RCF to raise price by 2-3% next month

Mumbai: State-run Rashtriya Chemicals and Fertlizers Ltd (RCFL) plans a 2-3% increase in prices next month to protect the margins, following the 33% hike in natural gas price, according to a top company official.

“For P&K (potassium and phosphorus) fertilizers, we will have to raise our prices to some extent so that we maintain our margins. Depending on the market situation, we will have to raise the prices,” RCF chairman and managing director (CMD) R.G. Rajan said in Mumbai over the weekend.

When asked specifically about the quantum of increase, he said, “Since the gas price hike is not as substantial as the earlier expectation of doubling the prices, I hope our price hike should be a modest 2-3%,” he said. The government on 18 October hiked the natural gas price from $4.2 per million British thermal unit (mmBtu) to $6.17 per mmBtu from 1 November, or about 33%.

On the revenue side, Rajan said the company is eyeing 7,500 crore this fiscal, a 10% growth from last fiscal due to increased production capacity. “Last year, our production was 30 lakh (3 million) tonnes (LT), and this year it will be almost 32 LT... Our turnover last year was around 6,800 crore. This year it should be around 7,500 crore. With the proposed price hike our revenue may go up further. RCF has annual capacity of 2.5 mt (million tonnes) of urea and 7 LT of complex fertilizers,” he said.

The PSU (public sector undertaking), which already enjoys the Miniratna status, is also likely to get the Navaratna status this year once the government appoints the requisite number of independent directors. “We need to have six independent directors. Right now we have only one independent director. Hopefully, the government will appoint five more directors. Already, our case is recommended for Navratna but it is appointment of directors which is stopping us. We hope that this year it should happen,” Rajan said.

RCF plans to set up a subsidiary ‘RCF Videsh´ on the lines of ONGC Videsh Ltd, which will specifically focus on ventures and assets abroad. Asked about his expectation from the new urea policy, he said, “Our expectation is that ultimately we have to go for nutrient-based subsidy (NBS) policy from the present new pricing scheme (NPS). Today, urea is priced so cheap at around 5.3 a kg. It is cheaper than salt, so farmers are using more urea or misusing urea and the NPK ratio is getting distorted.”

Ultimately, the aim is that we should have an NBS policy for all the three nutrients, primary nutrients, so that we have a balanced NPK ratio. That is the ultimate objective, he said, adding, “We hope that the new policy, the government will take this into consideration.”