Capacity Utilisation Cranks Up Chambal Fertilisers Figures

Chambal Fertilisers and Chemicals Ltd, one of the largest private sector urea producers of the K K Birla Group, recorded highest-ever sales and profit growth in 1997-98 in spite of a significant increase in operating costs.

According to the audited results for the year 1997-98, the company reported an all-time high production of 9.70 lakh tonne of urea, achieving a capacity utilisation of 125 per cent against 113 per cent in the previous year.

This helped the company to register over 21 per cent increase in its turnover compared with a marginal decline in the previous year.

According to K K Birla, chairman of the company, Chambal Fertilisers has posted sales of 12.50 lakh tonne of fertilisers as against 9.95 lakh tonne in the previous year.

 

The sales volume includes 9.16 lakh tonne of indigenous urea and 1.96 lakh tonne of imported urea. The company's turnover in the pesticide segment increased from Rs 12 crore in 1996-97 to Rs 12.94 crore despite general slowdown in pesticide business during the year.

Due to some of the expansion programmes, Chambal Fertilisers' total expenditure increased by nearly 32 per cent compared with 11.7 per cent in the previous year. In spite of this hike in total expenditure, the company recorded over 12 per cent increase in its net profit compared with nearly a 13 per cent dip in the previous year. Chambal Fertilisers achieved this feat by better management of interest and depreciation costs. Further, its tax burden also declined over 11 per cent during the year.

In the first quarter of the current year also the company maintained the tempo of the last year's performance. It recorded a 25 per cent improvement in net sales over the previous corresponding period and nearly a 53 per cent improvement in net profit.

Traditionally, urea manufacturers do well during the first quarter which coincides with the beginning of the kharif season (June-October) when demand for nitrogenous fertilisers starts swelling.

According to corporate watchers, the company may not be able to retain the first quarter growth rates as it would not stand to benefit from the Hanumantha Rao Committee-recommended national referral price scheme of Rs 6,500 a tonne. The company's present cost stands at around Rs 7,000 a tonne.

According to the proposal, higher output over the norm will fetch higher profit for the company. Considering this, the company plans to double capacity and reduce per-unit production cost.

In the meantime, it has made a strong representation to the government highlighting the anomalies in the committee recommendations.

The company was promoted by Goa-based Zuari Industries Ltd (formerly Zuari Agro Chemicals) of the K K Birla group and originally incorporated on May 7, 1985, under the name of Aravali Fertilisers Ltd.

The name was changed to the present one during 1988-89. The company started manufacturing urea on January 1, 1992, with its 2,250-tonne per gas-based plant at Gadepan in Rajasthan.

It is doubling capacity of its fertiliser plant at an estimated project cost of Rs 1,256 crore. The overall progress of the project is reported to be as per schedule and expected to go on stream by end of 1999.

The company had promoted a joint venture named Indo Moroc Phosphore SA in Morocco in collaboration with Office Cherifien Des Phosphates, a Moroccan government company, with an estimated cost of $228 million.

The equity contribution of the company was $32.5 million, being 50 per cent of the capital. The plant is expected to start operation by mid 1999.

The software division of the company called India Software group has been set up at Chennai to carter to domestic and international software development business.