The Hindu Business Line : MCF plans roadmap for chemicals biz

MANGALORE Chemicals & Fertilizers Ltd (MCF) of the UB group plans to open a new line of business in chemicals as its mainstay urea production continues to reel under Government regulations, company sources have said.

The firm was currently looking at different options and mechanisms to propel its future growth through this new line of business, sources said. "Such plans are very nascent and it will take at least six months to one year to take a concrete shape," they added.

The company plans to leverage expertise in chemicals, grown over years of handling urea, and could even look at setting up additional reactors at its Mangalore plant to generate various chemicals, company sources said. "However, Mangalore being a very environmentally conscious zone, we have to be very cautious in selecting the types of chemicals (to be produced)", they added. They even indicated, that if it "is economically viable, the new business could be shifted to some place other than Mangalore." The sources maintained that "no external consultant has been appointed to frame the roadmap for the chemicals business".

Commenting on the possibility of exiting the fertiliser business going forward, company sources said that urea would continue to be one of the products and there were no feelers from any prospective buyers for the urea business.

"We receive two-thirds of our income from Government subsidies...under such condition who will want to buy?'' sources said. The Government had ordered a reduction in retention prices of 13 urea plants with retrospective effect from April 1, 2000, based on an interim revision in consumption norms.

It is expected that the Government will finalise the revised retention price of urea manufacturer for the seventh and the eighth pricing periods, which is expected to correct the current anomaly. In view of the retrospective effect of the reduction, the manufacturing units will be required to pay back a huge amount to the Fertiliser Industries Co-ordination Committee leading to liquidity crisis and even closure of plants.

While MCF and Duncan Industries have issued notices to the Government seeking permission to close down their respective plants, others have represented their cases to the Fertiliser Association of India. Some like Zuari Industries and Tata Chemicals have paid the amount.

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