Restructuring of Duncan subsidy issue resolved

THE LONG overdue restructuring of the subsidy of Duncan Fertilizer Industry has now been resolved with the Fertilizer Industry Coordination Committee (FICC) announcing new fixed price for Chand Chap Urea.

Much to the relief of Duncan Fertilizer, the FICC has fixed Rs 16,328 plus the sales tax as per ton cost of production of the urea produced at the Panki plant.

The revised subsidy to the fertilizer plant will now be calculated on the basis of the new price fixed by the FICC. This was the issue which resulted in re-closure of plant on October 18, 2005.

Earlier, at the time of closure of the plant on July 8, 2002 fixed price per ton of fertilizer produced by Duncan was Rs 9931. This price remained unchanged even after reopening of the plant and start of production on August 30, 2005. 

The new pricing has facilitated manifold increase in subsidy to the fertilizer which will be availed by the promoters of Duncan Fertilizer after ascertaining of new price by the FICC.

The current subsidy to Duncan will be calculated after deducting the maximum retail price (MRP) which is Rs 4650 per ton from the new fixed price which has been fixed at Rs 16328 plus sales tax by the FICC.

No change has been made in the MRP of Chand Chap Urea which earlier, at the time of closure of the plant, was Rs 4650. Therefore, at the time of closure of the plant the subsidy availed by the plant was calculated after deducting the MRP Rs 4650 from the old fixed price which was Rs 9931.

Change in the fixed price from Rs 9931 to Rs 16328 plus the sales tax will facilitate the promoter of Duncan Industries Limited (DIL) GP Goenka to claim the subsidy at the revised rates and overcome the financial ongoing crunch.

Now after removal of the main hurdle, the Duncan management will hold talks with their bankers, the SBI and the IOC, for restructuring of the loan and naphtha price respectively. In order to keep checks and balances on the daily expenditure the cash flow of Duncan Fertilizer is also likely to be monitored by the SBI as per the new agreement which will be signed after restructuring of the loan to be released by the bank.   

The present financial crisis in Duncan can be ascertained by the fact that after re-closure of the plant on October 18, employees for the first time in four months have not received their salary for the month of December till date.

Duncan Employees’ Union senior leader Arvind Kumar said, “Despite the fact that employees have not received their salary for December, cent per cent attendance is being maintained at the plant.”  

The plant had to be kept in the running state and for this pressure in the boilers and temperature had to be maintained, he said.

“We are optimistic that normal production at the plant will start soon,” he added.

It may be recalled that power supply to DIL was snapped on March 25, 2005 and on July 1, 2002 layoff was declared by the management. After continuous struggle by employees of DIL the layoff was lifted on July 8, 2005 and on August 30, 2005 once again production started. But barely after two-and-a-half months, the production once again stopped on October 18 due to financial crisis.