Govt suspends GSFC subsidy payments

Govt suspends GSFC subsidy payments

New Delhi: The government on 7 March suspended subsidy payments to Gujarat State Fertilizers and Chemicals Ltd (GSFC), which is likely to hit profit at the state-owned company.

The fertilizer ministry issued the order after the company did not supply financial details that the ministry had sought in January, according to a person with direct knowledge of the matter, who did not want to be identified.

V.V. Vachhrajani, company secretary and deputy general manager, legal and industrial relations, GSFC, on 11 March said he was unaware of the latest order.

The government was considering revoking the subsidy it had offered to the firm on ammonium sulphate since April 2010, Mint reported on 23 January. Fertilizer ministry officials had said the firm may have gained 126 crore a year by way of profit through the subsidy payout.

GSFC produces around 320,000 tonnes of ammonium sulphate a year. The government had problems with the subsidy payments to GSFC on grounds that it was being made as an oversight and that it wasn’t being passed on to farmers.

In a 24 January statement, GSFC said the subsidy it received on fertilizers, including ammonium sulphate, was in line with government policy and subsidy was paid after “thorough checking" by the government.

Company results show that while until September 2010, earnings per share (EPS) was 25.98, it crossed 94 in March 2011. EPS is an indicator of the profitability of a company.

aman.m@livemint.com

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