Nfl Dips On Disinvestment Uncertainty

Shares of National Fertilizer Ltd (NFL) today plunged following reports that the delay in the long-term fertiliser policy would stall the process of disinvestment in the company.

The stock of the state-run National Fertilizers (NFL) proved the biggest loser among fertiliser companies, closing lower by 4.46 per cent at Rs 26.75. A total of 9,522 NFL shares changed hands on BSE.

The fall in the stock was purely attributed to the reports that the disinvestment in the PSU fertiliser major would be delayed as the fertiliser minister SS Dhindsa is still not forthcoming with the long-term fertiliser policy, dealers said.

The cabinet committee on disinvestment had earlier decided that NFL would be privatised only after the government announces the long-term fertiliser policy.

The CCD has already granted approval for the sale of the government's stake in NFL. But the sale is awaiting long-term fertiliser policy formulation.

Fertiliser companies are demanding that re-targeting of subsidies should be accompanied by the freeing of fertiliser prices, failing which the efficiency and profitability of the fertiliser units would suffer. This has caused a delay in the formulation of the fertiliser policy.

Given the tricky and multi-dimensional nature of the issue on hand, the government has still not taken a view on the long-term policy.

In 18 sessions between August 5 and August 30, the scrip lost 33 per cent to Rs 28 from Rs 41.70. In July 2002, the department of disinvestment invited expressions of interest for NFL, but that was subsequently set aside.

Indicative valuations for the 51 per cent stake in the unit have been pegged at around Rs 800 crore. The companies in the fray to acquire NFL include Chambal Fertilisers, Oswal Chemicals, Tata Chemicals, Deepak Fertilisers and Indo-Gulf Fertilisers.

Anyone who acquires the 51 per cent government stake in NFL becomes the country's largest producer of urea. Currently, NFL is the second largest producer of urea in the country with a production of 32.5 lakh tonne, which is slightly lower than leader Iffco which produces 36.5 lakh tonne of urea.

The government has put on the block the loss-making NFL which is a 'mini ratna' category-i public sector undertaking (PSU) enjoying a 13 per cent market share of the total nitrogenous fertilisers produced in the country. The government is selling 51 per cent of its 97.64 per cent equity in NFL in favour of a strategic partner.

For the first quarter ended June 30, NFL increased its losses to Rs 29.26 crore (Rs 25.43 crore) on a 8.88 per cent fall in its net sales to Rs 503.94 crore (Rs 553.07 crore).