Financial Daily from THE HINDU group of publications
Friday, Nov 05, 2004
Jay Shree Tea seeks hike in subsidy on super phospates
Kolkata , Nov. 4
JAY Shree Tea & Industries Ltd, a B.K Birla Group company, is waiting for the Union Government to increase the subsidy on super phospates to improve its profitability.
According to Mr R.K. Ganeriwala, President (Finance & Corporate Affairs), the cost of production of super phospates has increased by Rs 550-600 per tonne during the last one year or so due to a steep rise in the cost of the raw materials sulphur and rock-phosphate.
The company, along with other super phospate producers in eastern India, has already discussed their problem with the West Bengal Government. The latter has requested the Centre to increase the subsidy from the present level of Rs 650 per tonne.
"Officials of the Union Government are considerate about our case. They have said that they are considering the proposal but till date nothing has been announced. It will be difficult for us to continue with such steep losses," Mr Ganeriwala told Business Line.
Jay Shree Tea's super phospate plant is located at Khardah in West Bengal. They had a similar plant at Haryana, but it had stopped producing super phospate. Instead, it is manufacturing only sulphuric acid.
Despite rising losses, the company has not been able to reduce or shut down its production of super phospate because agricultural production is likely to go up. Moreover, no government will favour a fertiliser plant cutting down its production as it will affect farmers.
Company officials said that productivity in the West Bengal plant is also low. About 500 people are employed in this unit, which produces 90,000 tonnes of super phospates every year.
"Elsewhere in the country, the productivity of the workers in this particular sector is high. During the last four or five years there has been no improvement in the labour productivity. This has severely affected our profitability," he said.
During the second quarter of 2004-05, Jay Shree Tea's net profit increased by 81 per cent to end at Rs 6.47 crore from Rs 3.57 crore in the corresponding quarter of 2003-04. Net sales increased by 37 per cent to Rs 59.06 crore from Rs 43.24 crore.
Net profit for the half year ended September 30, 2004, increased to Rs 6.79 crore compared with Rs 4.18 crore corresponding half year in 2003-04. Net sales increased to Rs 93.23 crore from Rs 69.24 crore.
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