Fertilizer Ministry considers waiving Rs 550-cr loans to sick PSU
Monday, 16 May 2011 18:48
The Fertiliser Ministry is considering the waiver of Rs 550 crore worth of government loans and accrued interest owed by Madras Fertilisers Ltd (MFL) with the objective of reviving the sick PSU.
The waiver of loan will help the company restart operations with a clean balance sheet and without any loan overdue. It will also help Chennai-based MFL access banks to raise the resources necessary to improve the performance of its units, the official said.
The proposed revival plan for public sector undertaking MFL has been circulated for comments among the concerned ministries. The final report will be vetted by the Board for Reconstruction of Public Sector Enterprises (BRPSE) before it is placed for the Cabinet decision.
Madras Fertilisers had suffered huge losses since 2003-04, largely due to introduction of the New Pricing Scheme (NPS) for urea by the government, which did not compensate it for the cost of a revamp undertaken in the 1993-98 period, the official added.
"Later, the compensation received by MFL for urea was not sufficient to service the loan, interest, depreciation, loan repayment and to source the raw materials," the official said.
According to the Fertiliser Ministry official: "If the proposed strategy is not approved by the Cabinet, the company will make further unsustainable losses and the unit has to be closed. The cost of closure will also be high."
The official also explained the country presently imports a large quantity of urea. "Production from MFL units will reduce subsidy and foreign exchange outgo," he said.
As MFL units are strategically located in Tamil Nadu, which is a deficit zone in fertiliser production, the revival of these units will enhance availability of fertilisers in the southern region.
MFL produced 4.36 lakh tonne of urea in 2009-10.
Source : BS
The waiver of loan will help the company restart operations with a clean balance sheet and without any loan overdue. It will also help Chennai-based MFL access banks to raise the resources necessary to improve the performance of its units, the official said.
The proposed revival plan for public sector undertaking MFL has been circulated for comments among the concerned ministries. The final report will be vetted by the Board for Reconstruction of Public Sector Enterprises (BRPSE) before it is placed for the Cabinet decision.
Madras Fertilisers had suffered huge losses since 2003-04, largely due to introduction of the New Pricing Scheme (NPS) for urea by the government, which did not compensate it for the cost of a revamp undertaken in the 1993-98 period, the official added.
"Later, the compensation received by MFL for urea was not sufficient to service the loan, interest, depreciation, loan repayment and to source the raw materials," the official said.
According to the Fertiliser Ministry official: "If the proposed strategy is not approved by the Cabinet, the company will make further unsustainable losses and the unit has to be closed. The cost of closure will also be high."
The official also explained the country presently imports a large quantity of urea. "Production from MFL units will reduce subsidy and foreign exchange outgo," he said.
As MFL units are strategically located in Tamil Nadu, which is a deficit zone in fertiliser production, the revival of these units will enhance availability of fertilisers in the southern region.
MFL produced 4.36 lakh tonne of urea in 2009-10.
Source : BS
Similar articles
- Fertliser ministry seeks SAIL's response on Rs 70,000 crore proposal
- Jet, Kingfisher have not paid Rs 1,050-cr dues to oil PSUs
- Punj Lloyd wins Rs 1,595 cr domestic, overseas contractsPunj Lloyd wins Rs 1,595 cr domestic, overseas contracts
- Power Ministry asks Oil Ministry to allocate gas to 10 power projects
- Air India to monitor competitors' fares, plans to install FTS
 |
 |
 |
