Duncan may resume production soon

A PLAN to resume production at Duncan Industries Limited (DIL), Fertiliser division, Panki, is likely to be approved by company chairman GP Goenka. Initially, there will an emphasis on starting production at one plant.

A comprehensive plan prepared by the Panki team of the company about the possible revival of production was sent to Goenka. Keeping in view the financial constraints, stress has been laid on starting one plant that would cost Rs 17.5 crore. 

The cost includes cash reserve of Rs 10 crore, naphtha Rs 5 crore and other expenses Rs 2.5 crore.  A separate provision of a bank guarantee of Rs 15 to Rs 20 crore has also been made in the plan. However, past liabilities related to dues of employees have not been included in the plan.

The plan states that nine days will be required to produce urea.  About 750 tones of urea per day would be produced after consuming 350 tones of naphtha per day.

Other details, including the subsidy to be claimed by the company from the Fertiliser Industry Coordination Committee (FICC), a body regulated by the Government of India and the estimated increase in the subsidy to be claimed due to escalation in the price of naphtha, have also been discussed.

Besides, the amount is likely to be realised from the sale of Chand Chchap urea (famous brand of DIL) from farmers has also been discussed in the plan. 
 Justifying the start of production with only one plant initially, it has been pointed out in the plan that the Indian Oil Corporation (IOC) had refused to give credit beyond Rs 50 crore and two months for payment of naphtha supplied by it to the company.

Therefore, it becomes all the more necessary to start production at one plant.
To allay the fear of Indian  Oil Corporation regarding payment for naphtha a provision of a bank guarantee of Rs 15 to Rs 20 crore has also been made mandatory in the plan.  To ensure regular supply of naphtha, a provision of an Escrow account has also been made.

The subsidy to be claimed by Duncan Industries Limited  would be directly transferred to the Escrow account. The FICC and IOC will be empowered to directly withdraw from this account the amount due to it against the supply of Naphtha.  

 Talking to Hindustan Times general secretary of the Duncan Industries Limited employees union Arvind Kumar and senior leader of CITU said,  “The plan has been sent to the chairman who is likely to approve it within due course of time.”