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NFL selloff not to await fert policy

Gaurav Raghuvanshi in New Delhi

The government may go ahead with the divestment of National Fertiliser Ltd without waiting for the long-term fertiliser pricing policy. The next meeting of the Cabinet Committee on Divestment will take up the proposal for inviting price bids for 51 per cent equity in the fertiliser company.

"The government had earlier decided to wait for the long-term fertiliser pricing policy before selling its equity in NFL to a strategic partner, but now with the delay in its announcement, we are taking the proposal to the CCD early next week," a divestment ministry official told Business Standard.

The government, at present, holds 97.65 per cent equity in the company. Four bidders -- Zuari Agro, Indo Gulf, Chambal Fertiliser and the Oswal group -- had shown interest in taking up management control in NFL.

A fertiliser department official said the ministry was "almost ready" with the pricing policy and would announce it soon.

The government was also working on a long-term fertiliser policy that would decide on the overall industry scenario, including how to meet the inorganic nutrient requirements in the country and what feedstock to encourage, he said.

Meanwhile, the fertiliser ministry had drawn up plans to draw out the Rs 2 billion gain likely to be made by NFL on account of the seventh and eighth fertiliser pricing policies cleared by the Cabinet earlier this year, the official said.

"The final profit and dividend figures of fertiliser companies depend on the fertiliser pricing policy. Since the policy itself was implemented with retrospective effect, NFL should also be allowed to declare dividend for the period," he said.

Of the Rs 3.7 billion to be refunded to urea units for the seventh and eighth pricing periods (1997 to 2000 and 2000 onwards), NFL is set to be the largest gainer with nearly Rs 2 billion expected to flow into the company as vintage allowance.

NFL posted a net profit of Rs 483 million on a turnover of Rs 29.43 billion 2001-02 and the company has called an annual general meeting on July 30 to endorse the board's decision to declare a 20 per cent dividend. NFL's reserves at the end of the last financial year were in excess of Rs 10 billion.

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