MFL rehab caught in red tape

Chennai, May 29 | Updated: May 30 2007, 05:30am hrs
The public sector Madras Fertilizers Ltd (MFLs) rehabilitation package is yet to see the light of day. It is caught in the red tape of various agencies handling it. Interestingly, the Union minister for fertilisers and chemicals Ram Vilas Paswan pledged his ministrys support to rehabilitate the ailing company almost two years ago and even yanked the company off from the divestment block saying it was the wrong policies that turned the company sick.

Sources in the know told FE that the department of fertilisers efforts to turn around MFL on a standalone basis or merging the company with another profitable public sector entity have not made any headway so far despite the company furnishing all the details sought by the agencies. There is no progress so far and the turnaround is not in sight, sources said. MFL officials were not available for comment.

The department has been exploring various ways to salvage MFL from its current financial plight, including a financial package. According to the financial package, which was cleared by the Board for Reconstruction of Public Sector Enterprises (BRPSE) way back in March 2005, the government had decided to enhance the outlier benefit for MFL under the new urea pricing scheme from 50-70% for two financial years, modification of the existing pricing formula for complex grades, government guarantee for loans to the tune of Rs 150 crore, and swapping high cost loans and waiver of interest to the tune of Rs 16.82 crore, and Rs 18.49 crore respectively. MFL, as part of the bargain, would not get any more Plan, non-Plan or budgetary support from the Centre. Since the proposal did not make any headway, the department started exploring other means to save the company including a possible merger with Gujarat State Fertilizers and Chemicals Ltd and Rashtriya Chemicals and Fertilizers Ltd. Though both the companies have completed their due diligence exercise and submitted their reports to the authorities long back, no decision has been taken so far, sources said.

Despite a severe cash crunch, MFL has managed to achieve its urea production target in the last fiscal, but its production of complex fertilisers was hit.

Mired

The department of fertilisers efforts to turn around MFL have not made any headway so far
The department has been exploring various ways to salvage MFL from its current financial plight, including a financial package.