The company also has decided to go slow on its proposed capacity expansion of the copper division, where the focus will now be on de-bottlenecking.Indo Gulf managing director Debu Bhattacharya said: ``A formal decision regarding the DAP project has been taken by the company. We will set up a 4.5 lakh tonne per annum capacity.''

Bhattacharya declined to comment on the proposed level of investment for the DAP project, but analysts said that a facility of around 4.5 lakh tpa will require an investment of over Rs 250 crore.

When the project was earlier envisaged and later scrapped, the company had talked of an investment in the region of Rs 300 crore for a three lakh tonne unit.

Bhattacharya said the project would be financed almost entirely through internal accruals. ``We may go for some debt, but there will not be any equity dilution,'' he added.

He added that the company is undecided on any capacity expansion in urea-ammonia, where it is one of the leading players, and will look at participation in the privatisation of state-owned fertiliser companies ``if the price was right.''

The company appears to be going slow on the phase II expansion of the copper project. It had earlier said the expansion to 1.5 lakh tonne per annum, from the present one lakh tpa, would be complete by early 2001.

``My priority now is to best utilise the existing assets of the company rather than capital investment. The company will first proceed with de-bottlenecking the smelter,'' Bhattacharya said.

``A lot can be done in this regard, as in the first half the capacity utilisation was 114 per cent,'' he added.

He did not rule out the second phase expansion, but said it will be taken when the demand-supply situation is ripe enough for the company to go ahead with it. Rival Sterlite Industries, which has a similar capacity in place, has already announced hiking capacity to 1.7 lakh tonne within the next two years. Bhattacharya said the company will set up a refinery to extract precious minerals like gold and silver from anode slime, a residue in the copper-making process. The company has so long been exporting anode slime.

Indo Gulf had earlier said that at full capacity utilisation, export of anode slime could yield additional revenues of around Rs 200 crore annually.

Net up to Rs 89.68 crore in first half

Indo Gulf Corporation has posted a net profit of Rs 89.68 crore for the first half of the current fiscal against Rs 70.5 crore for the same period last year, despite high interest charges depreciation on account of the copper division.

The company's turnover has jumped 62 per cent over last year at Rs 1,001.03 crore, propped up primarily by higher capacity utilisation of the copper division in the second quarter. At 114 per cent capacity utilisation, the division contributed over 60 per cent to the company's total turnover during the first half.

A high interest charge of Rs 70.60 crore, as compared with Rs 23.9 crore in the first half of last year, has largely been responsible for eating into the bottomline.

The company's managing director Debu Bhattacharya said: ``The high interest pay-out remains a cause for concern and it will definitely be something that we will focus on in the coming months.''

The company has repaid around Rs 65 crore of high-cost domestic debt during the current fiscal, Bhattacharya added.

Depreciation has also been higher at Rs 55.6 crore against Rs 32.06 crore in the same period last year.

INSIGHT:

Second half will be better

Strictly speaking, first half results are not comparable with the corresponding period in the previous year. This is because the company's copper smelter began operations only in the second half of 1998-99. Yet, there is no denying the fact that the company's first half performance has been impressive. The company's efficiency improvement drive is reflected in the urea plant's record production. The ramp-up of its copper plant has also been comparable to the best in the world. Copper prices are on an upturn and TC/RC margins are likely to improve further in the coming months. Higher efficiency combined with better TC/RC margins will only add to the company's profitability.

-- Sarad Saraf