Madras Fertilizers, MCFL and SPIC gain after CCEA approves continuation of urea production

Madras Fertilizers, Mangalore Chemical & Fertilizers and Southern Petrochemicals Industries Corporation rose by 7.21% to 11.38% at 14:55 IST on BSE after the Cabinet approved the continuation of production of urea from their units in Southern India.

The Cabinet Committee on Economic Affairs made announcement during market hours today, 10 June 2015.

Meanwhile, the BSE Sensex was up 447.58 points, or 1.63%, to 26,913.27.

Madras Fertilizers (up 11.38% to Rs 14.98), Mangalore Chemical and Fertilizers (up 7.21% to Rs 56.50) and Southern Petrochemicals Industries Corporation (SPIC) (up 10.64%) gained.

The Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister Narendra Modi, has approved the continuation of production of urea from Madras Fertilizers-Manali plant, Mangalore Chemical and Fertilizers-Mangalore plant and Southern Petrochemicals Industries Corporation-Tuticorin plant using naphtha as feedstock till availability of gas through gas pipeline or by any other means.

However, the state government concerned that is Government of Tamil Nadu and Karnataka, would be required not to charge value added tax (VAT) or entry tax on the Naptha/FO as decided in the earlier meeting of the CCEA in December 2014.

There are only two urea units at Kakinada in the entire Southern region other than these three units. If these three units would have been closed, then the entire requirement of the Southern region would have had to be sourced mainly through imports. Continuation of operation of these three units would substantially ease the problems of urea supply in Southern states during the ensuing Kharif.

These three naphtha based urea units with an annual capacity of 14.88 lakh metric tonne will cater to the demand in the Southern states of Karnataka, Tamil Nadu and Kerala (around 22.5 lakh metric tonne per annum) throughout the year.

The production of urea by these units will ensure timely and adequate availability of urea to farmers of the Southern states and will result in import substitution of urea.

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