RCF reaps gains

RCF zoomed higher just as trading commenced on Wednesday, driven forth by the government's decision to disinvest 51% stake in the company.

By 9:58 IST, the scrip of the state-run fertiliser major notched up gains of 15.83% to Rs 20.85 as a result. It recorded volumes of 88,751 shares on BSE by then.

In fact, expected divestment has been a major issue on the counter of late. In the 10 sessions between 31 March and 15 April 2003, Rashtriya Chemical & Fertilisers jumped over 40% to Rs 18 from Rs 12.80.

Tuesday's meeting of the Cabinet Committee on Disinvestment concluded in a decision to sell 51% stake in the large fertiliser company. Currently, the government owns 92.5% stake in RCF.

RCF is the largest gas-based fertiliser and chemicals manufacturer in the country, with an installed capacity of 1.16 million tonnes. It has manufacturing units at Thal (Raigad district in Maharashtra) and Trombay near Mumbai. The company produces nitrogenous, phosphatic and potash fertilisers along with a wide range of industrial chemicals. Fertilisers contribute 80% to the company's turnover. Since it has a depreciated plant, the cost of producing urea is low compared to multinational companies.

RCF has embarked upon an ambitious investment plan of Rs 2,700 crore (Rs 27 billion), over the next three to five years, on modernisation schemes at its Trombay and Thal plants. The plan is to make the units safer and enhance their environment friendliness. The company, which proposes to achieve a turnover of Rs 5,000 crore (Rs 50 billion) to take on global competition in the wake of WTO regime, proposes to fund these schemes through internal accruals independent of Government of India support

For Q3 ended 31 December 2002, RCF reported a 138% jump in net profit to Rs 26.21 crore compared to Rs 11.03 crore in the corresponding period of the previous year. Total income (net of excise) increased by 18.5% to Rs 537.46 crore (Rs 5.37 billion) from Rs 453.59 crore (Rs 4.53 billion) in DQ2001.