Financial Daily from THE HINDU group of publications
Sunday, Nov 30, 2003
Financial Daily from THE HINDU group of publications Sunday, Nov 30, 2003 |
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Corporate
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Courts/Legal Issues Nagarjuna Fertilizers may have to pay back excess subsidy Ch. Prashanth Reddy
Hyderabad , Nov. 29 NAGARJUNA Fertilizers and Chemicals Ltd (NFCL) may have to shell out Rs 233 crore on account of recovery of excess subsidy received in the earlier years. This follows the Supreme Court's refusal last week to entertain the company's petition against the Andhra Pradesh High Court's judgment on the issue. The VII and VIII pricing policies had required urea companies to pay back excess subsidies resulting from re-computation of retention prices for the period July 1, 1997 to April 1, 2000. The Andhra Pradesh High Court had turned down NFCL's case against the operation of the two pricing policies in July last. In June 2002, the Union Government had announced new parameters in relation to the VII and VIII pricing periods for computation of retention prices for urea. These new parameters were made effective with retrospective effect from July 1, 1997 and April 1, 2000, respectively. This led to retrospective changes in the retention prices of urea manufactured by the company for this period.
The retrospective implementation was not welcomed by NFCL. The company maintained that it had closed its accounts, declared dividend, paid bonuses, taxes and the financial statements could not be reopened nor reverted. Incidentally, the company had provided for Rs 233.10 crore in its financial statements for 2002-03 to meet this contingency. This provision was the key reason why NFCL reported a loss of Rs 170.52 crore for 2002-03.
According to NFCL management, even the new pricing policy, termed as Group Concession Policy, effective April 1, 2003, is "ambiguous and plagued with uncertainties". The policy moves away from the earlier unit specific retention price to group retention price with groups being formed based on vintage and feedstock.
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