Financial Daily from THE HINDU group of publications
Wednesday, Mar 23, 2005

Port Info

Group Sites

Corporate - Trends
Agri-Biz & Commodities - Fertilisers

Cash crunch: MFL stops producing complex fertilisers

Our Bureau

Chennai , March 22

MADRAS Fertilizers Ltd (MFL) has stopped producing complex fertilisers due to cash crunch following delay in release of subsidy by the Fertiliser Ministry, according to MFL officials.

MFL continues to source feedstock on credit from Chennai Petroleum Corporation Ltd (CPCL), which has for some time been threatening to discontinue credit and change to cash-and-carry basis. But the company is optimistic that the subsidy of Rs 360 crore due to MFL, which has been pending from November 2004, would be released soon, according to officials.

Sources in the know say that due to the delay in release of subsidy by the Fertiliser Ministry, MFL has had to cut back on production. In the last 10 days, it has shutdown production at the complex fertilisers unit, which earlier was operating at 85 per cent capacity. Urea production is continuing with the plant working at 105 per cent capacity.

Meanwhile, it has committed to CPCL to catch up on payments once the subsidy is released. This would enable the companies to get back to transactions on normal commercial terms, which provide for one-month credit. MFL is negotiating with the oil company to increase the credit period to 60 days, they said.

Last month, MFL expressed fear that it would have to shutdown the facility fully since CPCL was planning to stop supplies of feedstock on credit basis to MFL.

CPCL officials told journalists recently that supply of feedstock was continuing despite Rs 120 crore outstanding.

It had not stopped supplies but would shortly insist on cash-and-carry terms for delivering the feedstock.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Merven Drug shareholders okay pref allotment

Mallya to merge spirits cos, SWC as United Spirits
SWC-Modi issue: High Court stays UB, Jumbo deal
Restructuring to be over in 6 months: Mallya
Ucal Fuel may buy US co
SEBI board meet today to discuss revised corporate governance norms
Eveready to set up battery unit in Uttaranchal
LG's GSM plant begins operations in Pune
Dabur evaluates private label business for toothpastes
JK Industries sees 10% growth in turnover
Bescom hopes to raise revenue by 11 pc
Cash crunch: MFL stops producing complex fertilisers

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line