The stock of country’s leading fertiliser maker Rashtriya Chemicals and Fertilisers (RCF) lost over 5 per cent on Friday. Weak performance in the March quarter has dragged down the stock price.

Even as RCF managed to increase its revenue by 6 per cent, its operating profit slumped by over 28 per cent - from Rs 264 crore in the March 2014 quarter to Rs 189 crore in March 2015.

The company had accounted subsidy income of Rs 87.4 crore during the March quarter, receivable from the Government as reimbursement of marketing margin on gas, for the last five years (beginning 2009-10). Operating profit would have been much lower after adjusting for this.

The weak operating performance was largely on account of a sharp rise in power and fuel expenses (20 per cent), employee costs (23 per cent) and other expenses (32 per cent).

The subsidy on complex fertilisers amounting to Rs 96 crore, which has been withheld by the Government, has been accounted as income by the company in the March quarter.

This relates to the matter pending with the Inter-Ministerial Committee regarding unintended benefit accruing to units due to use of domestic gas for manufacturing N (nitrogen) nutrient used in complex fertilisers. In the event of any adverse outcome, the company may have to write back the same.

The Government has recently approved the final subsidy rates for complex fertilisers and new urea policy for the existing and new units. However, the policy has not been notified yet. The shape of urea policy will be critical to RCF’s performance going forward.

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