Nagarjuna Fertilizers faces working capital issues

Nagarjuna Fertilizers and Chemicals said it is facing working capital issues that are preventing it from operating its plant.

“..the company had taken plant maintenance activities on July 4, 2018,” it said in a statement today.

“The shutdown had to be extended due to inadequate working capital on account of Direct Benefit Transfer (DBT) and accumulated losses arising out of the earlier GAIL accident.

“The company is in the process of sorting out the working capital issues with the bankers to restart the plant,” it added.

The Narendra Modi government introduced the scheme of ‘direct benefit transfer’ of subsidies to farmers buying fertilizers.

Earlier, companies used to get subsidy payouts based on production. Under the new scheme, they get subsidy only on the basis of data about the sale of fertilizers by a retailer to a farmer.

The move requires the company to wait for the sale to take place and for the records to reach the government, before getting subsidy.

The second adverse factor impacting production is the fire that broke out on gas supplier GAIL’s pipeline in East Godavari district of Andhra Pradesh in late June.

The accident disrupted the supply of gas from Reliance’s KG D6 block to Nagarjuna’s fertilizer plant in Kakinada from early July.

The shutdown of the plant is expected to have impacted the supply of fertilizers during the summer as it is one of the largest urea complexes in India, spread over 1, 130 acres.