RCF had earlier proposed to set up a JV with UCB Chemicals for manufacturing methalamine. The MoU, which was signed two years ago, has expired.According to RCF's chairman and managing director DK Varma: "Though the progress has been delayed, the project will be done in one form or the other. The delay is mainly because demand constraints, along with the recessionary phase, has affected the production of the industry."

Due to the increase in prices of naphtha and other petroleum products by around 50 pre cent to 80 per cent, the production cost has gone up. "Therefore, the entire viability is being reviewed and there is a need for renegotiation with UCB," Mr Varma said.

"Though the project is positive, the form and flavour will change and we want to review the various understandings in the MoU. Under the present management, the two companies will be renegotiating on the restructuring of the project and to finalise the proposed restructuring a high level meeting is going to be held in the end of January 2001," Mr Varma added.

On its JV with Hindustan Zinc and Rajasthan Minerals for setting up a 3-4 lakh tonnes per annum of diammonium phosphate (DAP) fertiliser plant at Rajasthan, Mr Varma said: "The project is being monitored with great pace. We had a meeting of the joint managing committee last week and we have decided to go ahead with the project to expedite its completion. Bids have already been invited for the project and presently the evaluation is going on."

Regarding the SSP plant at Madhya Pradesh, Mr Verma said: "The project has been shelved because of the policy of the respective governments on the bifurcation of Madhya Pradesh."

The government currently holds 92.5 per cent of RCF's equity base of Rs 510 crore, with the balance 7.5 per cent held by the public and financial institutions.

With regards to the disinvestment, Mr Verma said: "RCF is slated for disinvestment. The disinvestment committee has given recommendation for divesting Centre's majority stake with change in management control. However, it is also incumbent upon the government to finalise the long term fertiliser policy. The policy has to precede any action on the disinvestment." Mr Varma said that the government has to first make a policy and a road map on gradually decreasing the fertiliser subsidy for the entire industry. "If the decontrol or partial decontrol is decided then the disinvestment in RCF will add value to the government's stake and they can realise better valuation," Mr Varma added.

... yet to get govt clearance for Thal unit RCF is yet to receive government clearance for the third phase expansion of its Thal unit in Maharashtra. The company manufactures urea fertiliser at Thal. The company's third phase expansion plan encompasses a cost of 1,400 crore.

RCF chairman and managing director DK Varma said: "The expansion is very much on the anvil. However, a formal decision of the government is awaited."The company is also in the process of setting up a naphtha feed supplement unit at the cost of Rs 70 to Rs 80 crores which will enable RCF to increase the urea output by almost two lakh tonnes per annum.

He said, "we have recently completed the commissioning of a modernised baggaging and loading plant in the Trombay unit and optimisation schemes are being implemented to improve the energy efficiency and operating efficiency.""Despite the best efforts with the petroleum ministry, the availability of gas as feedstock for RCF is reduced. The reduction is both in quantity and quality. This is a major cause of worry in the growth of RCF," Mr Varma added.

The short supply in gas is to the extent of 35 per cent to 40 per cent of RCF's total requirement. "Last fortnight, there was a secretary level discussion and a review has been done in the petroleum ministry to meet RCF's demand. For the long run, we have tied up with Metropolitan Gas, a subsidiary of Enron India, for the supply of gas," he said.