Rcf To Convert Part Of Equity Into Debt

Rashtriya Chemicals and Fertilizers (RCF), the Rs 2,091-crore public sector fertiliser major, is planning to convert part of its equity into long-term loans, subject to government approval.

The company has proposed that its equity base be reduced to 51 per cent of its current size of Rs 551.69 crore, while the balance be converted into long-term loans.

Its loan portfolio, as on March 31, 2001, stands at Rs 603.88 crore. Currently, the Central government holds 92.5 per cent in the company.

D K Varma, chairman and managing director of the company, said, "Our equity base is very large, and by reducing it we will be in a position to service it better." As a result, the company's dividend payout has been very low, and last year it was less than 4 per cent, Varma said.

The company's interest payout on the outstanding loans is Rs 76.16 crore, more than the last year's net profit of Rs 64.97 crore.

Along with the on-going Rs 3,000-crore capital expenditure programme, the company is also undertaking initiatives to improve its finances to raise funds at competitive rates.

On the performance front, the company is also embarking on three-pronged strategy. To begin with, it is planning to rope in consultants to restructure its HR structure.

Varma said, "We have also curtailed cost of production, by reducing energy, and cost of water by 15 per cent. And also, we redeployed manpower by training them."

As a second step, the company intends to focus Thal and Trombay units as separate cost centres. Varma said these cost centres will be the responsibility of separate executive directors for sales, receivables and targets. He added that each unit would be a business centre for the company.

The third strategy will be to improve market reach. U S Jha, director-marketing of the company, said the strategy was to make available all products to the farmers at a single-window shop.

"We are making our presence felt throughout the country by improving our marketing network," Jha added.

Elaborating on the business plan, Varma said the company was planning to consolidate by mergers and acquisitions of some government-owned companies.

"We want to go in for both backward- and forward-integration. We have shown expression of interest in Hindustan Organic Chemicals, SAIL' s fertiliser unit at Rourkela and Paradeep Phosphate Ltd," Varma said.