Promoter Holding In Nagarjuna Fert Set To Vault 13%

Shareholding of the core promoter group in Nagarjuna Fertilizers and Chemicals is poised for a 13 per cent jump to 42 per cent from 29 per cent. The company has sought shareholders' approval at an extraordinary general meeting (EGM) to issue to the core promoter group, namely, Nagarjuna Holdings (P) Ltd and its associates, 11,00,00,000 warrants entitling them to exchange these warrants for equity shares of Rs 10 each. Consequently, there will be a substantial rise in the existing stake of the promoters and their associates in the company.

According to the notice of the EGM, "in the context of globalisation and liberalisation process taking place in the country, there is a need for the promoting class to demonstrate their unflinching commitment towards the companies they control". Nagarjuna Fertilizers is poised for significant growth on account of the first fertiliser project and the successful implementation of the expansion project, stated the notice.

The shareholders also approved another five-year term for company's vice chairman and managing director K S Raju, whose present term will expire on July 2, 1998. Associated with the company right from its inception, Raju was appointed as the managing director in 1993.

The company suffered a 13.67 per cent fall in net sales in the year ending on March 31, 1998. Its net profit dwindled by 24.26 per cent to Rs 122.1 crore from Rs 161.2 crore in the previous year. The company maintained a dividend of 18 per cent.

Turnover of Nagarjuna Fertilizers declined to Rs 796 crore as against Rs 922 crore. The lower turnover is believed to be due to the government imposing restriction on urea offtake beyond 115 per cent of installed capacity in the second half of the year. The company has touched a capacity utilisation of 131 per cent in 1997-98.

The company has doubled its capacity at a cost of Rs 970 crore at Kakinada and the commercial production from the new plant commenced on March 19. The project has been financed by internal accruals and loans from financial institutions.

In the previous year, the company produced 7.17 lakh of tonnes of urea, while its sales of pesticides stood at Rs 84.76 crore. It has further strengthened its marketing network for handling larger volumes of sales on an all India basis.