RCF’s working capital depends on subsidy payment: Umesh Dhatrak

With the introduction of direct benefit transfer (DBT), we become eligible for payment of subsidies only if the fertiliser is sold to the farmers through the point of sales machine (PoS), says Umesh Dhatrak, Chairman & Managing Director, Rashtriya Chemicals & Fertilizers Ltd. During an interview with Swati Khandelwal, Dhatrak said, "We are competing with low-cost imports from other countries by optimising our costs."

The fertiliser sector has a substantial subsidy due. Can you provide an expected timeline by which you will receive it through DBT?

Fertiliser sale happens only through DBT. We get eligible for the subsidy payment only if the fertiliser is sold to the farmers through PoS machines. Much time is not required to get the subsidy outstanding if the fertiliser is sold through PoS machines.

How will it impact your working capital and profit?

Working capital depends on our subsidy payment. And the only thing that has happened with the introduction of DBT is that we get eligible for payment of subsidies only when fertiliser is sold through PoS machines to farmers. Thus, it takes some time, and once it is sold to farmers through PoS machines, then much time is not required for receipt of the subsidy payment.

Is the government looking at divestment of RCF?

No. RCF is yet not named in the divestment list. Already, there is a public holding of 25% shares of RCF while the remaining 75% is held by the government.

Did good monsoon have any impact on the demand of fertilisers?

Fertiliser is in good demand and it is available in the market and there is no shortage of it. Although monsoon was a bit late, but has been a good one, however, there were floods in some areas. The uncertainty of monsoon affects fertiliser sales in our country.

What is your current debt level and how much do you plan to reduce it by the end of this fiscal?

Our debt requirements are needed for our working capital. It, debt levels, move up and down as per the requirement of our projects, internal and joint venture projects.

You have garnered about Rs 500 crore by selling a land parcel in the recent past. Do you have any further plans to sell land, if yes, then tell about the value that will be garnered through this sale?

No, we don't have any access land and there is no point to sell any land as it is required for our factory and township.

Can you give us an outlook on the chemical business? What sort of margins are you expecting there?

The chemical business market is very low. But we are supposed to compete with low-cost imports from other countries, where gas is available at cheap rates, which reduces their cost of the production cost of chemicals. Interestingly, their products are being imported to India and we are supposed to compete with it. We procure gas, LNG from the open market at the rate of around $10-11/mmBtu, however, the chemical producers of those countries, where gas is available in abundance, procure the gas at the rate of $2/mmBtu. Despite this, we are competing with them by optimising our costs.

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