracts have been rising due to an increase in international oil prices.
  8The company is thus taking steps for reduction in the overall gas cost and has requested the government to replace a part of RLNG volumes with the gas from the KG-D6 basin in line with a mandate from the Empowered Group of Ministers.
  8The company perceives Nutrient Based Subsidy Scheme (NBS) as “an opportunity to expand its product range in potassic and phosphatic fertilisers through an active overseas procurement programme. This will further strengthen the company’s flagship brand ‘Uttam’ under which these products will be sold.”

New fertilizer secretary

Sept 1: 8Sutanu Behuria today took over as the Secretary, Department of Fertilizers (DOF), according to an official release.
 8Mr. Behuria is a 1976 batch officer of the Indian Administrative Service of Himachal cadre. Prior to this, he was Special Secretary and Financial Adviser in the Ministry of Commerce and Industry.

RCF takeover of FACT: Fresh due diligence likely

Sept 1: In response to a request from the DOF, Rashtriya Chemicals and Fertilizers Ltd (RCF) has said that it will be have to conduct a fresh due diligence on whether it is in a position to take over FACT as a subsidiary.
 RCF had done a study in 1997 when it concluded:
 8FACT to be made a subsidiary of RCF. RCF management will assist in the turnaround of FACT, which is expected to be done within two to three years.
 8Merger option will be taken up after the company is turned around successfully and operations become consistently profitable.
 Since the policy environment has changed since then, RCF claims fresh due diligence will be required.   Details

RCF seeks sulphur supply offers

Sept 1: 8Rashtriya Chemicals and Fertilisers Limited (RCF) has invited tenders for supply of 1000 tonnes of sulphur.
 8In its notice inviting tenders (NIT), the last date for submission of offers is 7Sept2010
 Click our report sections to view RCF NIT.

Indo Gulf seeks extra RIL gas

Sept 1: Indo Gulf Fertilizers has lodged a complaint with the DOF that the company has said that reduced supply of APM gas is not compensated either as additional quantity supplied by RIL or as a fall back supply.
 8Instead, GAIL plugs the gap by supply of RLNG at market price, leading to a loss to the company.
 8The company claims that the gap in supply of gas should be made from RIL as fall back supply.
 8Indo Gulf has asked the DOF to intervene with RIL for supply of the extra gas as a supplementary agreement.   Details

MOEF extends moratorium on projects at 43 sites

Sept 1: The uncertainty over the fate of fertilizer and other projects proposed in areas that have high “comprehensive environmental pollution index” (CEPI) has got prolonged due to a government order today.
  8The Ministry of Environment and Forests (MOEF) today released its directive extending the moratorium on consideration of project proposals in such specified areas by two months to 31 October, 2010 from 31 August.
  8In an memorandum dated 13 January 2010, the MOEF had noted that the CEPI for 88 industrial clusters had been prepared jointly by the Central Pollution Control Board (CPCB) and the Indian Institute of Technology, New Delhi.
  8The Ministry had then decided to return proposals for projects in 43 industrial clusters with CEPI score of above 70. This restriction on project consideration and approval was valid for eight months during which time authorities were asked to prepare time-bound plan for improving environmental quality in these areas.
  8In its latest office order dated 30 August 2010, the MOEF acknowledged the preparation of such plans by concerned State Pollution Boards. It, however, contended that mere preparation of action plans would not serve the intended purpose unless these plans are effectively implemented. It would be necessary to review the implementation at the field level. Hence the moratorium.
  Click reports to see the MOEF’s latest office memorandum.

FACT gets a new officiating CMD

Sept 1: 8The Government has appointed a new officiating chief executive of Fertilisers and Chemicals Travancore Limited (FACT).
 8The company today informed the National Stock Exchange that V.G. Sankaranarayanan, Director (Technical) has taken over the additional charge of the post of Chairman and Managing Director (CMD) of the Company with effect from 1st September 2010 following a Government order.

NBS for urea: FAI issues ultimatum

August 31: The Fertilizer Association of India (FAI) has expressed its disappointment over the DOF`s inability to implement the NBS in urea from Rabi 2010-11. In a letter, the FAI has made the following points:
 8We have reasons to believe that there may be a delay in implementation of the NBS on urea. The Department of Fertilisers (DOF) continues to retain full control on urea including imports. There is indifference to many of the issues which impairs the already fragile health of urea units. Efficiency is penalised. The Industry is made to suffer for no fault on their part. There are serious taxation issues under which many states are imposing additional taxes on the inputs and finished products. These are neither recognized under the urea policy nor the industry is allowed to recover the same in the form of higher MRP in the concerned States. The marketing margins paid by the industry on the purchase of gas signed with the knowledge and consent of the DOF are not being recognized and paid. Various costs like wages and salaries, distribution cost etc. have not been updated for the last several years. The above are only some of the issues that are adversely affecting the urea units. In summary, the urea industry continues to be shackled heavily, despite the stated intent of the Government of India.
 8Our Urea plants are most efficient as per the international benchmarking, both in respect of capacity utilisation and energy consumption.
 8In view of what is stated above, the industry again reiterates that any new pricing policy of urea (modified NPS-III or NPS-IV schemes) based upon groupings, costing, capacity utilization etc., is no more acceptable to the Industry.
 8If NBS on urea is not implemented latest by 1st April, 2011, the industry will like to withdraw from any subsidy/concession scheme of the government on India.
 Click on Details for more information.   Details

Kribhco revamp: Rs 300 crore in buyers' credit

August 31: The Kribhco is planning to take buyers' credit route for the Rs 1300 crore revamp of its Hazira urea-ammonia plant that would increase capacity by 25%.
 8The expansion is to be financed through a debt of Rs 800 crore and Rs 500 crore in surplus funds.
 8The debt is being financed through domestic and foreign terms loans. Under the present scenario, the cost of funds under buyers' credit is lower than term loans. Kribhco will take advantage of a buyers' credit facility of up to Rs 300 crore as and when required depending upon the requirement of funds for a period of 2 to 3 years.
 8 It is expected that buyers' credit rates including hedging cost will be cheaper than rupee loans for three years.

Ammonia Brief

August 31: 8Vessel "Bunga Kemboja" is nominated to load 16,000 tonnes of ammonia from Malaysia with ETA Paradeep around September 2-4, 2010 to discharge 11,000 tonnes under long-term agreement between CIFC and IFFCO, followed by Haldia, to discharge 5,000 tonnes under long-term agreement between MITCO and Tata Chemicals.
 8The price for this cargo will be in the high $340s PMT cfr.