Nagarjuna Fertilisers and Chemicals

Economic and Political Weekly January 5-12, 1991 11 IN THE CAPITAL MARKET Nagarjuna Fertilisers and Chemicals NAGARJUNA FERTILISERS AND CHEMICALS (NFCL) promoted by the Nagarjuna Group of Hyderabad will enter the capital market soon with a public issue of equity shares of Rs 10 at par for an aggregate sum of Rs 108 crore The issue is being made to part finance the Rs 785 crore fertiliser projects being set up at Kakinada. Of the total issue, 85.07 lakh shares of Rs 10 each will be reserved for the employees of the company, 100 lakh shares for NRIs, 95 lakh shares for firm allotment to Mutual Funds and the balance 799.93 lakh shares will be offered for public subscription. The fertiliser project ai Kakinada is at an advanced stage of implementation and is scheduled to go on stream in August this year. This will be the first gas-based fertiliser plant in south India. Natural gas from Kakinada will be available for use both as feedstock and fuel. The company has concluded an ag- greement with Gas Authority of India for supply of 1.3 million CMD of natural gas. There is no dependence on imported feedstock Operating even at 54 per cent capacity, the project can meet all cash costs and commence generating a cash surplus. The product pricing for each fertiliser unit is determined by the government of India and is designed to yield a 12 per cent post-tax return on net worth at 90 per cent capacity utilisation and other norms of efficiency. This offers scope for higher return through higher efficiency and capacity utilisation. Since the production of urea in Andhra Pradesh is less than 10 per cent of the state's consumption, the company's products will have an assured market.