However, the chairman and managing director CK Mehta, was concerned about the performance for the remaining seven months due to the spiralling cost of oil and gas. Nevertheless, the company is going ahead with its expansion plans, Mehta told shareholders at the annual general meeting held in Pune on Wednesday. "The company has decided to strategically consolidate its bulk fertiliser business," he said.

Deepak's 1998-99 sales and income rose to Rs 522 crore from Rs 414 crore in the previous year. Apart from anincrease in manufacturing activity, the growth was largely due to imports and sales of DAP fertilisers.

The company is going ahead with its plan for debottlenecking of its Ammonia plant. This will enable it to enhance its capacity from 272 mtpd to 354 mtpd. It will also enhance capacity for dilute nitric acid which is required for the production of ANP. A second hand plant has been procured from Ireland for this purpose. Capacity will go up from 765 to 1100 tonnes. This expansion is being done through marginal investments and by using the existing plants. This project would cost around Rs 40 crores and would optimise ANP production . If favourable policies are announced this capacity could be increased to 2000 tonnes, Mehta indicated

At the AGM, shareholders criticised the company for making an issue of secured redeemable non-convertible debentures aggregating Rs 50.45 crore on private placements basis at a high rate of 14.75 per cent despite other cheaper options available in the market. Mehtaexplained that at the time of placement, the company had lower ratings. Hence, the higher rate. He said the company would consider early redemption of the debentures to lower the interest costs.

Rising gas prices cause concern

During the current year, oil prices have spurted over $20 from $10 a barrel. Correspondingly, gas prices have increased by about 12 per cent since July 1 this year. Further rise in gas prices is expected in the last two quarters of the current financial year and is a cause for concern for the fertiliser industry.

Deepak Fertilisers CMD, CK Mehta, said the fertiliser industry was worried about the depletion of the country's gas reserves. Availability of gas has been affected as ONGC has curtailed supply of gas after the recent fire in some of its oil wells at Bombay High. Deepak has had to use costly fuel naptha to achieve production targets. "Unless strong efforts are made to explore new gas reserves, the country may have to depend on high-cost imported LNG," Mehtasaid.

He also called for reduction in fertiliser subsidy in a phased manner.