Nfcl Earns Sharehoders Ire At Its 24th Agm

The management's inability for not fully rewarding its shareholders, has given a tough time for Nagarjuna Fertilisers and Chemicals (NFCL) at its 24th annual general meeting yesterday. This was questioned against the management's prudence in taking up giant projects like a 1,050 MW power plant and six million tonne petroleum refinery

Added to this are a host of many other things. The shareholders expressed their anger at the board's decision of slashing the dividend for 1999-2000 to 10 per cent from the earlier year's 20 per cent. Their contention was that the grassroot refinery project, the company is setting up at Cuddalore in Tamil Nadu, would be unviable and the power project proposed at Mangalore has a long gestation period. Many a shareholder expressed their concern over the deteriorating performance of the company. They cited the erosion in bottomline which was Rs 30 crore in the past financial year. The company posted a net profit of Rs 113.5 crore for the year ended March 2000.

Some of the shareholders questioned the rationale behind increase in Unit 64 scheme investment, which was done by about 20,00,000 units to 3,07,64,718 units. This gave an yield of only 9 to 10 per cent, while paying 15 per cent interest on non-convertible redeemable debentures.

There were also cocerns over company's equity investments in some of the non-traded shares like that of in Sri Saritha Synthetics. The company has an equity portfolio of Rs 24.91 crore as on March 31. There are also investments in scrips like Industrial Development Bank of India (17,17,000 shares), which were subscribed at Rs 120 in the initial public offering and getting quoted at Rs 35 now.

Replying to shareholders', chairman of the company, M C Sam Manekshaw said large outstandings of subsidy are to be received from the government and pile up of fertiliser stocks due to restricted allocation for the company's urea, were main reasons for slashing the dividend. In order that urea segment of the fertiliser industry is made globally competitive, it would be prudent to achieve decontrol of this segment within next 3 to 5 years, he advised the policy makers.

Explaining the progress made in implementing the refinery project at Cuddalore, he said that dismantling of the refinery at Woerth, Germany has been completed and shipment to the project site has commenced. The company has so far invested about Rs 410 crore in the project. However, the shareholders' urge for increase in dividend went unheeded.