WHO WILL REAP THE BENEFITS?

Article Abstract:

The Hanumantha Rao committee report has increased fertilizer stocks. The panel suggested the scrapping of retention pricing scheme (RPS) and asked for a fixed price and flexible subsidy. It has recommended an ex-factory normative referral price (NRP) to be followed as a substitute for the present farmgate urea price. Since urea accounts for almost two-thirds of total fertilizer sales, hiking of its price has come in for criticism. While some companies argue that the NRP is lower than their present RPS, others stand to benefit since they have a low retention price. The committee has suggested additional subsidy for new expansion projects. The implementation of the report will also allow producers to sell their product wherever they want to. Also, the equated freight concept will be withdrawn. With deregulation coming in, it is also feared that certain areas may be neglected as companies will try and sell their products near their plants. The report suggests the calculation of uniform price based on long-range marginal cost. This takes into account the realisation over project life discounted by the current value. However, realisation in the initial years will be very low. Companies have been asked to move over to natural gas from other feedstocks. The government has been asked to compensate small farmers for future rise in farmgate prices. (nv)

Comment:

India: Hanumantha Rao committee suggests scrapping of retention pricing scheme & asks for a fixed price & flexible subsidy

Public affairs

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GOOD PROSPECTS: NAGARJUNA FERTILIZERS AND CHEMICALS

Article Abstract:

Nagarjuna Fertilizers and Chemicals (NFCL) has a 1,500 tonnes per day gas-based plant. The project is the costliest one in India with a capital cost of Rs22,767 per tonne. Hence, the suggestions of the Hanumantha Rao panel would have a severe impact on the company's earnings. Despite the high cost, the retention pricing mechanism and high capacity utilisation has resulted in strong growth in the company's revenues. NFCL also markets seeds and pesticides. (nv)

Comment:

Operates 1,500 tonnes per day gas-based plant in India, the costliest one in the country w/ a capital cost of Rs22,767 per tonne

Facilities & equipment, Nagarjuna Fertilizers and Chemicals

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GOOD PROSPECTS: RASHTRIYA CHEMICALS AND FERTILIZERS

Article Abstract:

Rashtriya Chemicals And Fertilizers (RCF), a leading manufacturer of urea and phosphatic fertilizers, is involved in a major joint venture with Kribhco and Oman Oil. RCF produced 2.1 million tonnes of fertilizers in 1996-97 and recorded a turnover increase of Rs496.3 million. The company has an overall capacity utilization of 85.2 percent. It is likely to benefit from the Hanumantha Rao committee recommendations since it produces low- cost urea. (nv)

Comment:

Produces 2.1 mil tonnes of fertilizers in 1996-97, & posts turnover increase of Rs496.3 mil

Production data, Rashtriya Chemicals and Fertilizers

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