CompanyWatch: Rashtriya Chemicals-Govt to shed 51% stake in RCF
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Rashtriya Chemicals & Fertilizers Ltd. (RCF) is one of the largest fertilizer and chemical company in Asia, with 20 operating plants at Trombay and 5 large plants at it's Thal Fertilizer unit...
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Govt to shed 51% stake in RCF
Our Bureau -BusinessLine
MUMBAI, Sept. 24
THE Disinvestment Commission has proposed the sale of 51 per cent of the Government's equity holding in Rashtriya Chemicals and Fertilizers Ltd, according to Mr. D. K. Varma, Chairman and Managing Director, RCF.
The Government's equity holding currently stands at 92.5 per cent, with 7.5 per cent with financial institutions.
Addressing presspersons following the AGM of the company, Mr. Varma said the proposal was being examined by the Ministry and the new Government would take a view on it.
The disinvestment of 51 per cent of the equity in RCF would mean that the Government would give up management control in the company and bring its holding down to below 49 per cent. The modalities with regard to the quantum and timing of disinvestment are being worked out, Mr. Varma said.
RCF has recorded sales of Rs. 774 crores (US$166 million) during July-September 17, 1999 as against Rs. 605 crores in the second quarter of the previous year. The company sold 12.20 lakh tonnes during the period as compared to 9.86 lakh tonnes in the corresponding previous period.
Production of industrial products during the first six months of the current year is expected at Rs. 108 crores as against Rs. 105 crores in the corresponding previous period. The sales in the first quarter of the current year were at Rs. 261 crores.
Mr. Varma said constraints faced in supply of feedstock i.e gas by ONGC may result in a drop in production of urea by 1.5-2 lakh tonnes in the current year. Gas supplies to RCF have declined considerably in the last one year. In the current year, gas supplies are expected to be lower by almost 15-20 per cent. If there is any further reduction in feedstock, the plant may have to shut down, officials said.
To meet its feedstock requirements, RCF has tied-up with Enron and Tata-Total-GAIL for gas supply to Thal and Trombay units respectively. RCF has also indicated to the Tata-Total-GAIL combine, its interest to pick up an equity stake in the LNG project at Trombay. It is likely to receive gas supplies only by 2001-end. Currently, however, RCF is fully dependent on gas supplies from ONGC. Over the short term, the company plans to invest Rs. 100 crores in installing a dual supply system which would enable it to utilise naphtha as feedstock.
RCF is planning to invest Rs. 2,900 crores (US$666 million) over the next five years towards expansion, modernisation and new projects. This would be met through a debt equity ratio of 2:1.
The Rs. 1332-crore expansion of the Thal unit submitted to the Government for consideration has recently received approval in principle from the CCE. The PIB appraisal has also been completed and the project is awaiting the final go-ahead from the Government.
This would increase the output by around 7.68 mtpa and will bring down imports, RCF officials said. RCF has entered into a equal joint venture with UCB Belgium to produce 20,000 mtpa of methylamines and its derivatives at Thal. An MoU has been signed with Hindustan Zinc Ltd and Rajasthan State Mines & Minerals ltd, for setting up a joint venture company for manufacturing 850 mtpd of DAP and related products.
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