ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
-A A +A

Lower Profit, Higher Production

Lower Profit, Higher Production Hansavivek GUJARAT STATE FERTILISERS COMPANY has earned a lower profit during 1977 compared to the previous year, despite higher production of fertilisers, caprolactum, etc. The directors attribute this to low retention price for the company's urea and, to accumulation of caprolactum stocks following large imports at cheaper prices under open general licence. The fertiliser industry, as Well as its individual units, have represented to Government of India that it may be difficult to operate plants generally at 80 per cent capacity and that the retention prices be fixed taking into consideration the feedstocks, processes, age of the plants, and reasonable capacity utilisation for each unit, so as to provide 12 per cent post-tax return on net worth at such reasonable capacity utilisation. They have also pointed out the need to include rehabilitation allowance in the pricing mechanism so that funds are available from year to year to each unit for investment in plants to keep them at optimum operating level. So government has appointed a co-ordination committee to go into all issues pertaining to fixation of retention prices. At the year- end, the company had unsold stocks of 6,781 tonnes of caprolactum, which increased to 8,885 tonnes in the subsequent two months. The company has represented to the authorities for a review of the policy which allows caprolactum under OGL and it expects sales to pick up from the second quarter of the current year. With a decline in sales from Rs 90 crores to Rs 82.68 crores, gross profit has slipped from Rs 34.58 crores to Rs 30.29 crores reflecting pressure on margins. Net profit is Rs 10.10 crores (Rs 11.89 crores) and the maintained dividend of 22 per cent is still covered 3.4 times by earnings. The directors, however, point out that the full impact of reduction in prices of urea and caprolactum would be felt during the cur- rent year.

Subscribers please login to access full text of the article.

New 3 Month Subscription
to Digital Archives at

826for India

$50for overseas users

Get instant access to the complete EPW archives

Subscribe now

Comments

(-) Hide

EPW looks forward to your comments. Please note that comments are moderated as per our comments policy. They may take some time to appear. A comment, if suitable, may be selected for publication in the Letters pages of EPW.

Back to Top