PPL, which owns Asia's largest DAP plant at Paradip, was set up in 1986 as a joint venture with the Republic of Nauru. It has an installed capacity of 7.2 lakh tonnes of DAP, 2.25 lakh tonnes of phosphoric acid and 6.6 lakh tonnes of sulphuric acid per annum. Mismanagement, chronic labour problems and shortage of imported raw material had led to continuous losses since 1986. The only exception was 1994-95 when PPL posted a book profit of Rs 27 crore following a financial restructuring in the previous fiscal.

As on March 31, 1999, PPLhad an accumulated loss of Rs 256 crore and the company's net worth had been eroded by more than 70 per cent. It is likely to be referred to the Board for Industrial & Financial Reconstruction (BIFR) by the year end.

However, the Disinvestment Commission's recommendations have made the management hopeful of escaping the BIFR net. A fresh capital restructuring proposal has been prepared by Credit Rating & Investment Services India Ltd (Crisil) which suggests that PPL's entire equity be assessed in line with its intrinsic value. Moreover, the Rs 230-crore government loan should be converted into equity and a sum of Rs 120 crore pumped in as working capital bridge loan, Crisil suggested.

PPL sources said after the financial restructuring is completed, the company's stock will fetch a better price. However, the restructuring and offloading of 51 per cent stake will take place only after the new Government at the Centre is installed.

Despite continuous losses posted by PPL, the three fertiliser majors arequite enthusiastic about its takeover, PPL sources said. "The plant's location near the port, its infrastructure and huge surplus land in and around the plant have attracted the suitors," they said.

Hindustan Lever Chemicals, which mobilised Rs 102 crore in March 1999 by offering 22.25 lakh preferential shares, is looking forward to finance two new fertiliser plants and a new sulphuric acid plant at a cost of Rs 120 crore. With nearly 78 per cent of its Rs 926-crore turnover in 1998-99 coming from the DAP business, the company is keen to acquire PPL.

Similarly, PPL would be a strategic acquisition for the Punjab-based Oswal Chemicals & Fertilisers which is setting up a phosphatic fertiliser complex at Paradip port at a capital outlay of Rs 1,830 crore.