Partial Privatisation Of Fertiliser Psus Sought

The working group for the ninth plan has recommended partial privatisation of all fertiliser public sector undertakings. It has also sought special status for Indian Farmers Fertiliser Cooperative Ltd (Iffco) and Krishik Bharati Cooperative Ltd (Kribhco) to enable them raise funds from the capital market.

In its report, the working group on fertilisers said the partial privatisation of the shareholding in these PSUs should be achieved at the earliest in order to raise the resources required for their modernisation, revamp, expansion and diversification.

The group pointed out that even though shares of some of the PSUs Fertiliser and Chemicals Travancore Ltd (FACT), National Fertilisers Ltd (NFL) and Rashtriya Chemicals and Fertilisers Ltd (RCF) have been disinvested in tranches since 1991-92, the government continues to hold more than 97 per cent of the shares in these companies.

 

The tardiness of the improvement in financial performance during the initial phase of stabilisation and adverse capital market conditions have constrained the buoyancy of the fertiliser PSU shares, it said, adding that public participation in ownership would also help in improving efficiency, management culture and accountability.

The group suggested that Iffco and Kribhco should be granted dual status of cooperative companies by making suitable amendments to the Multi-State Cooperatives Societies Act, 1984, and the Companies Act, 1956, to enable these societies to raise funds from the capital market. A specific timeframe could be evolved to carry out this task.

The department of fertilisers has nine public sector undertakings and two cooperative societies under its administrative control. While RCF, FACT, Madras Fertiliser Ltd, NFL, Iffco and Kribhco have been making profits, Hindustan Fertiliser Corporation (HFC) and FCI have been incurring losses since inception.

The governments holds 97.65 per cent in NFL and 92.52 per cent in RCF. In MFL, the government holds 69.78 per cent, while the rest of the equity is with National Iranian Oil Company.

The group noted that there was a significant improvement in the operational performance of the undertakings under the control of the fertiliser department.

In their present state, the functional units of the loss-making FCI and HFC are currently contributing about 7 lakh tonnes of urea per annum. A scheme has already been formulated by the government to revamp Sindri, Ramagundam and Talcher units of HFC with a fresh investment of Rs 2,201.13 crore.