Madras Fertilizers plans to set up Rs 4,500-cr urea facility

Company seeks more time to convert existing naphtha plant into a gas-based one

Madras Fertilizers Limited (MFL), which comes under the Ministry of Fertilisers, is planning to set up a new urea plant with an investment of about Rs 4,500 crore. The company also said it was open to rope in an investor for the proposed plant.

The company also asked the ministry to extend the deadline for converting its existing plant from naphtha to gas.

The company currently has a manufacturing facility near Chennai with a capacity to manufacture 4.87 lakh tonnes of urea per annum.

I Vijayakumar, chairman and managing director, Madras Fertilizers Limited, told Business Standard: "The government wants us to set up a greenfield facility, which can use gas instead of naphtha to produce urea and this would help the government to cut down the subsidy."

The ministry has already issued the direction to convert the existing facility to gas before June 30 this year, failing which the government would stop the subsidy.

According to Vijayakumar, of the company's revenue of about Rs 2,700 crore, the government's subsidy was Rs 2,300 crore. He met Union Minister for Chemicals and Fertilizers Ananth Kumar to request him to extend the deadline for the conversion.

"We are ready with the infrastructure, but the problem is we don't have the gas," said Vijayakumar adding that the company can source gas from Indian Oil Corporation (IOC) from 2017 and till the time the government's subsidy is essential to run the plant.

The company was hoping that it will get gas from GAIL's Kochi facility. However, the GAIL's pipeline project was halted due to farmers' protest in Tamil Nadu, leaving MFL with no choice.

On the greenfield facility, he said, the company got around 130 acres of vacant land near to the existing facility, where a new greenfield facility could be set up. "We have placed the proposal before the government," said Vijayakumar. He said to set up a 4.87 lakh tonne urea plant around Rs 4,500 crore will be required.

"We are also open for joint venture. We can give land as equity, while the partner can bring the money," said Vijayakumar.

FRESH PLANS

• The firm currently has a manufacturing facility near Chennai with a capacity to manufacture 4.87 lakh tonnes of urea per annum
• The ministry has already issued the direction to convert the existing facility to gas before June 30 this year