Bhubaneswar, March 26: Central-sector Diam- monia Phosphate (DAP) manufacturer Paradeep Phosphate Ltd (PPL) has urged the Union government to implement the complete financial restructuring scheme (FRS) for reviving the company. "We have written to the government for a comprehensive financial restructuring of PPL," the chairman-cum-managing director, Mr H Mishra, told The Financial Express, adding that a partial acceptance of the FRS would not be of much help to the unit for making a turnaround.The Centre recently accepted the FRS proposed by the PPL partially, and waived interest on its loan, accrued till March 31, 2000, amounting to Rs 129.79 crore. The Centre has also sanctioned a fresh loan of Rs 70 crore to meet the working capital requirement and unavoidable capital expenditure of the unit.
Under the FRS prepared by Crisil, PPL had sought a lowering of the face value of the existing equity from Rs 219 crore to Rs 2.19 crore and a reduction of preference share. The company had also sought a conversion of the government loan of Rs 230.28 crore into fresh equity, waiver of interest on plan loan and interest holiday and moratorium on payment of instalment on balance loan. However, these latter demands of the company were not approved by the government.
PPL, enlisted for disinvestment this year, faced further financial crisis because of adverse conditions in the DAP market. Drought conditions in Maharashtra, Gujarat, Rajasthan, Madhya Pradesh, Uttar Pradesh and Orissa threw the market to a downturn. The countrywide intake dropped by about 25 per cent. At present, DAP manufacturers are selling products at heavy discounts and allowing credit for even 90 days. "This has hit the cash flow position of PPL," admitted Mr Mishra. Now, the company is finding it difficult to buy even raw materials, the supply of which has slowed down resulting in low production, the CMD added.
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
