RCF MOU for urea, ammonia and phosphatic plants in Mozambique: Details

May 8: The website carries here details of the MOU to be signed between RCF and Industrial Development Corporation and Foskor, both of South Africa, for a ammonia, urea and phosphatic fertilizer plant in Mozambique.  The following are the salient features of the MOU:
 8The MOU shall subsist for a period of 12 months.
 8The Parties will investigate the setting up of an Ammonia -Urea and Phosphatic Fertilizers production facility at Maputo in Mozambique by sourcing rock phosphate from the Phalaborwa mines of Foskor in South  Africa and natural gas from Mozambican gas fields. If the project is proceeded with, implementation shall be done by a joint venture company to be formed by the parties.
 8The Parties will approach the Government of Mozambique for securing allocation  of nature gas on priority basis subject to availability of new  gas findings in Mozambique.
 8The Parties will enter into a formal understanding with the Government of Mozambique for providing and infrastructure  at a suitable location  in Maputo in Mozambique and, furthermore, may introduce a joint venture partner from the Mozambican side as may be proposed by the Government of  Mozambique.
 8During the subsistence of this MOU, the parties shall not enter into any  negotiations or any agreement of whatsoever  nature with  any other third party in respect of the project.
 8The Parties shall jointly prepare a techno economic feasibility report and a detailed feasibility report. The costs of the TEFR and DFR shall be shared by the Parties as to 50% jointly by IDC and /or Foskor, and 50% by RCF. The TEFR and DFR shall  be owned by the Parties jointly.   Details

RCF JV for port infrastructure:Ambitious plans

May 8: RCF has been allotted 10 acres of land at Vizag and 2.96 acres of land (12000 sq.meter) at Tuticorin) by the respective port authorities on 30 years lease for development of infrastructure and its operation. The company plans to promote a joint venture for effective operations of infrastructure to be built in the land acquired in the two ports:
 8One single joint venture with more than two partners be formed to look after the operations of infrastructure to be built in the two ports, plus for other possible ports such as Kandla.
 8The JV will not jsut operate warehouses but should have the objective of covering the entire logistic business, including storage, inland transport, coastal transport and  allied areas. At a future time, the JV could also consider going into the shipping business.
 8The JV could be named "RCF Logistic Pvt.Ltd.", with RCF holding of 49% while other partners should not have more than 20% stake.
 (Click on Details for more information)   Details

IPCL caught in a financial squeeze

May 8: Indian Potash Ltd has begun feeling the squeeze resulting from the DOF's inability to make payments on time. The funds position has been very tight all through 2007-08 and is gradually getting worse. The DOF's preference has always been to make 'on-account' payments of claims for the current year while ignoring payments of huge accumulated balance payments of the earlier years.
 8IPL claims that payments have not yet been fully made to settle balance 15% claims for the period upto 2006-07 for all products and other claims arising out of buffer stocking.
 8Also not paid are differential payments for 2007-08 for the first half of the year for which final rates of concessions have already been announced as well as the balance 15% payment for the period
 8Also not paid are 'on-account'  payments from January, 2008 onwards
 Comment: The squeeze is indeed very hard for IPL given the fact that the company has no other way of making up the gap expect to borrow heavily and pay interest which is not disbursed by the government.

Details of the JVC between RCF, Kribhco and NFL

May 7: The website carries here details of the Joint Venture company floated by RCF, NFL and Kribhco to explore the the possibility of investments in nitrogenous, phosphatic and potassic sectors in resource rich countries. The name of the JV will be Urvarak Videh Ltd. The equity capital will be equally divided among the three promoters. The following are the salient features of the company:
 --The authorized capital of the Company will be Rs. 5 crore.
 --Paid up capital of the company will be Rs.15,00,060. RCF, Kribhco and NFL will contribute Rs.5,00,020 each.
 --Additional capital contribution will be shared equally by the promoter companies as and when required for the business.
 --The Board of Directors shall consist of minimum 3 and maximum 12 directors. Unless and otherwise mutually agreed between the parties all the directors on the Board shall be on part-time basis.
 --Chairman will be appointed from amongst the directors on rotation basis for a period of one year. The first Chairman will be appointed in the first Board  Meeting of the JVC.
 --The Lock in period for shares shall be 6 years .
 (Click on Details to find out more on who the directors of the company would be)   Details

RCF seeks capital grants and soft loans for revival of Durgapur and Talcher plants

May 7: The website carries here details of the financing patterns suggested by RCF for the Durgapur, Talcher and Thal-III fertilizer plants. The costs of the three projects have been pegged at Rs 3241 crore, Rs 3178 crore and Rs 3156 crore respectively. Of this RCF wants to contrinute equity capital to the tune of Rs 100 crore in Durgapur and Talcher each while it is willing to shell out Rs 200 crore for Thal-III. The company  has sought a GOI soft loan at a rate of interest of 4% to the tune of Rs 400 crore each for revival of the two sick units and Rs 402 crore for Thal-III. A GOI capital grant of Rs 800 crore has been sought for Durgapur and Talcher each while the rest of the money would come in by way of loans from banks.
Comment: Clearly, RCF`s financing plan will not find favour with the government. A Group of Ministers (GOM) meeting on the issue had clearly stated that the revival of closed units shoul dbe through the least cost route. That leaves out government support to these units,. The moot point now is whether public sector companies would be wiling to foot such a large burden.   Details

Kharif supply plan for Gujarat

May 7: For reference purposes, the website carries here details of the month-wise and company-wise fertilizer supply plan for Kharif in Gujarat. The detailed figures show district-wise requirements of major fertilizers.
 8The Gujarat government has claimed that there the Kharif supply plans drawn up shows a short supply of about 3.17 lakh MT of urea and about 0.13 lakh MT of MOP as against requirement while the availability of DAP is expected to be sufficient.
 8The DOF has now been asked to fill up the shortfall of urea by allocating imported urea of 35000 MT in June, 145000 MT in July, 117000 MT in August and 20000 MT in September.   Details

Facts about FACT

May 6: A sum of Rs 200 crore was released for rehabilitation of FACT on March 28, 2008. In the meanwhile, as directed by the government,  due diligence studies are being undertaken by NFL and RCF on the possibility of a merger of FACT with them or or making it a subsidiary. A detailed study is also being carried out by a consultant for measures to improve efficiency and viability of FACT. Results of these studies are awaited. According to the DOF,  changes are to be implemented in the fertilizer price concession scheme from 2008-09 onwards, by which the company is expected to make its operations profitable. The availability of LNG by 2012-13 will also give a boost to the company's profitability and growth.
 The following future plans have been chalked out by FACT:
 8FACT has entered into an MOU with M/s Indian Potash Ltd for a period of 3 years during which period supply will be arranged by IPL on the strength of the letter of comfort issued by DOF.
 8FACT plans to demerge the operations of its design wing FEDO by forming a JV company with IOC as the lead partner holding 51% equity.
 8FACT also intends to demerge the operations of its fabrication unit FEW by establishing a JV company with CSL as the lead partner holding 51% equity.
 8FACT is in the process of utilising its assets of about 60 lakh Tons of gypsum by boosting its sales through MOU with  Cement companies and by promoting bagged gypsum as a new soil conditioner. An MOU has already been signed in this regard with the Rashtriya Chemicals and Fertilisers Ltd (RCF) and RBS (Australian Technology Supplier) and the foundation stone for the JV project has been laid today.
 8Taking advantage of the new link road under construction from NH47 to the Container Terminal at Valarpadam passing through the FACT Township at Udyogamandal, the company plans to utilise its land resources to establish 3 JV'S in related business fields like a container freight station or an SEZ with strategic partners like Central warehousing Corporation (CWC), Container Corporation of India Ltd (CONCOR) and MMTC. These projects will ensure a good revenue to FACT and utilization of land for constructive purposes.
 8FACT is in the process of setting up a JV with CWC for establishing a Container Freight Station to take advantage of the business prospects of the upcoming Container Terminal at Valarpadam. The project proposes to utilize 300-50 acres of land.
 8FACT is also setting up a JV with the Container Corporation of India Ltd (CONCOR) for a Container Freight station at Udyogamandal. The project proposes to utilize 20 to 30 acres of land.
 8FACT is in the process of negotiations with the Government of Kerala for the development of a Free Trade Warehousing Zone at Cochin as a JV with MMTC. This project will require 100 acres of land and will give a boost to industrialisation and generate employment in the area.   Details

Rs 40 crore earmarked for BED for revamp of Kribhco's ammonia, urea plants: Government directors register protest

May 5: Government directors on the board of Kribhco have protested a proposal for spending a whopping Rs 40 crore in basic engineering design for revamping the cooperative`s ammonia and urea plants. In a letter of protest, the government directors made the following points:
 8While the proposal to entrust the revamp study of ammonia plants at Hazira to KBR and urea plants to Snamprogetti is proposed on the basis of the reasoning that these plants originally were designed by KBR and Snamprogetti respectively, it appears that Kribhco should have come out with an open advertisement before deciding on the consultants. The fees of Rs. 40 crore seems to on the high side and `therefore efforts should be  made to reduce the consultancy fee.
 8No justification has been given of the basis on which the figure of Rs.40 crore has been arrived at. It has also not been mentioned whether, as per CVC guidelines, Kribhco is empowered to give work to process licensors on a nomination basis or not.
 Meanwhile, in light of the observations made by government directors, it was decided that the award of contracts be put on hold and put up again after collecting data from other manufacturers who have conducted similar revamps or are planning to revamp their capacities.   Details

Opposition to award of BED for Kribhco's ammonia, urea plants on nomination basis: Is corporate rivalry at work?

May 5: Was the vociferous opposition to award of Basic Engineering Design to KBR and Snamprogretti for revamp of Kribhco's ammonia and urea revamp projects prompted by rivalry? It is difficult to say but Kribhco's answer to the queries raised by government directors clearly states that the only other rival to KBR's ammonia technology is HTAS. The Kribhco management made the following points:
 8These two technologies have different  process configuration, control and operational philosophy, design approach and methods. These two technologies cannot be compared on like to like basis. Hence open advertisement for selection of technology for revamp is not feasible. Kribhco said that RCF Thal and Kribhco Hazira were the two first generation gas based plants (Pre-92 vintage) based on HTAS and KBR (erstwhile M. W. Kellogg) technologies respectively. Apparently, while Kribhco's plant is performing exceedingly well, RCF's unit is struggling to achieve benchmark standards. The RCF plant only started doing well after modifications were carried out. But even today. Kribhco alleges, RCF's  energy consumption for both urea and ammonia plants at 6.5 GCal/MT and 9.2 GCal/MT respectively is significantly higher than not only their design figures but also Kribhco's actual energy consumption.
 (Click on Details to know more)   Details

Iffco signs long-term deal for rock phosphate with Australian company

May 5: In a major achievement, Iffco has struck a deal for long term offtake and supply agreement with Australia’s Legend International Holdings, Inc. for about 3 million tonnes annually of concentrated rock phosphate from Lady Annie project in Queensland, Australia. IFFCO and Legend have decided to pursue the Project in Joint Venture with an investment of about 800 million dollars. Financing and Joint Venture options for the capital cost of Legend’s phosphate project are currently under discussion between the parties as is the price of the phosphate rock. The price of the rock will be negotiated on a fair and equitable basis for both companies based on international market prices applicable for the Indian market with an appropriate discount. Negotiations in regards to finance options will be concluded in coming months.   Details

IFFCO and Bharti Airtel join hands to unleash telecom-connectivity in rural areas

May 4: 8Bharti Airtel Limited -- India`s leading integrated telecommunications service provider -- and Indian Farmers Fertilizer Cooperative Limited (IFFCO) today (May 2, 2008) announced the launch of a joint venture (JV) company -- IFFCO Kisan Sanchar Limited (IKSL) --which is set to provide a major boost to India agriculture and the rural economy at large through grassroot telecom services targeted at farmers. According to IFFCO managing director U.S. Awasthi, " The time has come when Indian farmers should have direct access to technology through the the launch of a rural communication system." Pertinently, the JV company will harness the power of telecom to add value to the farm sector and is expected to empower farmers by giving them access to vital information pertaining to agricultural practices.
8U.S. Awasthi hailed the joint venture as bridge between haves and have nots, rural and urban, India and Bharat. Commenting on the future plans of the JV company, Awasthi revealed that the JV combine is likely to unleash a new technology based on cranking to address the power shortage in rural areas. The power project -- which is expected to hit the road within the next 60 days -- will use animal power to create green energy.
8The launch of the JV company has also marked full-fledged entry of telecommunication giant Airtel in the rural sector. Airtel chairman Sunil Bharti Mittal made the point that the telecom revolution has truly transformed the country and its benefits must reach the rural population. Going a step further, Mittal hailed the JV as the beginning of second green revolution in the country and said, "This is not just about connectivity, provision for services and rolling out a network -- which the project will certainly ensure -- but this will start the next green revolution in rural India."
8IFFCO Kisan Sanchar Limited will offer products and services which are specifically designed for farmers through IIFCO societies in villages across the country. On offer will be affordable handsets bundled with Airtel mobile connections. The farmers will also get access to a unique VAS platform that will broadcast five free voice messages on mandi prices, farming techniques, weather forecasts, dairy farming, animal husbandry and fertilizer availability. In addition, the farmer will be able to call a helpline to answer their specific queries. Airtel has kept the calling rates competitive at Rs 50 paise per minute for calls between IFFCO members. Furthermore, the telecom major will set up towers at sites provided by IFFCO societies to provide services to the farmers.
8In the first phase, IKSL will roll out its services in UP, Punjab, Haryana, Rajasthan, Madhya Pradesh, Chattisgarh, Bihar, Jharkhand, Orissa, West Bengal, Haryana, Tamil Nadu and Himachal Pradesh. The second phase -- which is scheduled to commence from May, 2008 -- will see the partnership being extended to Gujarat, Maharashtra, Goa, Karnataka, Andhra Pradesh and Kerala. (Click on Details for more information)   Details

Ranjan Sharma: The man behind IFFCO Kisan Sanchar Limited

May 4: Who is the real man behind IFFCO Kisan Sanchar Limited (IKSL)? None other than former Oswal Chemicals and Fertilisers finance director Ranjan Sharma. In the press conference held to launch IKSL, both Iffco managing director U.S. Awasthi and Airtel`s Sunil Mittal gave full credit to Sharma for having conceived the idea and then bringing the two organisations together. "It was conceived by my friend Ranjan Sharma and we then took it forward," Awasthi said. Besides being on its Board of Directors, Sharma holds 25% equity in IKSL through the a company floated as Star Global Resources Ltd. Iffco is a majority shareholder while Airtel and Star Global are the other partners in the JV. The JV is already valued at Rs 800 crores by an independent valuer and is poised to grow further as it moves closer to its target of acquiring 10 million customers in rural India.   Details