RCF plans Rs 4,200-crore capex for Thal unit growth

Written by Sanjay Jog | Mumbai | Updated: Sep 26 2009, 05:48am hrs
State-run Rashtriya Chemicals & Fertilisers (RCF) has revived its Rs 4,200-crore capital expenditure plan to increase urea production capacity at its Thal facility to 31 lakh tonne from 18 lakh tonne at present.

Initially, the company is hiking capacity by 2 lakh tonne with an investment of Rs 200 crore under Thal II. RCF will increase it by another 11 lakh tonne by infusing Rs 4,000 crore under Thal III.

The company has also firmed up a capex of Rs 200 crore for renewal, replacement and maintenance at its various plants during the current fiscal year.

RCFs plant in Trombay has a capacity to produce 3.6 lakh tonne of urea. The countrys total urea production stands at 20 million tonne and RCFs contribution is around 15-18%.

A source at RCF told FE, The proposed capex of Rs 200 crore required for Thal II will be funded through internal resources and it will be carried out in 24 months from zero date. Funds for the next stage of expansion will come from internal accruals, IPO proceeds and by offering equity to a strategic partner. The company may consider an option of bringing in a technology supplier and offer it equity in the Thal III expansion, which will take 30 months from a zero date.

The company awaits Centres approval for an IPO, he said.

The company has to rework the Thal expansion plan owing to a dip in urea prices, which were prevalent in December 2008 and early this year.

The company, subsequently, reviewed the project and revived the proposed expansion.

RCF hopes to launch products such as wall plasters and gypsum rapid wall for the domestic market soon from its Rs 100-crore rapid wall project at the Trombay plant.

The rapid wall plant has an annual production capacity of 14.2 lakh sq metres.

Buoyed by the recent revival in the real estate sector, RCF is also pursuing real estate development at its Trombay plant situated in north-east Mumbai. It possesses nearly 800 acres and plans commercial development on a portion of that land.