Duncan up for sale, contenders line up
THAT DUNCAN Industries Limited is up for sale is a by-gone conclusion. But who?s buying it? The answer lies in negotiations between DIL owners and some key players in the fertiliser business. The decision to sell-off DIL was taken after all efforts of the management failed to resume production after its last closure on October 18, 2005.india Updated: Mar 25, 2006 00:13 IST
THAT DUNCAN Industries Limited is up for sale is a by-gone conclusion. But who’s buying it? The answer lies in negotiations between DIL owners and some key players in the fertiliser business. The decision to sell-off DIL was taken after all efforts of the management failed to resume production after its last closure on October 18, 2005.
At present, the DIL management is reported to be in talks with fertiliser giant Kribhco to sell off the massive Kanpur plant with a capacity of producing 2200 tonnes of urea. Recently, Reliance Industries Limited (RIL), also a contender for the takeover, backed off apparently over prices quoted. The DIL management, sources say, is reportedly asking for Rs 1000 crore for the final sale price.
Meanwhile, no final agreement has been reached between Kribhco and DIL till date. As per reports agreement on the final sale price of the plant is yet to be reached.
The financial crisis at DIL can be gauged by the fact that employees have not received salary from January 2006. Besides, only the first installment of the pending arrears of employees as per the MOU signed between them and management has been paid till date. No senior official of DIL was present in the city to comment on the issue.
Deputy president (works) S Ghosh was appointed after the retirement of president (works) BM Ritolia. But after the last closure of the plant on October 18, 2005, even Ghosh has left the city.
Initially, restructuring subsidy to Duncan Fertilizers was cited as the reason behind the closure of the plant on October 18, 2005. But even after restructuring of the subsidy of Duncan Fertilizer by the Fertilizer Industry Coordination Committee (FICC) the plant could not be re-started.
The second reason offered by the DIL management for production failing to start was the increased cost of Naphtha in the international market.
In the second week of January, the FICC fixed Rs 16,328 plus sales tax as the new cost of production per ton of the ‘Chand Chhaap’ urea produced at the Panki plant. At the time of closure of the plant for the first time (on July 8, 2002), the cost of production per ton of urea was fixed by FICC at Rs 9931.
This rise hiked the cost per month of DIL to Rs 84 crore, which was earlier Rs 35-36 crore, and its immediate fallout was the requirement of more working capital.
Power supply to Duncan Industries Limited (DIL) was snapped by Kesco on March 25, 2005, on charges of non-payment of pending dues. On July 1, 2002, the DIL management declared a layoff. However, after the State Government’s support and continuous struggle by the Duncan Employees’ Union, the layoff was lifted on July 8, 2005 and on August 30, 2005 production of Chand Chhaap urea re-started. But barely after two-and- half months, production once again stopped on October 18, 2005 due to financial crisis and till date it could not be started.
Senior leader of the Duncan Employees’ Union Arvind Kumar said, “At present there is no senior official of Duncan in the city to apprise us about the current situation.”