Nagarjuna Fertilizers

In the last few years, the trading income of the company has been rising steadily. Apart from producing urea, the company trades in urea and other fertilisers.

The recent sops for the phosphatic and potassic fertilisers could have also resulted in lower demand for urea.Any large increase in sales growth is being ruled out as the company is already operating at around 135 per cent capacity utilisation. However, more alarming is the company's extensive diversification and expansion plan.

The company is implementing a Rs 970-crore expansion programme at Kakinada which is expected to go stream in the first quarter of 1998. In its diversification programme, the company is setting up a 2.3-million tonne integrated steel plant at Mangalore with a capital outlay of Rs 4,500 crore. Since these are huge projects, an equity dilution cannot be ruled out, which would hurt the scrip sentiment.