Public Disclosure Authorized
I~~~~~~~~~Vt
s 4"l
RESTRICTED
LSK
,_
l
ReportNo.
PI-8
Public Disclosure Authorized
This report was prepared for use within the Bank and its affiliated organizations.
They do not accept responsibilityfor its accuracy or completeness,The report may
not be published nor may it be quoted as representing their views.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
Public Disclosure Authorized
INTERNATIONAL DEVELOPMENT ASSOCIATION
APPRAISAL
OF
THE COCHIN II FERTILIZER
THE FERTILISERS
AND CHEMICALS,
Public Disclosure Authorized
INDIA
May 14, 1971
Industrial
Projects
Department
PROJECT
TRAVANCORE
LIMITED
Currency
Equivalents
$0.133
Rs 7.5
1 Rupee (Rs)
1 U.S. Dollar ($)
Rs 1,000,000
'
$133,000
Weights and Measures
All weights
and measures
are
1 metric ton
1 metric ton
1 kilometer
(km)
Principal
GOI, Government
FACT
FEDO
UDL
PCI
UWNDP
TPY
TPD
CIF
expressed
=
-
Abbreviations
in metric
units:
1,000 kilograms
2,205 pounds
0.62 miles
(kg)
and Acronyms Used
The Central Government of India
The Fertilisersand Chemicals,TravancoreLtd.
FACT Engineering
and Design Organisation
Udyogamandal Division of FACT
Fertilizer
Corporation
of India
United Nations DevelopmentProgramme
Metric Tons Per Year
Metric Tons Per Day
Cost, Insurance and Freight
N, P, and K are used throughout
nutrients:
the report
to refer
N = Nitrogen Content
P = P2 05 or PhosphateContent
K = K2 0 or PotashContent
Fiscal Year
April
1 - March 31
to the fertilizer
TABLE OF CONTENTS
Page No.
SUMMARY AND CONCLUSIONS .............................
..............................
I.
INTRODUCTION ..........
II.
FACT'S EXISTING OPERATIONS ..........................
A.
B.
C.
III.
PROPOSED COCHIN II PROJECT ..........................
A.
B.
IV.
V.
2
2
2
3
5
........................... 5
Project Scope .......
............ 5
Project Description and Ecology ....
6
A.
B.
C.
6
7
7
Capital Costs .....................
Working Capital ................................
Financial Plan .................................
PROJECT EXECUTION
.............................
Project Management .............................
Project Schedule and Procurement ...............
Allocation of IDA Credit .......................
MARKET AND MARKETING .......
A.
B.
C.
D.
E.
F.
G.
VII.
1
PROJECT COSTS AND FINANCIAL PLAN ...............
A.
B.
C.
VI.
History and Organization .................
.........................
FACT Management .......
......
Financial Analysis of Existing Operations
i
8
9
10
......................... 11
................ 11
Present Situation in India .....
12
.................
Market Forecast for India .....
........... 13
Fertilizer Market in South India ....
15
....
....
FACT Marketing Area and Handling System
16
............................
NPK Seeding Program
16
...................
Sales Prices and Competition
17
Agricultural Credit ............................
OPERATING COSTS
A.
B.
8
.....................................
Raw Material Costs .............................
Production Costs ...............................
This report has been prepared by Messrs. Donald E. Browni
and Anthony R. Perram of the Industrial Projects Department based on missions to India in December 1970 and
February/March 1971.
18
18
19
Table
of Contents
VIII.
(Continued)
FINANCIAL AND ECONOMIC ANALYSIS OF THE PROJECT
20
A.
B.
C.
20
Financial Analysis and Sensitivity Tests
Economic Analysis .21
Imported Vs. Manufactured Phosphoric Acid
IX.
FUTURE PROFITABILITY AND FINANCIAL POSITION ON FACT .
X.
RECOMMENDATIONS .24
ANNEXES
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
MAP
-
Page No.
Description of FACT's Existing Operations
FACT Historical Income Statements
FACT Historical Balance Sheets
Product Schedule and Sales Price - Cochin II Project
Technical Description - Cochin II Project
Summary of Capital Costs - Cochin II Project
Working Capital Requirements - Cochin II Project
Forecast of Nitrogen Production - India
Forecast of P2 0 5 Production - India
Fertilizer Market - Demand Forecast for South India
Fertilizer Market - Supply Forecast for South India
Annual Cost of Production - Cochin II Project
Forecasted Income Statement - Cochin II Project
Sensitivity Analysis and Major Assumptions
Project Breakeven Analysis
Annual Foreign Exchange Savings
FACT Income Statement Forecasts
FACT Source and Application of Funds Forecast
FACT Long-Term Debt Service Coverage Forecasts
FACT Balance Sheet Forecasts
Present and Proposed Major Fertilizer Plants
in South India.
22
22
SUW4ARYAND CONCLUSIONS
This report appraises a proposed major expansion of the producI.
tion facilities of The Fertilisers and Chemicals, Travancore Ltd., (FACT),
a public sector company in the State of Kerala, India. The Government
of India (GOI) owns 81% of the company. Fertilizer production is a major
part of India's efforts to improve agricultural output. This project,
which will have a design capacity of 485,000 tons per year of granulated
nitrogenous, phosphatic and potash (14PK)fertilizers, would make a significant contribution towards rmeeting India's increasing fertilizer requirements. A small by-product plant for 7,500 tons per year of cryolite which
is used in aluminum manufacture is also included.
Total financing required for the project is estimated at $50.7
ii.
million (Rs 380 million), of which $19.6 million is in foreign exchange.
GOT will provide the financing with at least half in equity and with the
balance in loan. The proposed IDA credit of $20 million (Rs 150 million)
will be relent by the Government as part of its loan. The loan to FACT
will be at 3.5% interest per annum with a maturity schedule that includes
three years of grace and ten equal annual repayments for each wiclhdrawal
from GOI by FACT. Based on expected withdrawals the maximum life of the
loan will be 16 years.
FACT's existing plants are small, in part obsolete and have
iii.
encountered operating difficulties which have adversely affected the
company's financial position. Followin,grecommendations of a 1969 IDA
mission the company prepared a rationalization program which is now being
implemented. The December 1970 appraisal mission reviewed this program
and the Association is satisfied that FACT, with the help of some
experienced consultants, is capable of improving existing operations,
completing and operating a new urea plant (Cochin I) now under construction and of executing the proposed NPK project. To carry out such ambitious investments and to adjust its debt service to realistic expectations
of cash generation, the company's financial position will be improved by
increasing equity and rescheduling existing debt.
The managing contractor for the project will be FACT E.ngineering
iv.
and D)esignf)rganisation (FEDO), a division of FACT, withimajor portions
subcontracted to other engineering firms and local contractors. The
project is based on conventional technology within the experience and
capability of FEDO which has designed and constructed similar plants although not of the same magnitude. To assist with the project, the company
has selected several international engineering firms as process subcontractors who will supply the necessary technical support.
CGovernment-owned fertilizer plants in India have experienced
v.
substantial delays in construction and start-up difficulties and on the
utilizaof capacity
whlole have not yet been able to reach normal levels
-
tion.
Various factors
control of the plants
if
-
have been responsible
for tlhis, niot all within
concerned.
1lowever, GOI has become increasingly
the
aware of the high cost of construction delays and undertutilizedplant.
It has agreed that for the planned project the construction scheduile
should not be more than 33 months. It is therefore expecte(dthat tlle
project will be completed by March 1974.
vi.
Procedures for the procurement of foreign and domestic equipment have been agreed with FACT and GOI. The Government has indicated
that it will reserve about 12% of the value of equipment and materials
for Indian suppliers. These items are expected to be procured within the
requirements of time and quality imposed by the project. All other equipment will be bid competitively by international tender with assurances
given by GOI that all import licenses required will be promptly issued.
Any reserved Indian equipment which is delayed and might endanger timely
completion of the project will be promptly secured from other sources.
The proceeds of the proposed IDA credit would be used for internationally bid equipment, imported materials for equipment on the "reserved
list", costs of foreign process licenses, plant designs and consultant
services as well as a portion of the local costs of FEDO's engineering
and equipment erection costs.
vii.
Projections of Indian fertilizer demand and supply indicate
that, even on optimistic estimates of local production, India will have an
annual production shortfall through this decade of around 900,000 tons
of nitrogen and 800,000 tons of phosphates. The foreign exchange required
to import the tonnages required is substantial and emphasizes the hiigh
priority of the proposed project, which will save India approximately
$16 million per year in foreign exchange.
viii.
In FACT's marketing region in South India, projections of
fertilizer demand and supply show nitrogen in balance in the latter half
of the decade and a continuing shortfall in phosphatic fertilizer supply
of around 150,000 tons per year (in terms of nutrients). Since the
project's output will be NPK fertilizers with a high nutrient content and
ease of application, no sales difficulties are expected. FACT's marketing organization will be strengthened by adding more distribution points
and, on the basis of the company's successful marketing experience in the
past, it should be able to handle the increased volume satisfactorily.
Moreover, FACT will carry out a large seeding program for NPK to assure
the successful introduction of its new products. The effectiveness of
the company's marketing efforts will depend heavily on the availability
of agricultural credit. The Government has assured IDA that FACT will
have a suitable level of working capital to cover normal company operations and to finance required credit to the extent not available from the
banking system.
-
iii
-
ix.
The project provides a suitableeconomicreturn of 13.5%, which
indicates that productioncosts of the project are competitiveinternationally. Profitabilityof the project is satisfactory,with an indicated
financial return of 19.5%. The project is highly sensitive to relative
changes in selling and raw materialprices and to any delay in completion
of the project.
x.
There have been no previous IDA credits or Bank loans to the
Government-ownedfertilizerindustryof India. IFC has participated
in two private sector fertilizerprojects, (IndianExplosives,Ltd., in
Uttar Pradesh and Zuari Agro Chemicals,Ltd., in Goa) and is considering
a third. Indian Explosivesis successfullyin operationand Zuari Agro
is anticipatedto start productionin mid-1972. IDA is also considering
several other fertilizerprojectswith the GOI-ownedFertilizerCorporation of India (FCI), the largest fertilizercompany in India with five
existingplants and three presently under construction. In addition,
the Bank is ExecutingAgency for a UNDP-financedphosphatemining project
study in Rajasthan.
xi.
Based on the assurancesreceived during negotiations,the project
is suitable for an IDA credit of $20 million.
I. INTRODUCTION
The Governmentof India (GOI) has requested financing from the
1.01
InternationalDevelopmentAssociation (IDA) for a major expansion of
fertilizerproduction facilitiesof The Fertilisersand Chemicals,Travancore Limited (FACT),which are located near Cochin port in Southiwest
India. This expansion,designatedas the Cochin II Project, would add
about 115,000metric tons per year (TPY) phosphates (as P2 05); 54,000 TPY
potash (as K20); and 47,000 TPY nitrogen (as N) capacity to FACT's present
capability. The increased productionwill be high nutrient content, granulated NPK 1/ fertilizersto meet the increasingdemand in South India
and will permit FACT to market more balanced and competitivegrades of
fertilizersthan their present products. The plant will produce six different grades with an average NPK analysis of 19-23-11.
FACT has been producing fertilizersin Kerala State since 1948
1.02
and markets its own production,as well as fertilizerfrom the Government
FertilizerPool, in the states of Kerala, Tamil Nadu, Mysore, Andhra Pradesh and the Union Territoriesof Goa and Pondicherry. FACT's existing
factories are in Udyogamandalnear Cochin port (see Map). A major ammoniaurea factory (Cochin I) located about 20 km from Udyogamandalis expected
to begin operations in mid-1971 and the proposed expansion would be adjacent to it. Both factoriesare served by major highway routes and are
located adjacent to commercialwaterways. Cochin has railroad facilities
at its factory and Udyogamandalhas railroad stationsnearby.
The proposednew project was originallyconceivedby FACT as an
1.03
elementalphosphorusproject. An IDA mission studied this proposal in mid1969 and recommendedthat FACT should consider a more economic route for
obtaining phosphoricacid, either by import or manufacturefrom sulfur
and phosphate rock. IDA also recommendedthat FACT review its existing
facilitiesand devise a scheme for increasingperformance. FACT has responded to both recommendationsand submitted a project feasibilityreport
to IDA in October, 1970. An appraisal mission visited FACT in December
1970 to assess the proposed project and a program to rationalize existing
operations.
The Cochin II Project will produce sulfuric acid, phosphoric
1.04
acid, granularNPK fertilizers,as well as cryolitewhich is used in the
productionof aluminum. The design is based on imported sulfur, ammonia,
phosphate rock and potash; plus urea from the Cochin I plant. The!
project includesnecessary port facilities to handle the large quantities
of raw materials and all requiredoffaites.
1/
The nomenclatureused to describe multi-nutrientfertilizersis N-P-K,
referring respectivelyto the % Nitrogen (N), % P2 05 (P), and % K20
(K). Thus 28-28-0 contains 28% nitrogen, 28% P2 05 and no potash;
17-17-17contains 17% of each nutrient. The term phosphate is used in
all cases to refer to the P2 05 content.
-2-
FACT is presently in financial difficulty due to poor operating
1.05
performance at Udyogamandal and a 1-1/2 year delay in completing the
Cochin I ammonia-urea project. Due to losses in recent years, FACT has not
been able to meet portions of its maturing debts to GOT and negotiations
are now being completed between GOT and FACT to restructure the company's
debt.
The appraisal report was prepared by Messrs. Donald E. Brown
1.06
and Anthony R. Perram of the Industrial Projects Department, based on
missions to India in December 1970 and February/March 1971.
II.
A.
FACT's EXISTING OPERATIONS
History and Organization
2.01
FACT was incorporated iln 1943 as a private company with the
Government of the State of Travancore (now part of Kerala) having a substantial holding. The company's management was taken over in 1960 by
the Government of Kerala, by then the major shareholder. GOI, which
subsequently acquired the majority shares, has managed the company since
1963. GOI presently owns about 81% of FACT with the State Governments of
Kerala, Tamil Nadu, PHysoreand Andhra Pradesh holding about 15% of the
shares and the remaining 4% is held by about 5,500 private shareholders.
FACT began operations as a small producer of single super phos2.02
phate and since then has completed several expansion projects. FACT
presently produces and markets ammonium phosphate, ammonium sulfate,
mixed NPK products, and in 1971, will add urea production. The company's
present capacity is about 7% of the total fertilizer capacity in India.
With the Cochin Division the proportion will increase to about 12%.
2.03
FACT has five operating divisions which report to the Managing
Director: (1) Udyogamandal (UDL), which operates the existing plants;
(2) Cochin, which will operate the ammonia/urea plant now under construction and the Cochin II plant when it is completed; (3) FACT Engineering
and Design Organisation (FEDO), the planning and engineering arm of FACT;
(4) FACT Engineering Works (FEW), a small equipment ranufacturer; and (5)
Marketing, which handles all ferti:Lizersales. These divisions are further described in Chapter VI and in Annex 1.
B.
FACT Management
FACT has a 12-member Board of Directors of which eight are chosen
2.04
by GOI, two by Kerala, and two by private shareholders. The Board meets
about seven times a year to review operations and decide on major investments, budget and policy issues. The Board has delegated considerable authority to the Managing Director, who is a Board member chosen by GOI. He
acts as principal liaison with the shareholders and directs day to day
operations assisted by the Finance Manager, who functions as his deputy.
-32.05
FACT's overall managementcapabilitywas assessedby IDA in July
and August 1969, includinga report by P. A. ManagementConsultants,Limited, of London. The major problems found then were: (1) managementinformation, such as production,marketing,and financial reportswere not complete nor prepared on time; (2) the UDL division had excessivestaff, with
poorly defined lob specifications;and (3) maintenancewas not properly
scheduled. Some improvementhas occurredbut the basic problems still
exist.
2.06
The Managing Directorhas recentlybeen transferredand a new Managing Directorhas been appointedwho appears to be capable and is satisfactory to the Association.
The Cochin II Project
Manager has had production
and engineering
experience
and appears to be capable.
The appointment
of
highly competent people to the senior managementpositions (three key personnel have been lost recentlyby death or transfer)and continuityof management are particularlyimportant to the company and the execution of the
project since the company is not deep in managementpersonnel.
2.07
The company recognizesthat cost accountingand reportingneed improvement. Reasons given for the unsatisfactoryreportingwere union problems within the accountingdepartment,installationof a new computer system, and concentrationon improving productionrates. However, the speed
with which informationrequestedwas produced,was impressiveas was the
amount of detail provided. The company intends to introducemonthly production cost data for each individualproductionunit, improve quarterly fi-.
nancial statementsand budget goals for future operations,using realistic
production targets to stimulate improvementsin operations. FACT has given
assurances to IDA that its cost accountingand managementinformationsystem will be satisfactoryby January 1972.
C.
Financial Analysis of Existing Operations
2.08
Historicalincome statementsfor the fiscal years (FY) 1966
through 1971 are contained in Annex 2 and are summarizedbelow.
Summary Income Statements
(millionof Rs)
Total
1966-
Fiscal Years
FY66
FY67
Net Sales (from operations)
Operating Costs
25
31
Operating Profit (Loss)
Non-OperatingIncome
Gross Profit (Loss)
Interest
Taxes
FY68
FY69
57
51
77
73
119
116
(6)
2
6
5
4
2
3
7
(16)
3
(3) (12)
2
21
(4)
3
11
7
6
6
10
7
(13)
6
(1)
9
_
Net Income (Loss)
*Preliminaryfigures
__
(7)
4
FY70
118
134
___
-__
3
FY71* 1971
133
136
529
541
9
38
-__
(19)
(10
(9)
-4FACT's earnings
record has been unsatisfactory
over the past years.
Increasing sales and stable selling
prices since 1968 have been offset
by low
operating
performance and higher operating
costs, particularly
labor.
These
problems were quite evident in 1970. Net losses over the six-yea?r period
total Rs 29 million or about 5.5% of net sales from operations.
The corn-pany expects that fiscal
1971 will show a loss although the exact result
will depend upon decisions
to *bemade regarding
deferred
expenses for rmarket
development.
Historical
2.09
below.
balance
sheets
are shown in Annex 3 and are summarIzed
Summary Balance Sheets
(millionof Rs)
Fiscal
Years
Assets
Current Assets
Net Fixed Assets
Other Assets
Total Assets
Liabilities
and Capital
Current Liabilities
Long-Term Debt
Equity:
Share Capital
Reserves & Surplus
Total
Total
Equity
Liabilities
Current Assets/Current
Long Term Debt/Equity
*Preliminary
& Capital
Liabilities
FY66
FY67
FY68
FY69
FY70
54
172
4
98
207
4
177
257
4
232
499
10
216
598
12
189
684
16
230
309
438
741
826
889
59
100
75
(4)
109
124
75
1
166
197
75
-
205
392
141
3
277
391
174
(16)
318
371
226
(26)
71
76
75
144
158
200
230
309
438
741
826
889
.9:1
58/42
.9:1
62/38
1.1:1
72/28
1.1:1
73/27
.8:1
71/29
.6:1
65/35
FY71*
figures
2.10
Recent losses and delays in the completion
of the Cochin I Project
have prevented
FACT from paying its maturing debt to GOI. By March 31,
1971 this unpaid debt had accrued to Rs 81 million including
Rs 21 million
interest
which is now being renegotiated.
Payments on outstanding
loans
to the Industrial
Finance Corporation
of India and on the Italian
credits
for Cochin I have been paid on schedule.
GOI has been supplying
funds to
FACT, particularly
for the Cochin I project,
in the form of two-thirds
debt and one-third
equity.
The combination
of high debt and losses has
made the company financially
weak and has required increased
short-term
borrowings which have been difficult
to obtain.
The company now has a
negative working capital
position
and high debt service requirements
which
will be eased by the rescheduling
of the GOI loans and the provision
of
additional
funds by GOI if required
(para. 4.08).
III.
A.
PROPOSED COCHIN II PROJECT
Project Scope
3.01
The proposed expansion (Cochin II) has a design capacity of
435,000 TPY of granulated, high analysis NPK fertilizers and 7,500 TPY
cryolite. The grades, production schedule and ex-factory sales prices
for the NPK products and cryolite are shown in Annex 4. NPK production
is based on imported phosphate rock, potash, sulfur and ammonia and
includes manufacture of sulfuric and phosphoric acid as intermediate
products. Urea will be obtained from Cochin I. The major plants will
be based on licensed designs from contractors that have been selected by
FACT. The project also includes the necessary facilities at Cochin port,
about 15 km away.
B.
Project Description and Ecology
3.02
The phosphoric acid plant will have a design capacity of 115,000
TPY P205. FACT has a licensing agreement with The Engineering and Industrial Corporation of Luxembourg (Prayon) for phosphoric acid design knowhow. The process represents conventional and commercial technology, and
Prayon and FACT both have considerable experience in design and operation
of these plants.
3.03
The sulfuric acid (H2SO4 ) plant is a 330,000 TPY unit based
on elemental sulfur. The process and size represent commercial and conventional technology and FACT's licensor, Chemiebau, Dr. A. Zieren GmbH
& Company KG (Chemiebau), of Germany has adequate experience, including
designs of up to 264,000 TPY sulfuric acid.
3.04
The NPK plant will have a design capacity of 485,000 TPY NPK
based on technology from Wellman-Power Gas Inc., of the U.S. Their
granulation experience includes about 20 commercial plants including
Coromandel in India.
3.05
The cryolite plant will produce 7,500 TPY and is based on a
similar plant that FACT now has under construction.
3.06
Port facilities and other offsites represent a major portion of
the project. The Cochin Port Trust has agreed to provide a wharf and a
mooring berth exclusively for FACT. GOI and FACT have agreed to provide
the necessary assurances from the Cochin Port Trust as a condition of
effectiveness of the IDA credit. FEDO's design of the port, transportation and site facilities was reviewed with FEDO's engineering staff and
is considered adequate.
3.07
A phosphate fertilizer complex such as the Cochin II project
discharges several streams that are potential pollution hazards. The
effluents are fluorine and sulfur compounds that may be discharged to
- 6the atmosphere, fluorine compounds that may be discharged in liquid
wastes, and a solid material (gypsum) that is stored. FEDO has designed
the project to control these effluents within normal practice in the
industry. The cryolite plant offers the advantage of recovering fluorine
from phosphoric acid manufacture and decreases a potential pollution
problem.
A more complete technical description of the project, including
3.08
pollution control is given in Annex 5.
IV.
A.
Capital
PROJECT COSTS AND FINANCIAL PLAN
Costs
is Rs 380
for the project
required
financing
estimated
The total
4.01
during
construction.
which includes
interest
million
(US$50.7 million)
These costs
are summarized below and further details are given in Annex 6.
Summary of Project Costs
(in millions)
Indian Rupees
Total
Lcocal Foreign
Local
U.S. Dollars
Foreign
Total
510.3
20.2
39.4
68.3
8.8
-
79.7
9.9
0.5
3.9
130.0
20.2
49.3
68.3
9.3
3.9
6.7
2.7
5.3
9.1
1.2
-
10.6
1.3
0.1
0.5
17.3
2.7
6.6
9.1
1.3
0.5
Sub-Total
Working Capital
Contingency
187.0
12.0
13.0
94.0
38.0
15.0
281.0
50.0
28.0
25.0
1.6
1.7
12.5
5.1
2.0
37.5
6.7
3.7
Total Project Costs
Interest during Construction
212.0
21.0
147.0
-
359.0
21.0
28.3
2.8
19.6
-
47.9
2.8
Total Financing Required
233.0
147.0
380.0
31.1
19.6
50.7
Freight
Equipment,
Materials,
Duty, Sales Tax
Design, Erection
Civil Works, Land, Offices
Pre-Operating Expenses
Technical Assistance
The foreign exchange portion of capital costs, including working
4.02
capital, is estimated at $19.6 million. The foreign exchange costs are
based on 12% of total equipment beLng reserved for Indian procurement and
the expectation
that approximately 40% of the internationally bid equipmnent will be won by Indian suppliers.
4.03
The above costs represent:preliminary estimates based on the
escalation.
project beginning in mid-1971 and iincludeadequate price
Costs have been conservativelystated and the contingency,representing
10% of the direct project costs, should be sufficient.
B.
Working Capital
4.04
Total working capital requirementsfor the project at an annual
productionrate of 436,500 tons (90% of capacity)are estimatedat Rs 209
million ($28 million) as shown in Annex 7. The above figure is based on
four months accounts receivable,three months raw material storage (except
urea and ammonia) and two months product storage. The initialworking
capital is assumed at Rs 50 million ($6.7 million) of which the foreign
exchange componentis $5.1 million.
C.
Financial Plan
4.05
The Rs 380 million financingneeded for the project will be
providedby the Government,with at least half (Rs 190 million) in the
form of equity and the balance as loan. The proceedsof the proposed
IDA credit of Rs 150 million ($20 million)would be relent by the
Governmentas part of its loan under a subsidiaryloan agreement.
4.06
The interestrate for the subsidiaryloan agreed to in negotiations is 8.5% per annum. GOI's normal policy is to approve the funds
for the entire project and then disbursethem to the recipient in quarterly
installments,each of which constitutesa separate loan. Each disbursement has a three-yeargrace and a ten-yearrepaymentperiod. Since the
final disbursementis expected to be made in the fourth year after start
of constructionthe last maturitywould be in the sixteenth year of the
project. The financialforecasts in the annexes correspondto this
maturity schedule. Since the loan from GOI to FACT is wholly a rupee
loan, the exchangerisk remains with the Government.
4.07
The followingtable gives a summary of the total estimated
sources and applicationof funds for FACT as a whole during implementation of the project (Refer to Chapter IX).
Summary of Source and Applicationof Funds
during Project Implementation1971/1974
(millionsof rupees)
Sources
Long-TermDebt
Equity
Cash Generation- UDL/CochinI
Short-TermFunds
Total
Application
190
213*
380
60
843
*IncludingRs 23 million for Cochin I.
Cochin II Project
UDL and Cochin I
Debt Service
Total
380
199
264
843
- 8 -
4.08
The forecastedcash generationis based on UDL operating at
improved levels and Cochin I achieving its expected production. GOI and
FACT are currently renegotiatingthe company's debt. It is expected that
the actual amount of reschedulingwill be Rs 85 million with repayment beginning in FY 1972 and ending five years thereafter. Completionof the
arrangementsfor the debt reschedulingwill be a conditionof effectiveness
of the proposed credit. Although IDA anticipates that further rescheduling
may be necessary for some arnounts;
due towards the end of FY 1972, the Association has agreed to this scheme because (a) negotiationsfor the rescheduling are virtually completedand (b) the Governmenthas agreed to keep
the company in a liquid position during constructionwith a current ratio
of at least 1.5:1 being obtained at the start of commercialproduction.
4.09
To protect against an overrun in project costs (includingCochin
I) or shortfall in cash generation,GOI has agreed to provide funds necessary to complete the project and put FACT in a sound financial position
including adequateworking capital. To this end the Governmentwill put a
minimum of 50% of the funds representingCochin I and Cochin II investments
in the form of equity by completionof Cochin II. GOI also agreed to set
a goal of a long-term debt/equityratio of not greater than 55/45 for the
company after Cochin II begins commercialoperation. The Association's
projectionsshow that at the time Cochin II starts up, FACT should be in
a sound financialposition (a long-term debt/equityratio of about 50/50
and a current ratio of about 1.5:1).
V.
A.
PROJECT EXECUTION
Project Management
5.01
FEDO will act as managing contractorfor the Cochin II project.
IDA's evaluationof FEDO as an engineeringcompany, is given in Annex 1.
In view of the overall size and complexityof Cochin II, FACT has agreed
to employ an experiencedAssistant Project Manager plus one experienced
Engineer to assist FEDO in budget and schedule control and in general engineering,procurement,and constructionduties. The Assistant Project
Manager will remain until completionof the project and the Engineer is
expected to stay 2-3 years.
5.02
Tn addition, FACT will use selectedprocess licensors in design,
equipment selection,constructionand start-up. The extent of such assistance by the licensors (beyond their initial process package) is expected to
be as follows:
-9-
Man Months
Sulfuric Acid (Chemiebau)
PhosphoricAcid (Prayon)
NPK (Wellman-Power Gas)
8-12
12-18
60-80
The assistanceis primarily aimed at adding depth and experienceto the
FEDO organizationto ensure the success of Cochin II. FEDO has already
establishedcontinuingassociationswith Chemiebau and Prayon for sulfuric
and phosphoricacid designs, respectively,and has recently concluded a
contractwith Wellman-PowerGas for the NPK plant. FACT is now completing
final agreementswith Chemiebau and Prayon and arranging for the engineering personnel described above. IDA has reviewed these agreementsin draft
form and found them acceptable. Their satisfactoryconclusionis a condition of effectivenessof the proposed credit.
To avoid FEDO's overextendingits management and engineering
5.03
staff capacity during project execution,FEDO will not accept any engineering contractsin excess of Rs 1,500,000 ($200,000)each without first
consultingwith IDA until engineering for Cochin II is substantially
completed. FACT has agreed not to undertake any other major capital investment program in excess of Rs 7,500,000 ($1,000,000)per year without IDA's
consent.
B.
Project Schedule and Procurement
on
for the project
path schedule
FEDO has updated its critical
5.04
the basis of a completiontime of 33 months. For appraisal purposes, project constructionhas been assumed as 36 months, but a concerted effort will
be made to realize the 33-monthschedule. The shorter schedule is largely
dependent on efficient implementationof procurement. GOI has expressed
a strong desire to minimize project execution time and has agreed to the
33-monthschedule as the governing criterion to which all its and the company's actions will be geared and has modified its procurementpolicy with
this objective in mind.
The Governmentagreed that the equipment and materials reserved
5.05
for procurement from Indian supplierswill be limited to about 12% of the
total estimated equipment value. IDA is satisfied that the "reserved list"
includes only those items that do not have critical delivery time and can be
supplied from Indian firms in adequate quality. If it should become evident
affect
that delivery of any equipment on the reserved list would adversely
the project's criticalpath schedule, then the Governmentwill permit such
items to be shifted promptly to internationalor other procurementsources.
-
10
-
All other equipmentwill be bid by internationalcompetitive
5.06
tender, including India. Indian suppliers will be given a 15% cost preference in bid evaluationscompared against the CIF India price of competitive equipmentbids. GOI has given assurance that after FEDO has completed
its bid analysis and decided the procurementsource, any required import
licenseswill be issued promptly.
In collaborationwith the process licensors,FEDO will prepare
5.07
suitablebid packageswhich will permit qualified Indian suppliers to compete on the smaller of the packages but still maintain project schedule
and equipmentstandardizationrequirements.
The proposed IDA credit will include an estimated $0.5 million
5.08
of foreign exchangecosts for the import of materials and componentsto
be used by Indian suppliers for items on the "reserved list". While to
the extent practical these imports will be subjected to international
shopping, their speed of procurementwill be the governing factors. FEDO
will coordinatethe import of such materials and components.
C.
Allocationof IDA Credit
The proceeds
5.09
(see Annex 6):
of the proposed
IDA credit
would be used as follows
Use of IDA Credit
$ Million
1.
2.
3.
4.
5.
Equipment
Equipment (for foreign components
of "reserved list")
and Equipment Erection
Engineering
Licensors
(a)
(b) FEDO
TechnicalAssistance
Unallocated
Total
15.2
0.5
1.3
0.5
0.5
2.0
20.0
The allocationof IDA funds to the above categoriesis approximateat this
time and may have to be revised somewhatwhen FEDO has completedits detailed
engineeringwork. The credit will cover the CIF cost of imported equipment
and the ex-factoryprice (excludingtaxes) of locally procuredequipment
that is internationallybid. As mentioned before, the credit will also
include the CIF cost of imported foreign componentsof locally procured
equipmenton the "reservedlist", and the foreign exchange costs of process
licensesand consultants'services. A portion of FEDO's local costs for
engineeringand equipment erectionis also included. The estimated foreign
-
11
-
exchange content of the proposed credit is about $15 million, which assumes
that 30% of the internationally bid equipment is won by Indian suppliers
(para. 4.02). The projected disbursement schedule for the IDA credit is
contained in Annex 6.
VI.
A.
MARKET AND MARKETING
Present Situation in India
6.01
A major goal of Indian economic development is self-sufficiency
in agriculture, including fertilizer production. However, India currently
imports about half of the required fertilizer nutrients as finished products and as intermediate raw materials. Nitrogen, the major fertilizer
nutrient, is produced in India primarily as ammonia and urea with most
manufacture based on naphtha from imported petroleum feedstocks. Current
plans propose increasing reliance on fuel oil and indigenous coal as raw
materials to produce nitrogen fertilizer. India permits some ammonia
imports, but imposes a 60 percent duty on the CIF price. Use of imported
ammonia may increase as a result of recent trade agreements between India
and Iran.
6.02
Virtually no phosphate material is produced in India. While
feasibility studies are about to start (financed by UNDP with the Bank
as Executing Agency) to develop promising phosphate rock deposits in
Rajasthan these deposits are not likely in the near future to produce
enough rock to make India self-sufficient. India imports large amounts
of phosphate rock and, in recent years, the Government has granted permission for three companies 1/ to also import phosphoric acid. Potash,
or potassium chloride, is not produced locally; so all requirements are
imported, either as potash or in a finished NPK product.
Fertilizer consumption and production for the period 1964-1970
6.03
are shown below based on data from the Fertilizer Association of India,
the Ministry of Food and Agriculture and IDA.
1/
Madras, Zuari Agro, and Indian Farmers Fertilizer Cooperative
(IFFCO).
- 12
-
FertilizerConsumptionand Productionin India
(thousandsof tons)
Nitrogen (N)
Phosphate (P205)
Apparent
Apparent
ConsumptionProductionImports ConsumptionProduction Imports
FY
FY
FY
FY
FY
FY
65
66
67
68
69
70
580
530
660
920
1,200
1,450
240
240
310
400
560
720
340
290
350
520
640
730
160
160
200
290
410
560
130
120
150
210
210
220
30
40
50
80
200
340
6.04
Consumptionof nitrogen increasedduring the six-year period at
an average annual rate of about 20%. Local productionrose even more
quickly (about 28% per year) but was not able to catch up with demand.
Phosphate consumption increased
at about 28% annually and here too production was unable to meet demand. Low production levels (about 60% of
capacity) in existing plants have contributedto these deficits. Furthermore, while a more normal ratio between nitrogen and phosphate should be
approximately2:1, the actual ratio in India in 1969/70was about 3.3:1.
Consumptionof phosphate fertilizerthereforehas lagged substantially
behind that of nitrogenous fertilizer.Foreign exchange expendituresfor
imports of nitrogen and phosphate have averaged in excess of $150 million
annually during recent years.
6.05
Annexes 8 and 9 give lists of the fertilizerplants now in operation, under construction,or planned in India; recent production;and
major sources of finance.
B.
Market Forecast for India
6.06
Estimates for supply and demand of nitrogen and phosphate fertilizer nutrients for all of India for the current Fourth Five-Year Plan (ending March 31, 1974) and the Fifth Five-YearPlan (endingMarch 31, 1979)
are shown below. These projectionsare based on a previous Bank study
(September30, 1970) and a projectionrecently preparedby the GOI (Ministry
of Petroleum and Chemicals). The demand projectionsthrough 1973/74 are
taken from the Bank study mentionecd
above and are based on a projection
model that included historical
data plus growth rates in area irrigated
and in fertilizer
consuming crops.
The figures for the Fifth Five-Year
Plan (1974/79) are based on IDA's extrapolation
of these data and its
estimate of completiondates for individualplants (Annexes 8 and 9).
- 13 Market in India
Fertilizer
of tons)
(thousands
Demand
FY
FY
FY
FY
FY
FY
FY
FY
FY
1,760
2,110
2,500
2,910
3,300
3,700
4,100
4,600
5,200
71
72
73
74
75
76
77
78
79
Nitrogen
Supply
850
1,470
1,830
2,050
2,260
2,590
3,390
3,860
4,230
(N)
Deficit
910
640
670
860
1,040
1,110
710
740
970
Demand
750
970
1,220
1,510
1,700
1,900
2,100
2,300
2,600
Phosphate
Supply
(P 2 05 )
Deficit
230
380
430
530
750
940
1,310
1,540
1,730
520
590
790
980
950
960
790
760
870
The table indicates a substantialnitrogen deficit through the
6.07
period. The deficit decreases slightly in the early years as new Fertilizer
Corporationof India (FCI) and FACT urea units come on stream but widens
again thereafter. The phosphatedeficit grows from about 500,000 tons per
year to 800-900,000. The supply forecastsare based on a realizablebut
optimisticschedule for new projects and on all plants achieving a 90%
capacityutilization. The assumptionsused in the forecasts are explained
in Annex 8. Therefore, the supply figures representIDA's best estimate
of the maximum fertilizerproduction India can reasonablybe expected to
achieve. If the assumptionson capacityutilizationand schedule of projects are not fulfilled,then the estimated supply could be 10-20% below
the above forecasts.
C.
FertilizerMarket in South India
Estimated consumptionof nitrogen and phosphate from 1969/70
6.08
(actual) to 1978/79 for the four southern states (FACT's marketing area)
is given in Annex 10. Average annual growth rates anticipatedby FACT
through 1973/74 are about 10% for nitrogen and 20% for phosphate and
thereafterare assumed for both nutrients at about 13%. It has been
assumed that phosphate consumptionwould increase at a faster rate than
nitrogen until the ratio reaches 2:1. FACT assumed fertilizergrowth
rates below those for the rest of India because of the already higher
fertilizerapplicationin South India. The FACT estimates are the most
conservativeand are used in this evaluation. They are based on extensive market surveys and the requirementsof N, P and K for the area's
main crops (rice, wheat, tea, fruits, nuts, spices, sugar, cotton, vegetables, and tobacco).
The projected supply and demand of fertilizerfor South India
6.09
are shown below. The supply data are taken from Annex 11.
- 14 -
FertilizerMarket in South India
(thousandsof tons)
Demand
FY
FY
FY
FY
FY
FY
FY
FY
FY
71
72
73
74
75
76
77
78
79
6.10
600
670
730
810
910
1,030
1,180
1,330
1,500
Nitrogen (N)
Deficit
Supply
140
340
550
670
720
810
1,180
1,330
1,530
460
330
180
140
190
220
0
0
-30
Demand
Phosphates(P2 05)
Supply
Deficit
230
280
330
400
470
550
620
700
790
The locations of the fertilizer producers
110
180
230
260
330
380
490
530
630
in
120
100
100
140
140
170
130
170
160
South India are
shown in the map along with major broad gauge rail lines to illustratethe
market area served by FACT. The principal competitorsto FACT will be Zuari
Agro (Goa), Madras (Tamil Nadu), and Coromandel(Andhra Pradesh). IDA's
assessmentof supply assumes that the above three producerswill operate
at 90% capacity from 1974/75onward. Superphosphateproductionis projected
at 40,000 TPY P2 05 based on FACT's estimate. Other proposed projectsin
South India are CoromandelExpansion (II and III), Mangalore,Tuticorin
(SouthernPetrochemicalIndustriesCorporation),Ramagundam,and Occidental
at Vizag. These are assumed to come into productionover the period 19751979; however, the probabilityof all five of these projectsmaintaining
the schedule given is consideredunlikely. These productionforecastsare
more optimisticthan the all-India forecast in Annexes 8 and 9 to show the
maximum competitionthat FACT would have to contendwithin its marketing
area.
6.11
In spite of the optimisticsupply forecast, a phosphateproduction deficitwill still exist in South India and FACT should have no sales
difficultyas far as total market demand is concerned. The phosphatedeficit ranges from 130-170,000TPY over 1974-1979and would be met by a net
inflow from North Indian plants (such as FCI Trombay) or imports. The supply deficitwill remain high unless a number of the other projectsproceed
at a considerablyfaster rate than now appears likely.
6.12
The nitrogensupply could be essentiallyin balance in South
India by 1976/77based on FACT's conservativeestimateof consumptionand
the optimistic forecastof supply. Nevertheless,even if such balance could
be achieved the nitrogen from Cochin II will be sold as NPK fertilizerand,
with the large deficit of P2 05 expected, the company'sNPK fertilizersshould
be marketed with no difficultyeven if competitiondevelopsin straight nitrogen. The company's competitiveposition is further discussedin paras.
6.21 to 6.23 below.
- 15 -
D.
FACT Marketing Area and Handling System
6.13
The marketing area of FACT in South India includes the four states
of Kerala, Tamil Nadu, Andhra Pradesh, and Mysore. Within this area, FACT
has establishedan extensive distributionnetwork of godowns,wholesale and
retail dealers, and a marketing staff to service the more than 6,000 final
distributionpoints. At present the company markets about 460,000 TPY fertilizers of which 250,000 TPY are purchased. Tonnagesmay increase to
about 700,000 TPY with Cochin I and about 1,000,000TPY with Cochin II,
excluding amounts for seeding programs or other outside purchases. To
handle this expanded tonnage, FACT expects to utilize its existing distribution network more efficientlyand also to establish additionaldistribution
points.
6.14
The market share that the company expects to obtain in each of
the four southern states is shown below:
FACT Market Share by Area
Market
Kerala
Tamil Nadu
SouthernMysore
Northern Mysore
Andhra Pradesh
% of Market
N P205 K20
70
25
25
12
12
70
25
25
7
7
70
25
25
7
7
Rail Freight
Avg. Cost
Rs/ton
12
35
35
45
45
Sales
Headquarters
Trivandrum
Madras
Bangalore
Bangalore
Hyderabad
Selling
Points
Dec. 1970
3,000
2,100
210
(inc. above)
500
6.15
Kerala forms the principalmarketing area. At present FACT markets about 70% of the total supply to the state and its forecasts are based
on maintaining this percentage. No other producer can effectively compete
with FACT in Kerala due to the company's location advantage and its wellestablishedname. FACT has a large sales network in Tamil Nadu and Southern
Mysore and estimates that it will supply 25% of the total market demand.
The lower share is due to the longer freight distanceinvolved and the competition from Madras Fertilizerand Zuari Agro, both of which will be marketing similar products.
6.16
The other marketing areas contain northern Mysore and Andhra
Pradesh. These are much farther from FACT and substantial competitionmay
be expected from Zuari Agro and from Coromandel. Therefore,FACT has estimated that it will obtain only 12% of the nitrogen market and 7% of the
phosphate and potash market. The market penetration projectedseems reasonable for all areas.
FACT reports an average Rs 138/ton ($18.40/ton)distributioncost,
6.17
which includescharges for freight,storage, marketing overhead, credit and
dealer comnission. These costs compare favorablywith marketing costs in
- 16 other countries. Distributioncosts, plus sales and excise taxes, are
passed on to the farmer. About 70% of the fertilizeris sold under some
credit arrangement. Fertilizercredit is discussed further in paras. 6.24
and 6.25.
E.
6.18
NPK Seeding Program
Presently FACT sells the followingtonnagesof fertilizerannually:
110,000
20,000
60,000
100,000
170,000
NPK Mixtures
Superphosphate
Ammonium Phosphate
Ammonium Sulfate
Urea
460,000
Total
While sales of the above provide FACT witlhvaluablemarketing experience,
they provide little help in developingmarkets for the NPK's to be produced
in Cochin II. The analysisof the above NP and NPK mixtures varies but they
are generallymuch lower in nutrient content than those expected from the
project.
6.19
It will be necessary for FACT to develop a comprehensiveseeding
program for Cochin II based on the import of grades conformingas closely as
possible to those to be produced. This is particularlyimportantsince most
grades are not now available to the farmers. The specific grades are listed
in Annex 4 along with detailed commentson the fertilizerrequirementsof the
area and the basis for the selectionof the grades to be producedby the
project. To be successfulthis program should provideNPK fertilizersin
suitablegrades in at least the followingamounts (in tons per year):
FY 72
FY 73
FY 74
25,000 - 50,000 NPK
100,000 - 150,000 NPK
200,000 - 250,000 NPK
FY 75
As necessary to supplementproduction
During negotiationsit was agreed that FACT will implementa suitable seeding program and that the Governmentwill import fertilizersfor that purpose
as necessary.
F.
6.20
Sales Prices and Competition
Typical current retail fertilizerprices in India are:
Source
GovernmentPool
GovernmentPool
Coromandel
Grade
14-14-14
15-15-15
28-28-0
Ex-plant prices
Rs/ton
US$/ton
757
832
1,270
101
111
170
-
17
-
Witlhthe exceptionof 28-28-0,the grades proposedby FACT (Annex 4) are
not now marketed in India. Therefore,FACT calculatedthe current prices
for its NPK productsbased on the above prices of the Governmentpool and
Coromandel (Annex 4). The average grade of 19-23-11would thus have an
ex-factorysales price of Rs 928/ton ($124/ton).
6.21
Fertilizersales prices have been constant for about two years
during which time raw material prices on the whole have increased slightly.
Currently, only Coromandel is producing and marketing high analysis, ureabased NPK fertilizers in India. When Madras and Zuari Agro come on strces
in 1971 and 1972 respectively with new NPK capacity, the price could rea-
sonably be expected to drop due to increasedcompetitionbut this tendency
will probably be offset by the continuingshortfall in supply. IDA concludes, therefore, that prices are likely to remain at about existing levels
and represent a reasonable basis for evaluating the project.
6.22
FACT will face major competition in its market area from Coromandel
and Madras but other producers will be less competitive. Zuari Agro will
market a bulk blend based on urea and ammonium phosphate. Although the
grades can be the same, bulk blends are not generally as acceptable as the
granular product that FACT will manufacture. Also, Goa and the nearby area
of Mysore are serviced only by narrow gauge rails so transportation becomes
a major problem for Zuari Agro.
6.23
Manufacturers in north India will not be able to compete very
well in South India due to higher freight costs and product disadvantages.
Thus, competition from Northern producers should have limited impact and
FACT should be able to sell its output within its marketing area at projected prices.
G.
Agricultural Credit
6.24
The importance of credit to fertilizer consumption is well recognized in India. At present credit is provided by the commercial banking
system and by the GOI to cover purchases from the Government Pool. The
Fertilizer Association of India (FAI) has estimated total fertilizer credit
for India of Its2,970 million ($400 million) in 1970/71. Based on consumption forecasts, the requirements in 1974/75 will be approximateLy Rs 5,000
million ($670 million). While availability of credit has thus far not
seriously restricted growth in fertilizer demand, continuing efforts will
be necessary if future consumptionforecastsare to be met. To fulfill
this need FAI recommended comprehensive changes in the agricultural credit
policy of India including establishment of a Fertilizer Credit Guarantee
Corporation by the GOI. This corporation has not yet been established.
Other programs to improve fertilizer credit are being studied by GOI, the
State Governments, and the Reserve Bank of India.
6.25
FACT estimates its total fertilizer credit needs in the latter
1970's at about Rs 800 million annually, of which it expects to provide
- 118 -
about Rs 120 million from its own resources. The company's financialprojections indicate that FACT can readily provide this amount. Total credit
will be supplied as follows (in Rs million):
Dealers
CommercialBanks
Cooperatives
FACT
200
400
80
120
Total
800
The above distributionof credit sources has been proposed by FACT to reduce
the amount of credit to be suppliedby FACT and its dealers through increased
relianceon commercialbanks. The company has been successful in involving
local banks in selected areas in extending fertilizercredit but this system
is not in wide use at present. FACI's marketing efforts depend on the availability of such credit, and the Governmenthas agreed to provide adequate
working capital if funds are not available from commercialbanking sources.
VII. OPERATING COSTS
A.
Raw Material Costs
7.01
Raw material costs representabout 70% of total production costs
and their impact on the company's profitabilitytherefore is significant.
As noted before, the project is based on urea from Cochin I plus imported
phosphate rock, sulfur, potash and ammonia. At full production,annually
recurring foreign exchange expendituresfor the importedraw materials alone
are approximately$21 million at present prices. Prices of raw materials
have fluctuatedwidely over the past two to three years which makes accurate
forecasts of raw material costs difficult. The following table shows the
present prices (actually paid by FACT and used in the financial forecasts)
for these materials and the price trend (used in the economic return calculations) expectedby IDA.
Comparisonof Present and Future CIF Prices
Present Prices
Delivered
CIF
Plant Site
$/ton
Phosphate Rock
Sulfur
Potash
Ammonia (plus 60%
duty)
Urea (from Cochin I)
Rs/ton
Assumed Future
Prices
Rs/ton
$/ton
30
36
53
227
270
400
245
290
423
24
30
40
37
278
318
37
620 ($82.70)
60
-
-
There are no import duties on phosphate rock, sulfur and potash. Other raw
materials,such as filler and coating agent, are available in India.
-
7.02
All imports
now channeled
of sulfur,
through
19
-
phosphate
the Minerals
rock and potash
and Metals
Trading
into
India
Corporation
are
(MMTC),
a government-ownedcorporationwhich contracts for supplies from international sources,usually under bilateral trade agreements. MMTC suplies
the materials to the users such as FACT at its import price plus a fee.
Present raw material prices are generallyhigher than current international
prices due to such bilateral arrangements. Ammonia will be supplied for
Cochin II through a long-term contractrecently concludedbetween Iran and
GOI.
GOI has
bagging
agreed
supplies
to permit
to the extent
import
of all
not available
raw materials
needed
including
in India.
7.03
Present
raw material
prices are higher than those expected by
IDA in the longer run.
IDA's assumptionsare based on internationalprices
and assume that freight rates, which have greatly escalatedover the past
two years, will decline to more normal levels. Present prices have been
used in financialprojectionsto allow an accurate comparisonwith present
NPK prices. The effect of raw material and fertilizerprice changes on
the company'sprofitabilityis discussedin Chapter VIII.
7.04
The project analysis does not include the possibilityof supply
of phosphate rock from the mining project now being consideredin Rajasthan
(para. 6.02). It is too early to predict the quantity and price of any
indigenousrock supply, and it is not anticipatedthat Rajasthan phosphate
rock will be supplied to FACT in the near future. Cochin II will, however,
be designed to permit use of Rajasthan rock when it does become available.
B.
ProductionCosts
7.05
Productioncosts were calculated for the average NPK grade to be
produced (19-23-11)and include costs for sulfuric acid and phosphoricacid.
Details of these costs are given in Annex 12 for various levels of plant
utilizationand are summarizedbelow for the normal operating level assumed
at 90% of design capacity.
Annual ProductionCosts- at 90% of Design Capacity
(Rs million)
NPK
Variable Costs
Fixed Costs
Total ProductionCosts
/1
Cryol:Lte
258.2
46.9
8.3
1.1
305.1
9.4
Includes depreciation,but no intereston long-term debt.
7.06
The high proportionof variablecosts reflects the large raw material component. Since the raw material costs used in the projectionsare
higher than the estimated trend, they should not increase further unless
- 20
-
affectedby bilateral arrangements. Overall productioncosts are therefore
consideredconservative. A direct comparisonof Cochin II's projected operating costs with FACT's existing cost of productionis not possible since
the grades produced differ markedly in nutrient content and composition.
However, a comparisonon a cost per ton nutrient basis indicatesmuch lower
productioncosts at Cochin II than FACT can obtain at UDL Division. While
cryolite representsonly about 3% of the project's output and will hardly
influence the company'sprofitability,it is neverthelessan importantproduct in that it is crucial in the productionof aluminum and would help to
replace current imports.
7.06
The project will provide direct employment for about 500 skilled
and semi-skilledpersonnel. The lprojectis capital intensive and labor costs
representonly a small fractionof operating costs. No attempt was made to
project employment created as an Lndirectresult of the project in ancillary
industries.
VIII. FINANCIALAND ECONOMICANALYSIS OF THE PROJECT
A.
FinancialAnalysis and SensitivityTests
8.01
Detailed income statements for the project are containedin Annex
13. Summary statementsof these forecastsare shown below:
Summary Income Statements- Cochin II
(in millions of rupees)
FY75 FY76 FY77 FY78 FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87
CapacityUtilization (%)
50
80
90 90
90 90
90
90
90
90
90
90
90
Sales
195 353 413 422 422 422 422 422 422 422 422 422 422
Operating
Costs
162 269 308 315 315 315 315 315 315 315 315 315 289
Gross Profit
Interest
Profit before
Taxes
Taxes
Net Profit
33
14
84
15
105 107 107 107 107
14 13
11
10
8
19
69
91
94
96
97
99 101
-
-
-
-
-
53
54
56
56
57
58
19
69
91
94
96
44
45
45
46
47
47
107
6
107
5
107
3
107
2
107
1
133
-
102 104 105
106
133
58
73
48
60
8.02
The project shows a small profit in the first year of production
in the next two years as
are expected to rise rapidly
(FY 1975).
Profits
production increases to 90%, and remain at a level above Rs 90 million
- 21 -
per year until FY 1980, when - after a tax holiday of five years - the
impact of taxes (about 55%) forces net profit down to approximatelyRs 45
million per year.
8.03
Due to the relativelyhigh selling prices of fertilizer:LnIndia,
the project is very profitable and, after taxes become applicable,net profit equals 11% of sales and 24% of share capital. If Cochin II were carried
out in a separate corporation,it would have a quite satisfactorydebt service coverage of around 4.0 times in the early years when no taxes are paid,
and about 2.9 times thereafter.
8.04
The internal financial return (IFR) for the project has been calculated at 19.5%. The assumptionsused in this analysis,as well as for the
sensitivity tests, are shown in Annex 14.
8.05
The project has been tested for various factors and is very sensitive to changes in raw material and product selling prices. If raw material
prices are reduced to the level of the expected long-rangetrend, selling
prices could be decreased 7% without reducing the financial return. With
current raw material prices and a 10% reduction in selling price, the IFR
decreases to 9.3%.
The project is not appreciablyaffectedby changes in production
8.06
levels. The IFR for a maximum of 80% productionbeginning in the second
year and 100% beginning in the fourth year are 16% and 21% respectively.
A project delay, however, is critical. A one-year delay with a resulting
15% cost overrun would decrease the IFR to 9.2%. If this delay were followed by other adverse circumstances,such as a 10% decline in selling prices,
the project would show a negative return.
8.07
As shown in Annex 15, the profit break-even point for the project
at the assumed selling prices is 37% of capacity. At normal production the
project would break-even profitwiseif NPK prices were reduced as much as
22%. The cash break-evenpoint on the same basis including the service of
long-termdebt would require sales at 32% capacityor an NPK selling price
of Rs 710/ton (22% reduction).
B.
EconomicAnalysis
The internal economic return (IER) for the project is 13.5% as
8.08
shown in detail in Annex 14 and is based on the followingmajor assumptions:
(1) Raw material costs are the long range trend prices shown
in para. 7.01.
(2) The average selling price is equivalentto expected CIF
import prices of N (as urea); P2 05 (as phosphoricacid),
and K20 (as potash) in the proportions required for the
--
22
-
project's average NPK formulation£A2 notional manufacturing costs and profits if produced in a modern and efficient plant in one of the industrializedcountries.
8.09
Although the above analysis has its shortcomings,it still offers
the best comparisonwith importedNPK products, since the grades to be manufactured at Cochin II are not avaLilable
internationally.
This evaluation
indicates that when using internaLtional
input prices, the project would be
competitivewith imported NPK fertilizerswhile earning at the same time
an acceptableeconomic return.
8.10
Sensitivityanalyses of the economic return show the same trends
as the financialreturn with the project being very sensitive to relative
changes in raw material costs and selling prices. Again, a delay in project
completion reduces the return substantiallyto 6.0% and a delay coupled with
a relative selling price reductionof 10% results in a negative return.
Details of the sensitivity tests are contained in Annex 14.
8.11
As shown in Annex 16 the project would realize net annual foreign
exchange savings of $15.6 million at normal 90% production. The local currency expenditurerequired to achieve this savings is Rs 92 million ($12.2
million) per year.
C.
ImportedVs. ManufacturedPhosphoricAcid
8.12
In consideringCochin II, an analysishas been made to see if a
more optimum solutionwould be to use imported phosphoricacid rather than
to produce acid from imported raw materials (phosphaterock and sulfur).
Essentially the decision to import phosphoricacid would save about $18 million in capital costs, of which $4-6 million would be foreign exchange. However, local productionof acid would save annually about $3.7 million in
foreign exchange operating costs, albeit at an increasein local costs of
about $3 million equivalentper year. Details of this evaluation are contained in Annex 16.
8.13
As shown more fully in Annex 14, an economic return has been calculated on a separate project to produce phosphoricacid. The return has
been based on two alternativeassumptionsof delivered cost of imported
P205 - $160 per ton and $150. The return at the higher cost is 13.7% and
at the lower 9.0%. The foreign exchange savings (para. 8.12), plus the
possible use of phosphate rock from Rajasthan support the decision to
produce rather than import phosphoricacid.
IX.
FUTIUREPROFITABILITYAND FINANCIAL POSITION ON FACT
9.01
Forecastedincome and cash flow statements for the company as a
whole through FY87 are containedin Annexes 17 and 18. Consolidatedincomes
statement forecasts through FY79 are summarizedbelow:
-
23 -
Summary Income Statements-- FACT
(millionof rupees)
FY72 FY73 FY74 FY75 FY76 FY77 FY78 FY79
Net Sales
251
379
14
31
72
29
Profit before Taxes
Tax Provision
(17)
-
Net Profit
Operating Profit
Interest
Debt Service Coverage
421
586
721
774
783
783
86
24
115
34
173
30
193
26
195
21
195
17
43
-
62
-
81
-
143
-
167
-
174
50
178
85
(17)
43
62
81
143
167
124
93
.9
1.6
1.8
2.1
2.5
3.5
:3.0 2.8
9.02
FACT is expected to show an operatingprofit in FY72, Cochin I's
first year of operation;however, this will be more than offset by interest
expense and a net loss for the year of Rs 17 million results. A net profit
of Rs 43 million is expected in FY73 which will increase in succeedingyears
as Cochin I output increases and Cochin II comes on stream. Profit reaches
a peak in FY77 at a level of Rs 167 million when Cochin II reaches 90% capacity. Net profit is reduced in FY78 when income taxes are first applicable
and again the next year when the full tax impact is felt. In that year net
profit reaches a plateau of about Rs 90 million, or 11% of net sales. This
profit level is consideredsatisfactory.
9.03
The likelihoodof FACT profitabilitybeing in line with estimates
rests primarily on its ability to completeCochin II within the time and cost
now forecast,and to reach expected productionlevels at Cochin I and II.
UDL's contributionto profits is marginal and, after completionof Cochin II,
will amount to only about 7% of profit before interest and taxes, while those
from Cochin I and II are 38% and 55% respectively.
9.04
As the company'searnings improve,its cash buildup should enable
FACT to begin paying dividendson share capital. It has been assumed that
Rs 44 million, or 10% on share capital,will be paid each year beginning in
FY76. This will representonly about one-half of net profit after full
taxes are reached in FY79 and furtherpaymentsmay be possible.
9.05
After FY72 when some debt may have to be postponed (para. 4.08),
debt service coverage,Annex 19, is adequateat 1.6 to 1.8 times in FY73
and FY74 and above 2 times in each year thereafter. Since GOI has assured
IDA that FACT will have adequate liquidityduring project execution,protection against the lower coveragein the first three years is provided.
9.06
Forecastedbalance sheets for 1972-1987are containedin Annex 20.
Pertinent data from these for FY72 through FY79 are as follows:
- 24 Selected Balance Sheet Items - FACT
(in millions of rupees)
FY72 FY73 FY74 FY75 FY76 FY77 FY78 FY79
Current assets
Current liabilities
229
309
Net working capital
(80) (32)
280
312
388
302
557
364
698
368
858 1,024 1,145
370 420 452
86
193
330
488
604
693
Current ratio
.7:1 .9:1 1.3:1 1.5:1 1.9:1 2.3:1 2.4:1 2.5:1
Long-Term Debt/
Equity Ratio
63/37 54/46 47/53 38/62 30/70 23/77 17/83 12/88
9.07
The long-term debt equity ratio improves from the present 65/35
to better than 50/50 by March 1974 and the current ratio improves to 1.5:1
by March 1975. These ratios assume defermentof Rs 85 million debt (see
para. 4.08) and no further increase in long-term funds above the the
financing for Cochin I and Cochin II. After 1974 the company's financial
position improves steadily and its long-termdebt/equity ratio is forecasted
to reach 12/88 by FY79. Net working capitalbecomes positiveby FY74 and
increases each year. Dividends and debt prepaymentswill not be permitted
if they would reduce the current ratio below 1.5 to 1.
X. RECOMMENDATIONS
10.01
During credit negotiations,agreementwas reached between the
Government,FACT and IDA on the followingprincipal points:
(i) GOI will furnish at least Rs 190 million in equity and
the balance (not less than Rs 150 million) in loan for
the project (para. 4.05);
(ii) GOI will provide additionalfunds as necessary to complete
the project and Cochin I; assure a sound financial position
for FACT at the time Cochin II is completed;and maintain
an adequate liquidityposition of FACT during project execution (para. 4.09);
(iii) GOI will promptly issue import licenses as requiredincluding
such items on the "reservedlist" which cannot be procured in
India without adversely affecting the project (paras. 5.05,
5.06);
(iv) GOI will provide credit facilitiesfor marketing of FACT's
fertilizersto the extent required (para. 6.25);
- 25 -
(v) FACT will implementsatisfactoryaccountingand management
informationsystems by January 1972 (para. 2.07);
(vi) FACT will implement an appropriateseeding program including
necessary imports of NPK fertilizers(para. 6.19);
(vii) FACT will carry out the project according to its critical
path schedule (para. 5.04).
Completionof the followingarrangementswill be additionalcon10.02
ditions of effectivenessof the credit:
(a) FACT will have completed arrangementswith the Cochin Port
Trust that terminal facilitieswill be permanentlyavailable
at the time required (para. 3.06);
(b) FACT and GOI will have completedarrangementsregardingreszheduling FACT's debt that is in arrears as of March 31, 1971
(paras. 4.08 and 9.07);
(c) FACT will have completed arrangementsfor obtaining process
licenses,plant designs and technical assistanceas required
and on terms that are satisfactoryto IDA (paras. 5.01 and 5.02).
The project has a high priority in the Government'sefforts
10.03
to increase fertilizerproduction. The project's attractivenessdepends
largely on FACT's ability to complete constructionon schedule and FACT
and the Governmenthave agreed to take all necessary steps to complete
the project within the agreed time. With such assurancesand those indicated above, the project constitutesa suitable basis for an IDA credit
of $20 million for relending under the terms describedherein.
IndustrialProjects Department
May 14, 1971
ANNEX 1
DESCRIPTIONOF FACT's EXISTING OPERATIONS
The five operatingdivisons of FACT are described below:
A.
UdyogamandalDivision (UDL)
UDL started commercialproduction in 1948 and since then has implemented four expansion stages with some of the earlier plants no longer
in production. Over the past five years, FACT has invested Rs 200 million
in the UDL Division, tripling the gross fixed assets to Rs 300 million.
The UDL Division contains a number of small process units with an aggregate capacityof 90,000 TPY N and 40,000 TPY P205. The major products are
ammonium phosphate (16-20-0and 20-20-0), ammonium sulphate and single
super phosphate. The major productionlevels for FY 72 are expectetdto
average about 60-80% of design capacity, and in FY 73 and subsequentyears
are forecastedat an average of 90% of the annual design capacity. These
improved efficienciesare obtainablewith the RationalizationProgram,see
Annex 1 Section F below. Earnings projections for UDL are based onithese
production assumptions.
Ammonia is produced in four separateunits of which the oldest is
a 15 TPD NH3 electrolysisprocess which consumes large amounts of power.
Since FACT does not at present show each unit as a separate cost center,
the economics of this unit cannot be determinedbut it is difficult to conceive that productionfrom this plant is economical. Two ammonia units (80
and 140 TPD NH3 ) are based on partial oxidationof naphtha. This lprocess
is relativelyexpensivein part because it requires oxygen which has to be
generatedin air separationplants; furthermorethe units are small by comparison to plant sizes now available. The fourth unit (120 TPD NH3) is due
on stream during April 1971 at which time the oldest unit will probably be
phased out. The process employs naphtha reformingwhich is the most ecosmall. Overall production cost
nomical design but the unit size is still
of ammonia from UDL will continue to be high even if all units were to
operate at design capacity. However, at 80-90% capacityUDL should be able
to produce NH3 at about $65-80/ton (Rs. 500-600/ton)and thus generate a
reasonableprofit with the existing fertilizerprices in India.
Sulfuric acid is produced in four separate units, which together
have a capacity of 750 TPD H2 SO4 and which all use the same basic process.
In addition,FACT purchases about 100 TPD H2 SO4 from a nearby aluminum
smelter. The first two plants (68 TPD each) were part of the original
facilities. The last two plants (160 and 450 TPD) represent reasonable
modern design and size and can produce sulfuric acid economicallyor at
near design capacity. However, for the reasons stated before, it is impossible to accurately assess
their profitability.
ANNEX 1
Page2
UDYOGAMANDAL DIVISION
DESIGN CAPACITY AND OPERATING PERFORIMANCE
OF PROCESS UNITS
ON STRFAM
DATE
PROCF,SS UNITS
ANNUALDFSIGN
CAPACITY
Thousand TPY
1967-71
1971-73
1967/68
TPY
%
OPERATING CAPACITY
Thousand TPY
1968/69
1969/70
1970/71
TPY
%
TPY
%
TPY
%
1971/72
1972/73
TPY
% TPY
%
54.9 71
6U 55.0 71
8L.o
70
90.0
80
13.8
26.2
61h 33.0
80
~mmonia
1)
2)
I5
80
3, lihO
20 L20
TPD
TPD
TPD
TPD
1948
1962
1966
1971
335TMU
Phosphoric
Acid(P
77.6
112.0
33.0
41.3
44.2 57
49.5
2 0s)
1)
25 TPD
2) 100 TPD
125T-PF-
1962
1966
(1)
(1)
11.
33
13.
120.
49
135.0
4o 10.6
32
42
Sulfuric Acid
68
2) 68
3) 160
4) 450
i)
TPP
TPD
TPD
TPD
750 TPID
1947
1949
1962
1966
59 166.0 59 198.0 80
247.0
247.0
198.0
198.0
78.0 4o
132.0
181.5
54
41
65.0
49 53.0 40 69.0 52 112.0 62 165.0 91
49.5
49.5
42.2
85
28.3
57
29.7
61
30.0
61
9.8
75 TPD
24.8
2h.8
5.6
23
6.5
26
9.0
36
9.0
36
12.0
20 'D
6.6
6.6
2.5
38
2.4
36
2.2
33
88.3
.3
2.6
31
3.0
36
2.2
27
1.5
18
126.0
166.0
AmmnoniumSulfate
1) 225 TPD
2) 330 TPD
3) 45 TPD
600 TPD
1966
112.0
57 101.0 51 116.0 59 155.0 78 172.0
87
Ammonium Phosphate
1) 100 TPD
2) 300 TPD
3) 150 TPT)
550 TrPM
1962
1966
1971
'2uperphosphate
L) 150 TPD
1950
20
45.0 90
Antjioniium Chloride
1)
Oleun
1)
.ulfur
1)
Di oxide
25 'PPD
Fstimated
E.j
48 12.8 50
ANNEX 1
Page 3
Phosphoricacid is produced in two plants, 25 TPD and 100 TPD
P205, both of which are very small by current design standards,but use
conventionaland competitivetechnology. The operating level of these
plants has been low due to corrosion,mechanicalproblems, lack of - partly
imported- raw materials,and low operating levels of other plants.
Ammonium phosphate is produced in three granulationplants, all
considerablysmaller than modern economic units. Their low operatingperformancehas been attributableto mechanicalproblems and non-availability
of intermediatefeed materials from other units. When other units operate
satisfactorily,the ammonium phosphate plants should also operate at reasonably high capacity.
Ammonium sulfate is produced in two different processes. One unit
uses ammonia and sulfuric acid and produces product by direct neutralization.
This plant consumes sulfur which is imported. The other plant utilizes as
its source of sulfur by-product gypsum, or calcium sulfate, from the phosphoric acid plant. It was designed by FACT, has a much higher capital investment than normal but produces ammonium sulfate at a lower cost since
raw material costs are lower. The process is basically sound, although it
has operated at low efficiency and equipmentsize is small.
Single-superphosphatehas been produced by FACT since initial
operationof the company in a conventionalprocess of reacting phosphate
rock with sulfuric acid. The unit is typical of super phosphate factories
throughoutthe fertilizerindustry. FACT operates the plant when raw materials are available. The projected productionof 20% in 1971/72 is due to
shortage of phosphate rock grinding capacitywhich will be corrected in
1972/73.
FACT also produces minor quantities of other chemicals at UDL
including ammonium chloride,oleum (concentratedsulfuric acid), and sulfur
dioxide.
B.
FACT Engine
and Design Organisation(FEDO)
in
Division of FACTwhich was established
FEDO, the Engineering
induschemical
the
in
work
construction
and
out engineering
1965, carries
try based on licensedprocesses and their own know-how. The FEDO personnel
are competent but the organization'sdepth in engineeringstaff is lacking.
FEDO, with a total technicalstaff of about 240, handles all of the expansion of FACT as well as outside work. They are currentlybuilding a 100,000
TPY sulfuric acid plant in Trivandrum,a 115,000 TPY phosphoric acid plant
for FCI at Sindri, and the Cochin I project.
In addition to Cochin II FEDO has bid on other projects. It is
FEDO could overextend its staff capabilitiesif too much
that
possible
additionalwork is accepted. FACT is aware of this potential problem and
has agreed to consult with IDA before further major contracts are accepted
during engineeringof Cochin II.
ANNEX 1
Page 4
On previous jobs, particularlyCochin I, FEDO has not handled
procurementand project delays very,well. It is difficult to assess fully
the 1-1/2-yeardelay at Cochin I but FEDO could have improved the schedule
by making a concerted effort to minimize delays by replacing orders, changing
specificationsor expeditingshipments. Part of these delays were caused by
import licensingor other procurement limitationsoutside FEDO's control;
nevertheless,to a major extent the delays are indicativeof poor management
control. FEDO should concentratecn project schedule and effective use of
the project's critical path schedule. The Project Manager should be delegated sufficient authority to identifypotential delays early and undertake
correctiveaction.
FEDO has experiencewith each of the process units being considered
for Cochin II, although the only other large project they have managed has
been Cochin I. IDA considers FFDO capable,but consideringthe project's
size and their lack of depth in technical staff, several experiencedpersonnel will be added to FEDO's organizationto assist in the execution of the
project.
C.
FACT EngineeringWorks (FEW)
FEW is a small equipment fabricationdivision that manufacturesfor
FACT and other firms. FEW will not bid on any major equipment for Cochin II.
D.
Cochin Division
The Cochin complex is located about 20 km from Udyogamandal. Cochin I is a 200,000 TPY ammonia and 330,000 TPY urea project estimated to
cost about Rs 538 million ($72 million) including initial working capital,
interest during constructionand market developmentexpenses. This project
is being financed by Rs 126 million ($16.7 million) in Italian supplier credits and Rs 175 million ($23.3 million) in equity from GOI and Rs 237 million
($31.7 million) in loan from GOI. GOI has agreed to increase the equity portion of the Cochin I project cost to 50% to improve FACT's financialposition.
This adjustment in equity will be accomplishedby the completionof the Cochin
II project. IDA's financialprojections for the company (Annexes 18 and 20)
assume this equity ratio will be achievedby profits from UDL and Cochin I.
However, if insufficientprofits are earned then the equity will be adjusted
by the form of new funds coming into the company or by restructuringthe company's debt. The plant is based on naphtha from the adjacent refinery at a
price of Rs 110/ton ($15 per ton). The refinery is expanding its crude oil
capacity from 2.5 to 3.3 million TPY.
FEDO is the managing contractorand also engineered the ammonia
synthesis gas preparationunit based on ICI-PowerGas design. The ammonia
synthesis plant and the urea plant are being supplied by FCI and Montecatini.
The plant is expected to be completed in May 1971 and begin production in
,idid-1971.
ANNEX 1
Page 5
'rheMontecatini ammonia design has not been proven in this size
plant and the ammonia/ureaplant may have difficultyin coming on stream even
though a substantialnumber of expatriatepersonnelare being used for construction and start-up. The operating factors assumed in preparing the financial forecastfor Cochin I are: 50% of design capacity in 1971-72 (9 months);
75% in 1972/73and 90% in 1973/74and thereafter. On completion,Cochin II
will be transferredto this division.
E.
Marketing Division
FACT's Marketing Division is responsiblefor al,lfertilizersales
from UJdyogamandal,outside purchases including seeding materials, and the
future sales of Cochin. Fertilizerresearchand market promotionare also
handled by this division. FACT markets only in South India.
F.
Udyo .mandal Rationalization Program
The operating and profit performanceof UDL Divisionhas been very
poor for the past few years. The IDA mission that assessed the company's
performancein 1969 found major problems in the followingareas:
1)
2)
3)
4)
5)
6)
Power supply
Phosphate operations
Ammonia operations
Maintenance
Small process units
Management
As a result of the mission, FFDO and FACT prepared a comprehensive-program
for rationalizingor debottleneckingthe UDL operation. A list of the major
projects to be undertakentogetherwith their completionschedule is given
on the followingpage. Total expendituresof the program are about Rs 7.7
million ($1.0 million) includingabout Rs 1.0 million ($130,000)in foreign
exchange. These costs do not include most of the local constructioncosts
which are being absorbed in UDL's maintenancebudget.
ANNEX 1
Page 6
UDL DIV1SION
MAJOR PROJECTS
FOR RATIONALIZATION PROGRAM
Atem
Total Cost
Rs 1,000
1)
Power Supply
2)
Plant
Maintenance
& Instrumentation
Foreign
Cost
Rs 1,000
-
-
-
-
Estimated
Completion
Date
4/71
3) NH3 Plant
a) PumP Turbinie
b)
b) Absorption& Drying System
(Chemiebau plant)
-
6/71
maintenancebudget
12/70
70
2/72
120
4/72
-
6/7:1
Phosphoric
Elevator
b)
Grinding
c)
Reactor
150
141ll
Tank
Ammonium Sulfate
Cloth
12/71
2,000
1,ltOO
6/72
130
12/71
Plant
a) Gypsum Thickener
Filter
2,350
Acid Plant
a)
b)
80
250
c) Acid Storage
it)
4/72
SulfuricAcid Plant
a) Air Blower (Chemiebauplant)
3)
500
-
Carbon Recycle System
c) Oxygen Pump
4)
500
(Imported)
-
750
6/171
maintenance
budget
-
maintenance
budget
7/71
5) Ammonium Phosphate
a)
6)
Reconditioning
lAmmoniumChloride
a)
Centrifuge
b)
Vacuurmfluiq.
'T("PAL,
220
200
purchased
1,700
6/72
1/71
1,020
ANNEX 1
Page 7
The Government has given its approval for the program and portions
have already been implemented. Items requiring foreign equipment and material
are being discussed with GOI and some import licenses have been issued. The
rationalization program represents a major step towards profitable operation
of UDL and it is expected to be substantially completed by the end of Fiscal
Year 1971/72.
Power is supplied from the Kalamassery power station of the Kerala
State Electricity Board (KSEB). Power distribution in Kerala has been experiencing many interruptions and voltage dips. The principal causes are
inadequate protection from lightning. The UDL division, and specifically
the armonia and oxygen plants, is sensitive to power variations. The plant
has a small auxiliary power generation unit, but it would be prohibitively
costly for UDL to generate all its power requirements. The recent history
of power interruption as UDL is shown below:
Power Interr2uions
Voltage
Plant Shutdo,wns
Failures
Dips
Total
1969/70
(12 months)
11
100
111
37
17
1970/71
(8 months)
/1
12-
63
75
29
20
Ammonia
Oxygen
1969
Sept. to Nov.
(3 months)
-
-
53
-
-
197()
Sept. to Nov.
(3 months)
-
-
33
-
-
/1
6 are attributed to labor strike at KSEB.
Some slight improvement is indicated due to changes already implemented by
FACT and KSEB. However, it will be late 1971 before any substantial improvement in power supply can be expected. The problem of power supply in Kerala
was evaluated in 1969 by an Indian study commission and specific recommendations were made for both KSEB and the FACT/UDL electrical systems. The recommendpd changes in the FACT power system were:
1.
2.
3.
4.
5.
Independent power supply to control circuits.
Independent power supply to excitation motor-generator sets.
Automatic voltage regulators for synchronous motors.
Time lag relays for synchronous motors.
Time lag under-voltage relays for induction motors.
ANNEX 1
Page 8
The recommended changes in the KSEl3power system were:
1.
2.
3.
4.
Operation of 110 KV bus at Kalamassery as an integrate(dbus.
Carrier inter-trip facility on all inter-connecting feeders.
Single pole opening and reclosing facilities for all feeder
circuit breakers.
Automatic recording of power interruptions and voltage dips.
KSEB has completed some of the changes listed, and is now waiting for imported
components to complete the other improvements. FACT has installed time delay
relays as recommended on some motors but apparently not all. These relays
can correct for most short power dips, but FACT states that further improvements to their internal electrical system cannot be done until after KSEB has
completed its changes. It is difficult to assess whether the recommended
changes will completely solve the power distribution problems or if more
fundamental and costly improvements are needed. The ammonia plants at UDL
are heavily dependent on continuous power supply for efficient operation
and power dips and interruptions have previously shut them down for 12-24
hours at a time. In addition to the electrical changes, FACT is presently
modifying their oxygen supply system so that most power fluctuations will
not bring down the ammonia plant completely. Other equipment modifications
should permit the ammonia plants to attain steady production by mid-1971.
From about 1967 to 1970, the phosphoric acid plant operated primarily on rock which had a high chloride content and is very corrosive in
phosphoric
acid plants.
The corrosive
nature
of this
rock is well-known
throughout
the world phosphate
industry.
The phosphoric
acid plant
has
been severely corroded and, as a result,
experienced
long down times.
If
the phosphoric acid plant is not working then the downstream ammonium phosphate and ammonium sulfate plants cannot operate. In addition, the ammonium
sulfate plant is affected by the quality of gypsum it receives when the
phosphoric acid plant does operate. The percentage down time due to the
inferior rock supply is not known, but it obviously
was high.
Nor was it
possible
to determine who initially ordered the rock, how quickly the cause
of corrosion
was discovered,
nor how effectively
FACT tried to circumvent
its use.
The mechanical
changes
in the phosphate
plant
such as rock grinding mill,
new reactor,
and the ground rock elevator
should
permit
the phosphate plants to operate at close to design
capacity.
The poor maintenance and operating control was noted in the earlier
Bank mission. FACT has set up a system for improving maintenance, and are
consulting with an instrument firm on instrumentation. Also, FACT and G0I
have agreed to employ three experienced fertilizer plant operators for 6-12
months to assist in the UD)Ldivisicinoperations. Negotiations are now und(erarvwith Wellman Power Gas to supply these engineers.
The function of these
engineers would be to work with FA(T on maintenance, instrumentation, operation
[ln(icost control.
ANNEX 1
Page 9
The multiplicity of small units at UDL is inherent in the age and
growth pattern of FACT. These small plants are less efficient than modern,
single-train plants. T{owever,with good management control and completion
of the rationalization program, the plants can operate at a high rate and
reduce
production
Industrial
Projects
April 1971
costs
substantially
Department
below their
existing
levels.
FACT
Historical Income Statements
For Fiscal Years Ending March 31
(Thousands
Sales
Volume
From Own Production
of Metric
Tons)
1967
1968
1969
1970
32.6
13.9
64.7
32.2
55.9
4.2
48.7
4.8
82.3
56.9
6.6
76.8
66.7
8.3
106
60
9
20.2
29.5
17.0
10.3
20.2
6.3
18
10
159.1
173.1
178.3
203
74.8
108.8
7.9
113.5
30.2
97.2
87.6
108
170
(EstiMa
(ex NPK Mixtures)
AmmoniumSulfate
AmmoniumPhosphate
1971
1966
Ammonium Chloride
Super Phosphate
Others
34.7
10.7
3.2
34.o
14.7
Total
96.1
148.8
Mixed Fertilizers& Urea Seeding
58.7
NPK Mixtures*
Urea
_
Total
58.7
74.8
116.7
143.7
184.8
278
154.8
223.6
275.8
316.8
363.1
481
132
192
3
261
315
100
12
112
16
6
111
3
7
)
)
10
(7)
1)
7)
3
19)
GrandTotal
(Millions of Rupees)
Income
514
TotalSales
Sales From Own Production
Cost of Sales**
1
23
6
Expense
& Administration
Selling
Costs
Operating
(Loss)
Profit
Operating
Income
Non-Operating
Gross Profit
on Long Term Loans
Interest
2
Taxes
Net Profit
Before Taxes
(Loss)
82
m
m
Depreciation
Net Profit
*
**
e)
:;3
10
12
3
223
7136
31
)
T
2
:?
5
2
211
6
7
3)
)
_
(7)
(6)
4
_
4
_
(6)
Note: The company has reorganized the historical income statements to be consistent with the forecasted
statements,which show net sales (from operations) at ex-factory prices. Net sales exclude fertilizer
and selling
bought and sold (with the trading profit shown in other income), as well as distribution
costs passed on to the purchaser. These other fertilizer sales, urea and fertilizer mixes, have
increased steadily from about Rs 29 million in FY 1966 to an estimated Rs 227 million in FY 1971.
are small and do not appreciably affect the company's
operations
from these trading
However, profits
financial results.
April 1971
T1-0)
-
(1)9
from own production
ingredients
Including
Excluding cost of purchased fertilizers
Industrial Projects Department
9
2
_
3
16
(10)
Annex 3
FACT
Historical
Fiscal
Years
(Millions
ASSETS
1966
Current
Balance
Sheets
1nded March 31
of Rupees)
1967
1968
1969
1970
1971
stimate
Assets
3
4
7
50
31
Accounts Receivable
34
12
27
54
59
73
60
Inventories
Raw Materials
Goods in Prmcess
Finished
Products
Supplies
and Spares
10
1
5
23
18
3
23
23
50
3
33
30
4444
4
Total
Inventories
39
67
Total Current Assets
54
Cash
40
5
41
34
9
29
30
116
123
112
95
9B
177
232
216
189
108
231
246
264
283
310
Less Depreciation
Net Fixed Assets
46
62
56
175
69
177
82
182
100
183
116
194
Expansion Projects
110
32
80
317
415
490
Investments
4
4
4
4
4
4
Deferred _xperses
-
-
-
4
8
12
2
-
Fixed Assets
Other
Assets
Total
Assets
20
30
230
309
438
741
826
889
24
31
2
2
49
80
68
12
3
80
77
25
19
131
51
70
113
50
4
3
4
3
4
59
109
166
205
277
318
22
80
_
20
109
17
195
-
15
289
126
13
327
126
11
357
113
212
430
466
481
(15)
(38)
(75)
(110)
124
197
392
391
371
75
75
141
174
226
2
2
LIABILITIES AND CAPITAL
Current
Liabilities
Accounts
Payable and Accrued Expenses
Short Term Debt
Current Maturities
of Long Term Debt
Past Du Debt*
Other Current
Liabilities
Total
5
-
48
39
56
81
Long Term Debt
IFCI
GOI
Italian Suppliers
Total
Less Current and Past Due Maturities
Net
102
(2)
100
-
129
(5)
daquity
Share Capital
Reserves
Surplus (Deficit)
Total
75
8761
(12)
(6)
6
(1)
71
76
75
144
158
200
Total Liabilities and Capital
230
309
438
741
826
889
Current Ratio
.9:1
.9:1
1.1:1
1.1:1
.8:1
.6:1
58/42
62/38
72/28
73/27
71/29
65/35
Net Long Tenn Debt/Equity Ratio
*
Principal and interest on GOI Loans
Industrial Projects Department
April 1971
Anrnex 3
Page
2
FACT
COCHINII PROJECT
POSITION OF LOANSOUT3TANDING
AS OF MARCH31, 1971
SOURCE
AMOUNT
RATE OF
INTEREST
GUARANTEE
PENALINTEREST
TERMSOF PAiYMNT
(millions
of Rupees)
1.
Government of India
Loans*
a)
UDL Third Stage
78.8
6%
Nil
8k% in case of default
of repayment of principal
and interest
b)
UDLFourth Stage
50.0
7%
NiL
9½f%in case of default
principal
and interest
repayment
of
In 10 equal annual installments
commencing
from the third year after
date of drawal.
Annual installment
Rs 5 million.
c)
Cochin I Project
215.4
7%
Ni-L
94% in case of default
principal
and interest
repayment
of
In 10 equal annual installments
commencing
from the third year after
date of drawal.
Annual installment
Rs 21.5 mdllion.
d)
Ways and Means
12.5
6%
Ni:
2k4%in case of default
principal
and intereat
repayment
of
Due on August 2, 1969, which was extended
later.
11.2
4%-6%
Guaranteed by
Central Gov't.
A sum of Rs 2.13 million repayable every
year up to FY 72 and Rs 1.83 million up
to FY 76 and last installmnt
of Rs 1.74
million in FT 77.
11.1
6%
Guaranteed by
State
Iank
of India and
co-nter guaranteed by Gov't.
of Indi.a to State
Bank of India
Repayment due on 14 March and 14 September
from 1970 to 1979. Annual installment
Rs 1.30 million.
5.75%
Guaranteed by
State Bank
of India and
counter guaranteed by Iov't.
of India to State
Banbk cf India
Repayment due on 15 December 1970 to 1979.
Annual installment
Rs 11.30 million.
2.
Industrial
of India
3.
Italian
Finance
Credit:
Corporation
Cochin I
101.8
480. 8
*
Arrears
of installments
PCL Third Stage
UDLFourth Stage
Cochin I project
Ways and Means
of Governmen; Loans
33.1
2.8
11.7
12.5
Interest
21.3
Total Past Due
81.4
n-iustrial
Pmoje-to 3ep rtment
April 1971
(millions
of rupees)
In 9 equal annual installments
comsencing
from 5 years after date of drawal or 2 years
after commencing production.
Annual installment Rs 10 sillion.
ANNEX'
PRODUCTION
SCHEDULE
AND SALES PRICE
COCHINII PROJECT
PRODUCTION
DESIGN
PRODUCTION
TPY
NORMAL
PRODUCTIONJ
TPY
SALES PRICE
EX-FACTORY RETAIL
Rs/ton
Rs/ton
860
1,010
121,250
109,000
28-28-0
72,750
65,500
14-28-14
97,000
87,500
967
1,117
18-36-0
72,750
65,500
1,000
1,150
24-12-12
72,750
65,5oo
829
979
11-22-22
48.,500
43,500
910
1,060
928
1,078
17-17-17
1,036
1,186
AVG.
(18.7-23.4-11.1)
Cryolite
485,OOO
7,500
436,500
6,750
1/ Normal productioncapacityis assumed at 90% of design.
IndustrialProjectsDepartment
March 12, 1971
2,250
2,400
ANNEX 4
Page 2
Product Grades
The product grades recommended for production in Cochin II contain
six different grades of NP and NPK complex fertilizers in the following nutrient ratios, with percentages to total volume of complex fertilizers:
N
1
1
1
1
2
1
:P :K
1
: 1
: 1
0
2 : 1
0
: 2
1
1
: 2
2
25%
15%
20%
15%
15%
10%
These ratios represent the accepted pattern for different crops in
the marketing area of the company and the relative quantities taken into consideration in cropping pattern and areas under major crops. The grades and
tonnages can be adjusted to meet changing market preferences. The proposed
plant design is flexible, depending on the availability of raw materials,
and it is possible to make grades with nutrient ratios other than those indicated above.
The existing product mix (including the Cochin I production) indicates an imbalance in the combination of nitrogen, phosphate and potash. The
existing product mix offers a poor NPK ratio of 12:2:1. The proposed capacities of Cochin II will improve this position to an NPK ratio of 6:3:1. Such
an improved NPK ratio is advisable, both from the requirement of providing
balanced fertilizer nutrient to the soil and marketing requirements of providing a balanced product mix for easy market acceptability.
The fertilizer consumption trend in FACT's marketing area indicate
a definite trend towards urea, ammonium sulphate, NP and NPK complexes. The
NPK ratios and grades included in the product mix are in line with the fertilizer recommendations for different crops in the marketing area. The popular
ratios of NPK recommended for the various crops in the area are 1:1:1, 1:2:1,
2:1:1 and 1:2:2. For potash rich soils, NP ratios of 1:1:0 and 1:2:0 are
generally recommended. Hence all these are included in the product mix.
Since many of the important crops in this area require an NPK ratio of 1:1:1
for basal application, a higher production is proposed for this ratio. The
ratio of 1:2:1 is taken as next in importance as this is generally recommended
for local varieties of paddy. The ratio fo 2:1:1 is preferred for crops in
areas without assured irrigation and where all the NPK required by the crops
are to be given in one basal application. The ratio 1:2:2 will cater to the
requirements of some specific crops like groundnut, vegetables, etc. The NP
ratios of 1:1:0 and 1:2:0 are :Lncluded for meeting the requirements of those
parts of the marketing area where soil is rich in potash. An analysis of NPK
mixture grades recommended for crops and their consumption in the marketing
area will show that these NPK ratios are the most popular ones. The product
mix also gives the maximum possible concentration of NPK in the various ratios
and, therefore, will offer economies in handling, storage and application
costs. The product mix offered for production in Cochin II will satisfy marketing requirements and crop requirements of the area.
ANNEX 5
TECHIICAL DESCRIPTION
COCHIN II
A.
PROJECT
Production Facilities
The production facilities consist of four major process plants
and their associated services and offsites. The process plants are:
1)
2)
3)
4)
Sulfuric acid plant
Phosphoric acid plant
Complex fertilizer granulation plant
Cryolite plant
Sulfuric acid will be produced in a 33n,nn
TTrYsingle stream plant,
based on elemental sulfur. FEDO has an arrangement with Chemiebau Dr. A.
Zicren Gmbll of West Germany, for design and engineering of sulfuric acid
plants in India. The process know-how will be supplied by Chemiebau and
the detailed engineering, procurement and erection will be undertaken by
FEDO.
Sulfuric acid is produced by melting sulfur and burning it in the
presence of controlled quantities of air. The combustion air is first dried
in a drying tower by contact with 94% sulfuric acid. The gases, at 900%C,
are cooled to about 400°C in a waste heat boiler. The gases, which contain
8% So, are then passed through beds of vanadium pentoxide catalyst, to convert {he sulfur dioxide (SO2) to sulfur trioxide (SO ).
The heat evolved is
also recovered through heat exchangers. The SO is absorbed in 98% sulfuric
acid and product acid is drawn off from the circulating stream and cooled.
A part of the 98% sulfuric acid is recycled to the drying tower, taking back
portion of the 94% acid in the drying system, and adding water as required.
The gases, after absorption of SO3 , are vented to the atmosphere through a
stack.
Phosphoric acid will be produced in a single stream plant, of
115,000 Tl'YP 0 size. The plant, based on the Central Prayon Process, will
give a produc? acid containing about 35% P20 , with a high recovery efficiency. FEDO has an agreement with The EngineerKng and Industrial Corporation
(I'rayon)of Luxembourg, for building phosphoric acid plants. Prayon will
provide the process know-how and FEDO will do the detailed engineering, and
erection.
Phosphoric acid is produced by reacting phosphate rock and sulfuric
acid. Thicphosphate rock is ground to the required fineness and then reacted
with the phospho-sulfuric acid from the hemihydrate section, and the recyclecldihydrate slurry, in the attack tank. A portion of the 98% sulfuric
acid is also added and conditions are controlled to precipitate the calcitim
sulfate as dihydrate. A portion of the slurry from the attack tank is recycled through an evaporator-cooler, to remove excess heat and water. The
ANNEX 5
Page 2
slurry from the attack tank is fed to centrifugesand is further clarified
by settlingand taken otlt as product acid containingabout 35% P 0 . The
slurry from the centrifuges is sent to the hemihydrate tanks. The5conversion
of dihydrate into hemihydrate is the key step, which differentiatesthis
process from the dihydrate process and improvesrecovery. The slurry containing dihydrate and phosphoricacidlreacts with the balance of sulfuric
acid, at a higher temperature,in the hemihydrate section. The calcium sulfate dehydrate is converted into the hemihydrate form and then filtered,
using conventionalfilters. The filtrate, phospho-sulfuricacid, is returned
to the attack tank. A portion of the centrifugedphosphoric acid is concentrated in forced circulationevaporatorsto 54% P 0 to meet the needs
2 5
of the NPK granulation plants.
Complex Fertilizer (NPK) will be produced in a plant with two
identical streams with a total capacityof 485,000 TPY. FEDO has an agreement with Wellman-PowerGas Inc. of the U.S. to supply the basic engineering
know-how. FEDO will complete the design and erectionwith substantialassistance from Wellman-PowerGas. Complex fertilizersare produced by reacting
acid with ammonia and blending in the required amounts of urea
plhosphoric
and potash. Phosphoricacid is neutralizedwith ammonia in a 2-stage
reactor. Vapors from the reactor corntain
free ammonia, which is recovered
by scrubbingwith phosphoricacid, and the scrubbedgases are discharged
to the atmosphere. A drum type ammoniator-granulator
will be used for granulation. The slurry from the neutralizer is further ammoniated in the granulator and mixed with recycled product, urea and potash. Vapors from the
granulatorare fed into a fume scrubber,where ammonia is recovered by
scrubbing. The product from the grarulatoris then dried, screened,and
cooled. A portion is recycled to the granulationstep and a portion is
removed as product. The dryer and cooler will be handling dry solid
materials which creates dust. The gases from this equipmentare passed
through cyclone separators,to remove a large portion of the dust and then
are scrubbedwith a circulatingstream of acid to remove the remaining dust.
The dust is recycled back to the process, thus, loss of material is minimized.
The product, from the bulk storage, is delivered to the bagging
plant where it is filled into 50 kg. polyethylenewoven sacks or polyethylene-linedbags through automaticweighing machines, stitchedand dispatched
either to the bagged product storage or directly to the platform to be loaded
into wagons.
Cryolite is produced from the fluorinerecovered from the phosphoric acid plant. A portion of the liquor in the fluorine scrubbing system
is pumped to the cryolite plant. This liquor, a 15-20% solution of hydrofluosilicicacid, is filtered and treated with sodium chloride to precipitate sodium fluosilicate. The precipitateis slurriedwith water and then
ammoniatedunder controlledconditionsto precipitatesilica, which is filtered off. The resulting solution of ammonium and sodium fluorides is reacted
with aluminum sulfate solution (preparedfrom sulfuricacid and hydrated
ANNEX 5
Page 3
alumina) precipitatingtrisodiumaluminumhexafluoride(cryolite)and ammonium aluminumhexafluoride. The latter is then converted to cryoliteby
reacting it with sodium chloridesolution. Cryolite is then filtered,
washed, dried and bagged. The proposed plant will produce 25 TPD of cryolite.
B.
Offsites and Services
Importedraw materials required for the project are:
Rock Phosphate
Sulfur
Potash
Ammonia
347,000 TPY
110,000TPY
91,000 TPY
57,000 TPY
The above materialswill come by ship to Cochin port, where facilities are planned to unload and transportthem to site as part of the proposed project. Urea requiredfor the project will be available from the
adjacentCochin I Project and will be moved from urea silos to the NPK
granulationplant by a conveyor. Other materials such as filler, coating
agent, hydratedalumina, sodium chloride,soda ash, are available locally
and can be moved to the factoryby road using transportcontractors.
Cochin port authoritieshave agreed to allot one wharf in the harbor for unloading and handling importedraw materials and have agreed to
provide a mooring berth for over-sidedeliveries. Where raw material is
unloaded onto the wharf, there is sufficientarea for building storagesand
placing of unloading equipment. When the material is unloadedover-side
using ship's equipment the raw material will move directlyby barge from
the ship to the site.
Solid raw materialswill be unloaded at the berth using two mobile
grab cranes of 200-ton/hourcapacity. Phosphate rock and sulfur will be
unloaded into overhead concretesilos,
each of 2,500-toncapacity, the total
storage being 10,000 tons. From these silos, materials can be loaded directly into rail wagons or into barges and moved to the site. Potash will
be unloaded into a 4000-tonstorage from which it can be loaded on rail
wagons. The railways have agreed to place 55-ton box type wagons on a
closed circuit for the movement of raw materials to the site. The materials
will be moved to storage through covered conveyors and then to consuming
plants by conveyors and elevators. Where material is moved by barges, they
will be handled by grabs and moved to storage through conveyors.
Ammonia will be received in refrigeratedtankersand pumped into
an atmosphericpressurerefrigeratedstorage tank of 10,000-toncapacity to
be constructednear the unloadingberth. Ammonia will move from port to
site in 28-ton rail tank wagons and be stored in a 1,500-tonHortonsphere.
The Indian Railwayshave agreed to provide chassis for the wagons on which
tanks will be placed by FACT, these being built to specificationsgiven by
the railways.
ANNEX 5
Page 4
The present proposal is based on rail transport of all major raw
materials taking a comparatively less economical alternative. The Government
of India has agreed to improvements to a canal connecting the port with the
site. The State Government has assured FACT that the improvements can be
completed in 24 months, i.e. it will be ready for use for the movement of
material from port to site. With the alternatives of overside delivery from
ship to barge and the availability of arrangements for loading from berthstorage direct to the barges, it will be more economical to move the material
by river. However, as details are still under negotiations, the economics
of the project have been worked out on the costlier alternative of transport
by rail.
Power requirements for Cochin II are 17 MW which will be provided
tlhroughtwo 110 KV feeders from the Kalamassery Station of KSEB. Each line
can handle the full load of Cochin I and II. (Cochin I requires 25 MW).
The electrical drives in Cochin IT will be designed to handle voltage dips
that plague industrial facilities in Kerala. Cochin I has a 14 MW generator
that has excess emergency capacity and FEDO has included another small diesel
generator in Cochin II. These electrical facilities can keep critical units
production will
of Cochin II operating during a power interruption. Although
be stopped by a power interruption, the units can be quickly brought back
The Kerala
State
Electricity Board has indicated that power will
on stream.
be made available to the project and the power tariffs applicable to nonpower-intensive, bulk consumers will apply to this project. This rate is
Rs. 220/KVAY and with existing surcharges is equal to about 4 paise
currently
per
KWH.
Steam requirements of the project will be supplied by the waste
heat boiler in the sulfuric acid plant and supplemented by a 50-TPH steam
generation plant. (Four package boilers of 12.5 TPM capacity). Total
steam required for the project will be 2,500 TPD of which 1,300 TPD will
be provided by the sulfuric acid plant.
Water for the project will be available from the artificial reservoir built for Cochin I. The reservoir, with a capacity of 1,050 million
gallons is fed by the two monsoons. In dry months, a State Irrigation Canal
of carrying
46 milfeeds water into the reservoir through a channel capable
to the
been
indicated
has
total
water
requirement
per
day.
The
lion gallons
a suitable filling schedule
State
Public
Works Department to determine
Kerala
during the dry months. This matter is now being considered by the Public
Works Department. The total water requirement for the present project will
gallons per day and a provision to increase the present capabe 4.3 million
city
of the reservoir has been included.
150
tons
Fuel Oil will be available from the nearby Cochin refinery.
a day will be required for the project.
About
ANNEX 5,
Page 5
C.
Pollution Control
Several effluent streams from the Cochin II factory will be potential pollution problems. The proposedproject design controls these effluent
streams within normal industrialpractice. The principal effluentsare
fluorine, sulfur oxides and dust. It is understoodfrom FACT that there
are no legal requirmentsnow in force in Kerala for the control of these
materials.
The sulfuricacid plant burns sulfur and then recovers the resulting sulfur oxide by absorption. The efficiencyis a minimum of 98'%recovery
with the balance of sulfur oxides being exhausted to the atmosphere;representing about 290 kg/hour of sulfur. This efficiencyis typical of most
modern commercialsulfuricacid designs. The efficiencycould be increased
by adding more absorptionequipmentbut it is not considerednecessaryby
FACT nor the IDA staff.
The fluorine effluents are a result of the 3-4% fluorine contained
in phosphate rock that is liberatedduring processing. The exhaust gases
from the phosphoricacid plant are scrubbedwith water and the gases that
are vented to the atmospherecontain about 50 kg/day of fluorine. This level
representsa high scrubbingefficiencyand should be acceptable. Most of
the recovered fluorineis converted into cryolite. The NPK plant liberates
fluorine as it processesphosphoricacid. These gases are also scrubbed and
each plant dischargesa maximum of 50 kg/day of fluorine to the atmosphere.
The NPK plant dischargessmall amounts of ammonia and dust, but
these materials are substantiallycompletelyremoved by scrubbing.
Both the phosphoricacid plant and the NPK plant discharge large
volumes of water that are contaminatedwith fluorine. FACT has designed a
system that neutralizesany overflowfrom the water system to the river.
The overflow still containsabout 150 kg/hour fluorine (as calcium fluosilicate). This amount should not be harmful and correspondsto normal commercial practice in plants in the U.S. The system can easily be modified at
a later date if more stringentfluorinecontrols are required.
The phosphoricacid plant also dischargesabout 1,700 tons/dayof
gypsum, a solid waste. The gypsum will be stored in a diked area and converted to land fill as normally practiced in the industry. FACT later proposes to convert a portion to ammonium sulfate and sell the resulting calcium carbonate to cement factories.
IndustrialProjects Department
April 1971
FACT
SUMMARYOF CAPITAL COSTS
(in Millions)COCHIN II PROJECT
Local
Currency
Equipment and Materials
48.0
Freight,Handlingand Insurance
Duty, Sales Tax
Design, Engineeringand Procurement
Erectionand Cormissioning
Civil Wbrks
Land and Development
Office Buildings,Furniture
Pre-operatingExpense
TechnicalAssistance
2.3
20.2
12.4
27.0
60.2
7.2
0.9
8.8
187.0
9hb-Total
Indian Rupees
Foreign
Currency
76.6
3.1
-
7.4
2.5
_
0.5
3.9
94.0
Total
Cost
Local
Currency
124.6
6.4
5.4
20.2
19.8
29.5
60.2
7.2
0.9
9.3
3.9
0.3
2.7
1.6
3.7
8.0
1.0
0.1
1.2
-
281.0
25.0
U.S. Dollars
Foreign
Currency
10.2
0.4
-
1.0
0.3
_
0.1
0.5
12.5
Total
Cost
16.6
0.7
2.7
2.6
4.0
8.0
1.0
0.1
1.3
0.5
37.5
12.0
13.0
38.0
15.0
50.0
28.0
1.6
1.7
5.1
2.0
6.7
3.7
Total Project Costs
212.0
147.0
359.0
28.3
19.6
47.9
Interestduring Construction
21.0
21.0
2.8
_
2.8
Total FinancingRequired
233.0
380.0
31.1
19.6
50.!
Working Capital
Contingency
Projects
Industrial
March 12, 1971
Department
147.0
ANNEX 6
Page 2
USE OF IDA CREDIT
$ Million
1.
2.
3.
4.
5.
Equipment
Equipment (for foreign components of "reserved list")
Engineering and Equipment Erection
(a) Licensors
(b) FEDO
Technical Assistance
Unallocated
Total
Note:
15.2
0.5
1.3
0.5
0.5
2.0
20.0
Category 3(a) above represents the foreign exchange costs of the
design packages from the process licensors. The funds for additional
consultants services described in Paragraph 5.02 are covered in Category 4 above. Category 3(b) represents local currency financing for
a portion of FEDO's engineering and equipment erections costs which
total $5.3 million (see Annex 6, page 1). If the proposed IDA credit
is not used in other categories or cancelled for any reason then the
unallocated or unused funds would be shifted to this category.
PROJECTED DISBURSEMENTS OF IDA CREDIT
(in US$ millions)
1971
1972
1973
1974
Jan.-Mar.
Apr.-June
1.8
3.2
0.7
2.9
3.2
0.7
Industrial
Projects
April 1971
Department
July-Sept.
0.3
0.4
3.2
1.2
Oct.-Dec.
Total
0.4
0.4
0.4
1.2
0.7
5.5
10.0
3.R
20.0
ANNEX7
FACT
Working Capital
Requirements
at kmual
Production
of 436,500 Tons
Cochin Phase II Project
Amount
Rs Milli: o-
1.
Accounts Receivable
a) 100,000 tons NPK
500 tons Cryolite
b)
2.
92.8
1.1
Raw Materials
tons
@Rs
245/ton
19.1
b) Sulfur,
25,000 tons
ORs
290/ton
7.3
c) Potash,
21,000 tons
ORs
423/ton
8.9
ORs
@Rs
485/ton
620/ton
2.1
5.0
1.4
a) Phosphate
Rock,
78,000
d) Ammonia,
e) Urea,
f) Other Chemicals
3.
ORs 928/ton
@Rs 2,250/ton
Operating
4,300 tons
8,000 tons
Supplies
a) Bags, 2 mos. suppl;y
b) Operating Supplies and Consumables
a) Spare Parts
2.9
.6
8.3
4.
Goods in Process
3.7
5.
Product Storage
(2 mos.)
a) 72,750 tons NPK
b) 1,350 tons Cryolite
50.9
1.9
206.6
3.0
6.
Cash Balance
7.
Total Working Capital
8.
Initial
9.
Foreign Exchange Requirement (Total)
Working Capital
Projects
Industrial
March 12, 1971
ORs 700/ton
ORs 1,400/ton
Department
209.0
50.o
38.0
INDIA
FORECASTOF NITROGENT
PRODUCTION
(thousands of metric tons per year)
Design
Capacity
EXISTING FACILITIES
Public Secto 1
FACT-UDLTL3)
FCI-NAMRUP
FCI-SINDRI
FCI-NANGAL
FCI-TROMPAY
FCI-GORAKHPUR
FOURFELA
NETVELI
GSFC, DAROEA
OTFER PFRODDUCENS
SUB"OTAL
(1)
FY 70'
FT 71
92
45
117
80
go
80
120
70
216
12
922
35
26
79
79
44
73
30
42
111
12
?MIVATE SECTOR
,ORO1M1ANDEL,
VIZAG
ICY, YOTA
IEL, 12ANPTR
OTHER1TWODJCEFS
SUB TOTAL
80
130
200
34
68
81
17
30
TOTALEXISTING PLANTS
1366
35
30
60
100
120
30
73
120
185
30
73
120
185
30
00
73
120
185
30
1225
1240
1245
75
75
110
110
1LO
14o
1LO
14o
175
735
160
7
852
80
LO
105
77
80
73
110
60
200
12
4
95
4
75
130
500
140
140
110
110
175
67
-
90
125
-
21
75
X59°
0
TOTALEROBABLE
EROJECTS
80
105
77
80
73
110
60
200
12
37
73
120
185
o
1245
7
1644
LONGRANGE
PROJECTS
(2)
TOTAL
F'Y 77
FY 78
FY 79
8o
4o
105
77
80
73
110
60
200
12
80
4o
105
77
80
73
110
60
200
12
3
80
4o
105
77
80
73
110
60
200
12
5 37
80
4o
105
77
80
73
110
60
200
12
37
73
120
185
30
7 1;
73
120
185
30
408
73
120
185
73
120
185
1245
1245
1245
140
14O
14o
UhO
175
737*
14o
14o
140
14O
175
735
140
140
140
140
175
735
140
140
140
140
175
735
160
160
160
160
°95
R
95
695
45
120
45
115
115
110
110
600
45
120
45
160
160
140
i4o
810
45
120
45
205
205
140
140
150
30
125
80
3
195
30
175
110
710
195
30
220
145
9
lo45
1320
149o
200
boo
6oo
7
1245
895
25
65
25
35
90
35
-
-
-
-
-
75
1
215
30
248
160
653
FY 76
lo
537 o
FbOBABLE
PROJECTS(NEAl?FUTUTE)
Public Sector
FACTCOCHINII
L!7
FCI-TROMBAY
EXP.
132
FCI-GORAKHPUR
EXP.
50
FCI-TALCHER
229
FCI-RAMAGUNDAM
229
FCI-BIALDIA
152
FCI-TTANGAL
EXP.
152
SU' TOTAL
991
Private sector
IFFCO, KANDLA
COPONLANDEL
EXP., II
SPIC, TUTICORIN
MIANGA
LORE
SUB TOTAL
FY 75
75
LO
70
ho
- 35
130
12
5312
PROJECTS
UJNDE CONSTRUCTION
Public Sector
FACT-COCFHIN
I
152
-'CI-DURBGAPLT
152
FC1-EARAB
UI
152
FCI-XTA1BIRTF
152
IAT 'AS
190
SUIB CCAL
7
Private-Sector
ZUtARIAGRO-50A
175
973
FY 74
75
4o
105
77
80
73
110
60
200
12
6
TOTALUNTrERCONSTRUCTION
FY 73
60
40
105
77
80
73
110
60
200
12
l
75
727
FY 72
ANNEX 8
75
310
-
110
30
115
450
-
_
Aor -=19
goo
GRAND
TOTAL
6020
727
°52
1470
1830
2045
2255
2590
3385
3860
'4230
GOTESTMATE
6020
716
850
1420
1820
2185
31f40 3970
4420
4700
5200
Fiscal
Years ending March 31
Public Sector:
Private Sector:
Korba, Kamiptee, Rajasthan,
Mirzapur, Paradeep
Coromandel, Tata, Hindustan Lever, Dharamsi Morarji
(3)
GOI figures
Industrial
Projects
March 12, 1971
are not consistent
Department
with FACT's (see Annex 1).
ANNEX 8
Page 2
NITROGEN AND PHOSPIIATE PRODUCTION
ASSUMPTIONS AND COMMENTS
The following
comments refer
to the forecasts
production (Annex 8) and P2 05 production (Annex 9);
made on nitrogen
1.
Production figures for 1969/70 are actuals and for 1970/71 are
provisional estimates supplied by the Government. While overall totals for
1970/71 may be close to the 850,000 tons N and 260,000 tons P2 05 shown, production for individual plants may vary. Production from existing plants
after 1971/72 has been estimated at about 90% of design capacity. In recent years production in public sector plants has averaged 60-70% of capacity
and these estimates may therefore be high. llowever,any overestimate understates the gap between demand and supply and lends conservatism to the deficit. A 90% production estimate for the private sector is considered realistic based on its operating performance.
2.
For projects under construction, production has been assumed at
50% of design in the first year, 70% in the second year, and 90% thereafter.
Three plants - Cochin I, Durgapur, and Madras - are substantially completed
and start-up by summer of 1971 seems probable. The estimated start-up of
Barauni and Namrup is less certain, but it is assumed for spring of 1972.
Work at Zuari Agro is on schedule with start-up scheduled for summer of 1972.
3.
The 11 projects designated as probable for the near future are in
various stages of negotiation and IDA's assessment of the start-up dates
varies somewhat from GOI estimates. In each case production is assumed at
50% first year, 70% second year, and 90% thereafter once production begins.
The three projects assumed to be in production in 1974/75 must begin construction in 1972. Of these Cochin II should start construction in mid-1971
and negotiations appear well-advanced at the Gorakhpur and Trombay plants of
FCI. The project and financing plans for three projects, Nangal Expansion,
IFFCO and Haldia, must be completed by early 1972 if the projected 1975/76
start-up schedules are to be met. Plans for Coromandel Expansion, SPIC
(Tuticorin) and Mangalore are considered less certain and are projected for
1976/77 start-up. Two plants in the "probable category" are coal-based
ammonia plants with a total capacity of 460,000 TPY N. The technology of
these plants is not commercially proven and the plants are much larger than
any undertaken by FCI thus far. Start-up has been assumed for 1976/77.
4.
A number of other projects have been suggested for the longerrange. The tentative nature of the plans for these projects make forecasts
highly unreliable so they have been grouped together with arbitrary aggregate production schedules assumed at 10%, 20%, and 30% in 1976/77, 1977/78,
and 1978/79 respectively.
5.
There is little difference in the aggregate figures between
IDA's projection of supply and that of the Government in the early years.
Beginning in 1974/75, the difference becomes increasingly greater.,due to
ANNEX 8
Page 3
different forecasts of completion dates for various plants. These forecasts (Annex 8 and 9) represent IDA's best estimate of the production
that India can reasonably be expected to achieve. If the 90% capacity utilization assumption is reduced to 80%, then the production figures will be
approximately 10% less. The project start-up dates assumed could vary either
way and give an estimated t10% difference in the forecasts.
Progress in fertilizer production in India has been disappointing.
6.
This is true both for the public sector, where production has been below expectations and where completion of new projects has been delayed, and the
private sector, where only one plant is currently under construction and
only one plant, IFFCO, seems likely in the near future. If India is to narrow its supply gap, new projects must be implemented at a much faster pace
than projected. Every effort should also be made to improve production
levels at existing plants. The deficits forecasted in the Bank estimate
indicates the magnitude of the problem India faces in meeting its fertilizer
requirements.
Pertinent data on the nitrogen capacity of the public and private
7.
sectors in India are given below:
Public
capaNumber
city
1000's
of
Plants TPY
Existing
Under Construction
Probable
%
Total
Capacity
Private
Capacity
Number
of
1000's
Plants TPY
%
Total
Capacity
Total
%
Capacity
Total
Number
of
1000's Capacity
Plants TPY
9
910
69
3
410
31
12
1,320
100
5
798
82
1
175
18
6
973
100
14
1,708
74
4
585
26
18
2,293
100
7
991
60
4
653
40
11
1,644
100
21
2,699
69
8
1,238
31
29
3,937
100
8.
The present division of nitrogen plants show about 70% of N capacity in the public sector. This percentage is likely to be increased over the
next few years as new plants are completed.
9.
The high priority for India's self-sufficiency in fertilizer production suggests that private sector industry should be encouraged as well as
public sector projects. Given the limited resources of India, the fertilizer
industry should have as broad a base as possible.
ANNEX 8
Page 4
10.
The public sector projects show increasingreliance on one company,
FCI; with 8 plants completed or under constructionand another 6 planned for
the near future. The Governmentshould review this situation to determine
whether one company is the most appropriatevehicle for expansionof the
industry.
11.
Also critical to India's fertilizerproduction is its recent decision to build extremelylarge-scalecoal-basedammonia plants. Whether
this is appropriatein India, consideringthat the technologyhas not been
proven commercially,should be given thoroughstudy before the projects are
committed.
Foreign exchange financingof fertilizerplants in India in recent
12.
years has come from a variety of sources. The principal one recently has
been Italian Credits for the four urea plants now under constructionin the
public sector - Cochin I, Durgapur, Barauni and Namrup. US AID supplied
funds for Trombay plant of FCI but has not participatedin further financing
of FCI plants due to problemsrelated to choice of engineeringfirms. US
AID also participatedin the Coromandelproject in the private sector and
assisted the Madras plant now under construction. It is consideringfinancing for the IFFCO project,which may also have finance from the U.K. Government. Japan has given credits for three Japanese built plants, Gorakhpur,
GSFC, Baroda, and Kota. Foreign exchangefor Indian Explosivesat Kanpur
and Zuari Agro was supplied by IFC. In several cases foreign equity sponsors
also supplied foreign exchange.
IndustrialProjectsDepartment
April 1971
ANNEX 9
FORECAST OF P2 05 PRODUCTION
(Thousands
DESIGN
CAPACITY
EXISTING FACILITIES
FY 70(1)FY
4o
FACTPLIDL
E
'
FCI-TROMBAY
GSFC, BARODA
SUPERPHOSPHATEFACTORIES
of metric
11
16
21
14
43
50
45
7
SUB TOTAL
PRIVATE SECTOR
COROMANDELiVIZAG
DMCC, BOMBAY
PARRY, ENNORE
E.I.D.
SUPERPHOSPHATEFACTORIES
SUB TOTAL
71
15
16
30
15
73
per
year)
FY 72
FY 73
FY 74
FY 75
FY 76
FY 77
FY 78
FY 79
26
35
33
33
33
33
33
33
33
35
35
35
35
35
35
45
45
35
30
30
30
30
30
30
30
30
45
45
45
45
45
17N
64
50
66
66
66
66
66
66
66
66
4
5
8
9
120
8
8
9
120
9
120
9
120
9
120
TM
9
90
M
8
9
120
8
7
85
8
9
120
8
10
172
8
9
120
M
O
0
w
0
222
230
339
346
346
346
346
346
60
78
78
78
140
78
78
78
140
140
140
ho
40
40
_i
4
TOTAL EXISTING FACTORIES
44
PROJECTS UNDERCONSTRUCTION
PUBLIC SECTOR
MADRAS
FCI.SINDRI
SUB TOTAL
156
24i
40
185
PRIVATE SECTOR
ZUARI ARGO, GOA
45
TOTAL
86
75
-7J
6
-
22
32
40
82
185
T
110
T
ho
228
3
346
w
346
40
258
258
258
258
115
60
80
105
105
105
132
70
65
90
35
120
50
120
63
120
63
100
5°
-
I7
50
70
70
PRIVATE SECTOR
IFFCO, KANDLA
SPIC, TUTICORIN
COROMANDEL
II, VIZAG
MANGALORE
SUB TOTAL
127
70
7
90
27
-
65
-
-
-
-
TOTAL
711
SUB TOTAL
45
11
73
PROBABLEPROJECTS (NEAR FUTURE)
P4=UBLCSECTOR
FACT-COCHIN II
FCI-TROMBAY EXP
ECI-HALDIA
KHETRI
tons
90
90
9
9770
90
90
115
115
50
7
63
165
35
7
177
340
542
613
643
160
320
480
-
175
go
7
76w
LONG RANGE PROJECTS
1600
TOTAL
GRANDTOTAL
GOI ESTIMATE
1/
Fiscal
2/
GOI figures
years
3/
Public
Private
ending
are
Sector:
Sector:
not
3041
222
230
379
428
531
749
944
1306
1537
1727
3000
222
230
422
476
671
1200
1663
2025
2250
2500
March 31
consiatent
Rajasthan,
Dharamsi
with
FACT's
(See
Annex 1).
Paradeep,
and others
Morarji,
Occidental,
and Coromandel
III
Industrial
Projects
March 1971
Departmer
FERTILIZER MARKET: DEMAND
FORECAST
SOUTH INDIA!
(thousands
World BankY/
Kerala
Mysore
Tamil Nadu
Andhra Pradesh
GOI (Planning
FACT
V/
2/
Kerala,
Figures
1971/72
1972/73
1973/74
1974/75
1975/76
1976/77
1977/78
1978/79
N
N
N
N
N
N
N
N
N
N
P>Or
P,Oe
PqOK
32
29
58
40
90
38
68
107
49
49
50
145
69
168
89
326
113
386
515
200
619
260
729
540
186
540
186
-
601
-
231
-
667
Department
PnOf
P,Oz
PoCw
77
59
85
69
95
62
111
144
218
77
86
244
150
141
328
450
844
170
402
515
962
77
134
206
161
89
124
193
577
231
-
281
734
Mysore (including
Goa), Tamil Nadu (including
Pondicherry)
beyond 1973/74 are projected
at 12% growth rate.
Industrial
Projects
March 12, 1971
per year)
1970/71
76
123
268
Commission)
tons
1969/70
48
Total
of metric
333
486 1,077
825
422
-
805
399
912
and Andhra Pradesh.
P205
P2 Oc
P2(k'
107
181
273
646
87
97
168
258
119
202
306
724
97
108
188
289
134
227
343
810
544 1,207
610
1,351
682
1,514
-
-
-
-
545 1,174
622
1,332
-
-
471 1,033
109
121
211
324
PoOC
150
122
254
136
384
236
908
765 1,696
363
857
-
1,800
704 1,502
900
790
ANNEX11
FERTILIZER MARKET- SUPPLY FORECAST
SOUTH INfDIA-1
of metric
tons
(thousands
Design
2
Capiacity
N
70-/FY
FY
P205 N
2P
2
71
N
05
72
FY
PN
P2 0
2
FY
per
73
year)
FY
75
P2052 05
74
205
FY
05
2
N
P
FY
N
76
77
FY
P2 0
P2 05
78
FY
79
FY
P2 0 5
N
N
P205
FACT, UPL-/
92
40
35
11
35
15
60
26
75
33
80
33
80 33
80
33
80
33
80
33
80
33
COROMANDEL,VIZAG
80
73
68
64
60
50
73
66
73
66
73
66
73
73
66
73
66
73
66
73
66
NEYVFLI
70
_
)42
--
35
--
60
--
60
--
60
--
60-
--
60
--
60
--
E.I.D.
16
10
10
7
--
80
--
40
MADRAS
190
85
-
-
-
ZUARI AGRO, GOA
175
45
--
--
-- --
FACT COCHIN I
152
--
FACT COCHIN II
47
115
COROMANDEL
EXPANSION_/
155
55
SPIC,
2)48
MANGALORE
PARRY, IMORE
SUPERPHOSPHATEFACTORIES
-
14
9
14
9
£0--
14
40
-
40
--
40
--
40
175
78
175
78
175
78
175
78
4o
160
4o
160
4O
160
40
160
4O
140
--
140
--
1l)0 --
140
--
140
--
25
60
9
14
14
9
40
--
40
--
40
--
40
--
40
-
95
40
130
60
175
78
175
78
--
--
90
22
125
32
160
--
140
--
110
--
9
35
80
80
30
4i5105
9
14
9
])4 9
14
9
75
14
66
45 105
45 105
1]O
4O
140
50
140
50
70
125
35
175
50
220
63
160
90
80
45
1o
63
145
80
RAMAGUNDAM
229
--
115
--
160
-
205
--
OCCIDENTAL, VIZAG
140
140
-=
--
1750
800
155 122
1)44 114
337 181
552 230
667 258
727 326
TOTAL DEMAND
--
--
540 186
601 231
667 281
734 333
805 399
912 471 1033 545 1174 622 1332 702 1502 790
DEFICIT
--
--
385
457 117
330 100
182 103
138 141
125 145
TUTICORIN
TOTAL SUPPLY
Kerala,
2/ Fiscal
Mysore
Years
3/ GOI Figures
4/ Coromandel
Industrial
Projects
March 1971
(Including
ending
are
II
Goa),
Tamil
Nadu (including
216 169 (3)
Andhra
Pradesh.
8 and 9 to show possible
effect
Pondicherry)
plus
consistent
and III
are
with
Data
131
taken
than
in Annexes
on Cochin
from Annexes
II
70
634
0 168 (25) 156
FACT'S (See Annex 1).
shown earlier
7Q
817 376 1177 491 1332 534 1527
March 31
not
Department
64
--
Project.
8 and 9.
FACT
Annual
Cochin
Cost of Production
Phase
(millions
Design
Capacity
Tons
Unit
Cost
Rs/ton
TonsProduction,
1000
II Project
of Rupees)
1974/75 50%Capacity
1975/76
NPK
NPK
242.5
Cryolite
3.75
388
80% Capacity
Cryolite
6
1976/77 90% Capacity
Design
NPK
Cryolite
NPX
Cryolite
6.75
485
7.5
436.5
Capacity
VARIABLMCOST._
Raw Materials-Fertilizer
Sulfur
109,200
290
PhosphateRock
Ammonia
Duty-Ammonia
346,500
52,700
Urea
Potash
245
318
167
106,000
90,600
620
423
4.4
32.8
19.2
32,000
9,700
50
230
0.8
1.1
3,900
318
Fifler
CoatingAgent
Raw Materials
15.8
42.5
25.3
67.9
8.4
28.5
76.4
13.4
7.0
31.7
84.9
15.1
7.9
52.5
30.7
59 1
34 5
16.8
8.8
1.3
1.8
1.4
2.0
65 7
3 3
1.6
2.2
- Cryolite
Ammonia- Cryolite
Duty-Ammorna
Alumina
SodiumChloride
SodaAsh
0.6
1.0
900
135
0.3
1.8
1.0
o.6
650
2.8
1.6
0.3
3.2
1.8
0.4
3.5
2.0
0.4
0.5
167
3,900
15,000
750
1.1
1.2
o.6
0.7
Other
Utilities
OperatingSupplies
PackingCosts
Laborand Supervision
Interest
on Short TermLoans
3.8
1.2
9.7
2.5
2.3
TdtAl VariAble coa
0.4
0
0.2
0.1
0.1
6.1
2.0
15.9
3.4
0.6
0
0.2
3.3
0.1
0.1
144.5
4.8
230.6
7,~
6.4
10.6
25.4
1.5
0.2
0.2
9.0
10.6
0.2
0.2
0.6
0.1
6.9
2.2
0.7
0
0.8
0.3
7.6
2.5
19.4
0
0.3
3.6
0.1
0.1
3.7
3.9
0.1
0.1
258.2
8.3
287.1
9.2
9.4
0.2
0.2
9.7
10.6
25.4
1.5
0.2
0.2
17.1
3.5
FIIEDCOST
Selling and Administrative
Expense
Maintenance, 3.5% of Investment
Depreciation,
8.3% of Investment
Insurance, 0.5% of Investment
TotalFixed Cost
Total Cost of Production
43.9
188.4
Cost of Production,
Rs/Tons
Cost of Production, W/O Depreciation
Cost of Production, W/O Depreciation
776.9
163.0
158,6
Industrial Projects Departmmt
March 12, 1971
& Duty
0.6
0.1
1.1
5.9
1,573.3
5.3
5.0
25.4
1.5
10.6
25.4
1.5
0.6
0.1
o.6
0.1
46.5
277.1
1.1
46.9
305.1
1.1
47.2
1.1
8.5
9.4
334.3
10.3
714.2
251.7
244.7
1,416.7
7.9
7.3
699.0
279.7
271.8
1,392.6
8.8
8.2
689.3
308.9
300.1
1,373.3
9.7
9.0
FACT
COCHINII
PROJECT
FORCASTEDINCOME STaTEMENT
FOR FISCAL YmARS ENDINGMARCH31
1975
1976
1977
1978
242.5
40.5
202.0
388
23
365
436.5
9.5
427.0
436.5
436.5
1979
Thousanis
NPK
Production
Inventory
Sales
Build-up
Cryolite
Production
Inventory
Sales
3.75
.75
3.00
6.oo
.25
5.75
5
8
Build-up
Acid
Sulfuric
Sales
II
1981
1982
436.5
436.5
436.5
_
436.5
436.5
_
436.5
Acid
Adjustment
of Sales
at
Net Profit
Before
436.5
536.5
436.5
_
436.5
436.5
_
436.5
436.5
_
436.5
436.5
_
436.5
6.60
6.75
6.75
6.75
6.75
6.75
_
6.75
6.75
_
6.75
6.75
_
6.75
6.75
_
6.75
6.75
_
6.75
6.75
_
6.75
9
9
9
9
9
9
9
9
9
9
9
of Rupees
405
15
2
405
15
2
405
15
2
405
15
2
405
15
2
405
15
2
405
15
2
405
15
2
405
15
2
195
353
413
422
422
422
422
422
422
422
422
422
422
195
32
286
17
315
7
315
-
315
-
315
315
315
315
315
315
315
289
162
269
308
315
315
315
315
315
315
315
315
315
289
107
107
107
107
107
107
107
133
19
Taxes
436.5
_
436.5
Tons
of Metric
405
15
2
14
8.5%
1987
396
15
2
85
2/
Interest
1986
9616
339
12
2
33
Profit
Operating
1985
187
7
1
1/
of Production
Less Inventory
Cost
1984
9416
6.75
6.75
.15
Millions
Net Sales
NPK
Cryolite
Sulfuric
1983
_L
6.75
6.75
6.75
Value
Cost
1980
----
I Volume
15
69
107
105
107
14
13
11
10
8
6
5
3
91
94
96
97
99
101
102
104
105
106
133
57
58
58
73
47
48
60
11,
25%
ll
25%
14%
32%
-
-
-
-
-
53
54
56
56
Net Profit
19
69
91
94
96
ss
45
45
46
47
as a Return:
Net Profit
On Net Sales
(Rs 190 million)
On Share Capital
10%
10%
19%
35%
22%
47%
22%
49%
23%
50%
10%
23%
11%
24%
11%
24%
11%
24%
llg
25%
Taxes-
detailed
operating
costs
and Annex 14, Page 2, for
1/
See Annex 12 for
2/
Assuming loan
3/
calculations.
5 years for return
after
Nominal tax of 55% provided
againstoverall
to Cochin II will be applied
attributable
tax benefits
years actual
earlier
in
is higher
for tax purposes
As depreciation
Industrial
April
Projects
1971
major
assumptions.
of Rs 190 million
Department
1
2
taxes for
Actual
comparn profits
taxes would range
as
FACT as a whole may begin earlier
by 1977/1978.
and thus could be exhausted
from 50% to 65%.
FACT
COCHIN II
PROJECT
SENSITIVITY ANALYSIS AND MAJORASSUMPTIONS
IFR
BASE CASES (See Page 2 for Assumptions)
A.
Financial
19.5
B0
Economic
-
SENSITIVITIES
for Raw Material
I.
Long Range Trend
II,
One Tear Delay
III.
Maximum Production
of 80% Reached
IV.
Maximum Production
of 100% Reached
V.
Selling
Prices
Reduced
VI.
Selling
Prices
Increased
VII.
Combination
of II
and III
VIII.
Combination
of II
and V
C.
Economic - Phosphoric
l/
*
Resulting
with
Prices*
and 7% Decrease
Selling
in
Industrial
with
Projects
A-4I
1 071
in Second
in Fourth
Year of Production
Year of Production
10%
10%
19.5
1/
13.5-
on $160 per
on $150 per
-
9.2
6.0
17.8
11.4
21.0
14.8
9.1
5.1
27.3
20.0
8.6
Acid as Separate
price
price
4.0
-1.8
-2.1
_
13.7
Project
ton
ton
Base Case used in Economic
Department
Prices
Overrun
9.0
exchange ratio
at a foreign
if evaluated
increases
The economic return
selling
of international
from the use of the rupee equivalent
results
than costs.
Consistent
-
on Base A and B Above
- Calculated
Selling
Selling
IER
Return
rlus
Duties
and Urea
This
at Rs 7.5/$1.0.
greater
more
which should increase
prices
CD
(
Rs 620 ton.
FACT
COCHIN II
PROJECT
TABLE I
ASSUMPTIONSFOR BASE CASES
PHOSPHORIC
ACID
FINANCIAL RETURN
A
DESCRIPTION
ECONOMIC RETURN
B
AS SEPARATEPROJCT
C
Rs/Ton
Rs690
Rs 1930
Rs 230
Rs/Ton
$
Rs
($160)
Selling Prices
Rs/Ton
Rs 928
Rs 2250
Rs 230
NPK
Cryolite
Acid
Sulfuric
Acid
Phosphoric
Raw Material
Costs
Phosphate
SulfUr
Potash
Ammonia
Urea
Rock
Project
-
DELIVERD
24R
%
R
RB 290
Rs 423
Rs 485*
Rs 620
Rs
Period
of Project
Life
$ Equiv.
7$ 92)
($257)
($ 31)
per ton
Cost
Construction
$ Equiv.
(=)
($300)
($ 31)
Production
Year 4
Year 5
Year 6-15
CIF
$(I)
($36)
($53)
($37)
($82.67)
359 million
DELIVERED CIF
($30)
($40)
Rs
Rs
Rs
Rs
245
321
320
475
Rs
339 million
DELIVERED CIF
(*R2
s2
%
($30)
Rs 245
($37)
($60)
Rs
138 million
36 months
Same
Same
15 years
Same
Same
12 years
Same
Same
50%
80%
90%
Same
Same
42%
75%
88%
90%
Same
50%
80%
90%
Same
Rs
Sales
Year
Year
Year
Year
h
5
6
7-15
Rs
Scrap Value
(* Inc.
Industrial
60% Duty)
Department
Projects
1971
April
18 million
7 mill.ion
Annex 14
Page 3
COMMENTS
ON SENSITIVITY ANALYSIS
Case I is a test to see how much the selling prices could be
reduced without the IFR decreasing,if imported raw material costs follow
the long-range trend used in the IER.
Case II indicates the impact of a one-year delay in the project
with a 15% overrun. With the budget estimates being conservativeand
project
execution
receiving
full support from GOI, no significant
overrun
or lengthy delay is foreseen.
Case III (80% production) shows that both the IFR and IER are
still satisfactoryat the production.
Case IV (100% production)is possible but not consideredlikely
due to the wide range of blends and consequentdowntime.
Case V (10% reduction
in selling
prices)
can be considered
unlikely as prices should not fall to this extent unless costs are similarly
reduced.
The test indicates
that prices could decline somewhat in the face
of competition
and the project
still
show acceptable
returns.
Case VI (10% increase
in prices)
could increase somewhat in view of stable
This will depend upon supply factors.
is not likely although prices
prices in the last 2-3 years.
Case VII (15% overrun, one-year delay and maximum production
80%) shows that the combination of overrun, delay and production
difficulties
could make an otherwise acceptable
project
marginal.
Case VIII (15% overrun,
one-year delay and 10% decrease in
prices)
for the IFR is not considered
likely as the price-cost
relationship
should continue. For the IER, however, international
prices could be lower
than calculated
by IDA staff.
The senistivity
test on the phosphoric
acid production
as a
separate project
has been performed using a 6% drop in the selling
price.
The test shows the project returns
9% at $150 FOB per ton.
Phosphoric
acid has been contractedfor Indian delivery at $135 per ton CIF. However,
it is probably that a fair price for use in an economic return would be
$145 per ton to which $5 to $15 would have to be added for local costs,
assumed in this case to be borne by an importer
transport costs, and overhead.
IndustrialProjects
April 1971
Department
with
storage
facilities,
FACT
COCHINII FROJECT
TABLE2
of rupees)
Base Case Streams
Operating Costs
Capital Costs
Economic
inancial
Economic
Financial
P205
Return
Return
P20c
Return
Return
______
-_______
________
_______
(millions
Fiscal
Year
Ending
March31 Period
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1
2
3
4
64
129
118
48
5
6
7
8
9
10
11
12
13
14
15
Industrial
Projects
April 1971
61
118
112
48
25
48
46
19
168
260
289
289
289
342
343
345
345
346
346.
346
141
216
240
240
240
240
240
240
240
240
240
240
57
86
96
96
96
96
96
96
96
96
96
96
LnaitR
?tnaumnt
NPK @
Rs. 928
195
353
113
422
422
422
422
422
422
422
422
490
knnom$c
NPK e
Rs. 690
147
264
309
316
316
316
316
316
316
316
316
384
P20t
Rs.
1,200
69
110
124
124
124
124
124
124
124
124
124
151
Department
1W
FACT
COCHIN II
Project
Break Even Analysis
a
Selling
Price
Profit
of Rupees
9z
Re 928
86
Margin
Rs 312
158,000 Tonx x
178,000 Tons x
Rs 342
Rs 342
-
_4
61
-
0 90% Capacity
RS 124
86
Rs 75
436,500 Tons x
Variable Costs
Selling
Price
argin
-
_
R. 140 margin 586
436,500 Tons x
Variable Costs
Selling Price
/
Assuming
Assuming
7/ NFK only
/
Variable
50% of project
cost financed by debt maturing over 10 years
interest
on 50% of debt
- assuming cryolite
sold at variable
cost
costs exclude labor and supervision
for this calculation.
Conclusions
Cash break-even
Percent of total capacity
Capacity in tons needed
1971
Department
32%
158,000
needed
Percent of expected selling price
RJ 928 needed 0 90% production
Price needed 0 90% production
Projects
61
in
!/
April
26
26
-
of RS928
Selling Price
Variable Coats
Industrlial
Cash
Millions
9
Volume Required
Required
Requirement
26
19
Fimed Coats
Depreciation
Debt Repayment
Interest
Price
Break-Even
Profit
break-even
37%
178,000
of
77%
Rs 710
78%
Rs 726
LI
ANNEX16
FACT
Cochi.nII Project
Annual Foreign
Exchange Savings
at Normal Production
(90%)
(Millions
Gross Foreign
436,500
-95,400
6,750
103,500
Exchange Savings
tons
tons
tons
tons
NPK
NPK @ $85 each
Urea @ $60 each
Cryolite
@ $250 each
P2 0 5 @ $145 each
of Dollars)
Cryolite
P 0 *
*37.1
.7
$1.9
$15.9
Less Foreign ExchangeCosts
Sulfur - 98,280 tons @ $30 each
PhosphateRock - 311,850 tons @ $24 each
Ammonia - 50,940 tons @ 37 each
Potash - 81,540 tons @ $40 each
Ammonia - 3,510 tons @ $37 each
Other
supplies
and spare
parts
Depreciation
costs
Total Foreign ExchangeCosts
Net Foreign
.1
.2
Exchange Savings
Total OperatingCosts (Both Local & Foreign)
IncludingDepreciation
Less Duties
Plus Interest on 50% of Debt
Plus 10% on Equity
Total Annual Costs
B. Net Local CurrencyCosts
Net Local Currency Costs Divided by
Net Foreign Exchange Savings
in NPK
Industrial
Projects
April
1971
Department
.5
-
. -
*3
17.6
.1
11.3
$13.8
$1.8
$3.7
(Millionsof Rupees)
Re 267
- 8
Rs 9
-1
9
18
-48
-132
_ 23
Rs 83
6.0 Rs/$
Rs 106
- 0
-
286
Less Urea Transferred
Less Foreign ExchangeCosts
Less Handling Costs Saved
Included
.1
*7
Local CurrencyCosts
*
2.9
7.5
1.2
Interest on 50% of capital
A.
2.9
7.5
1.9
3.2
1
8
9
118
-
-
1
85
-12
Rs 8
Rs 21
-
4.4 Rs/$
5.7 Rs/$*
FACT
INCOME STATEM5NT3 FORECAST - COII3LIDATED
FISCAL TEARS ENDING MACH 31
(amtltone
1972
1S73
1974
I775
1976
1977
of Rapeoz)
1978
1979
198
198.1
1982
1983
1984
1985
1986
1987
IDL, FESO ANDFEW
Net Sales
Cost of Sales
Sales
Admin.,
Other
Inooes
Profit
Before
219
176
11
(3)
35
219
176
35
219
176
21
(3)
35
201
121
201
1°05
201
74
201
74
201
74
201
74
201
74
74
74
90
121
121
121
121
121
522
522
422
522
222
522
522
422
422
305
10
107
305
10
107
305
10
107
305
10
107
305
10
107
305
10
107
305
10
107
305
10
107
279
10
133
195
195
195
200
232
263
263
263
263
289
21
17
13
174
178
85
182
90
191
100
226
124
93
92
91
121
219
192
11
(3)
19
219
176
12
201
121
201
121
74
74
413
422
299
9
105
305
10
107
219
197
11
(3)
14
219
197
11
(3)
14
219
197
205
125
202
122
201
121
201
121
66
74
74
353
260
9
84
219
190
111
(3)
21
219
195
74
69
160
97
202
123
2
50
65
(3)
16
219
176
11
(3)
35
219
176
1
(3)
35
219
197
11
(3)
14
219
196
11
(3)
15
219
189
11
(3)
22
177
157
11
(3)
12
Expeoses
& General
- (Inc.
P0E1 & FEW)
& Taxes
Interest
(3)
14
(3)
35
Cochin
Net Sales*
Cost of Sales*
Ad-oin., Sales&OGeneral Experoeoa
Profit
Before
Interest
& Taxes
induced Ri 80 per ton
Including
amorttoation
*
**
13
3
for orea transferred
expeoses
of deferred
to Cochin
1973-1975
14
14
II
is 8 million
6
6
per
6
6
6
6
6
6
6
6
6
6
year
bg
Cochin
II
Net Sales
Cost of Sales
Adjoin.,
Sales
Before
Profit
& General
Interest
195
155
7
33
Expenses
& Taxes
Net Sales and Coot of Sales have
to customers,
and (b) by
charged
a) See Annex 17 page 2 for
b) See Annex 14 page 2 for
been redueed
eliminating
assumptions
essuoptions
(a) by deducting
fertiltoer
purchased
freight,
sold
interest
as part
and other
distribution
progrem.
of the seeding
osts
used
used
Consolidated
Before
Profit
& Taxes
Interest
Initemsotl/
Before Taxes
Taxes
2/
Net Prtfit
Estimated
Net Profit
1/
j/
(Loss)
See Annoe 19 for
After alluassceo
Irdutistal
Projests
Apr1l 1971
intorest
for imes
Dep-rtment
on long-term
caroy forwrd,
115
173
193
15L
72
86
31
29
25
34
30
(17)
-
43
62
8i
-
-
143
-
167
-
(17)
43
62
81
143
167
debt for each
de,oloopment
diviston.
end other
robote
ta
oonoesstorns.
26
-
6
ios
5
3
2
258
no
26o
120
261
120
148
140
141
1262
120
289130
159
FACT'
COCHIN II PROJECT
Major Assumptions Used in UDL and COCHIN I
In Forecasts
SALES
(OOO's of metric tons)
Ammonium
Chloride
Ammonium
Sulfate
Ammonium
Phosphate
1972
155
112
10
10
11
.8
1973
172
165
12.8
45
12
1.5
-
227
197L
172
165
12.8
h5
12
1.8
-
287
1975
172
165
12.8
L5
12
1.8
53
2LIh
1976
172
165
12.58
45
12
1.8
85
212
1977- on
172
165
12.8
45
12
1.8
95
202
-
700
620
SETLLINGPRICES
COSTS
-
1971
Ammonia
515
200
Based on current input costs for present production
and naphtha O Rs 110 per ton delivered for Cochin I.
IndustrialProjectsDepartment
April
Other
Products
UPEA
Cochin II
Others
104
(Rs per ton)
700
4Oo
Super
Phosphate
700
FACT
Booroe an
Tears
Piseal
1972
1971
Net Pr1ofit Before T--sx and V
on I.og Term Debt Interest
(15 yr-.)
(I:L y3 .)
(12 yre.)
Dopreoiation
of Deferred
1986
1987
263
263
289
26
26
26
26
26
26
26
289
289
289
289
190
1961
1962
1983
14
195
195
200
232
263
263
21
47
26
21
47
26
16
47
26
31
26
26
94
94
94
89
57
289
289
289
289
289
1974
1975
1976
1977
66
115
173
193
195
21
47
26
21
47
26
21
47
26
94
94
287
16
-
20
36
-
21
47
-
21
47
-
16
56
68
68
9b
C-_l
-
-
8
8
8
52
30
65
-
66
65
24
24
-
56
24
-
56
33
10
3D
_
85
30
67
68
UDL
C-I
(18)
(12)
162
314
285
281
321
291
102
73
138
81
48
(31)
10
54
1
50
(31)
51
(12)
90
7c
(6)
0
64
12
36
50
98
(6)
16
10
60
23
2
2
30
5
13
85
2
25
26
13
2
26
27
2
23
27
10
13
1
6
22
17
12
5
22
19
12
5
22
19
12
5
19
19
12
3
12
19
1
5
19
1
1
19
19
16
9
2
13
2
25
27
3
13
68
70
76
56
58
58
55
34
25
21
19
2
67
9
135
16
15
4
2
10
44
26
44
21
50
44
17
85
44
13
90
44
9
100
44
6
105
44
5
310
44
3
120
44
2
120
44
1
l3
44
-
137
123
168
197
177
175
175
176
182
174
176
92
737
312
849
3
963
31
114
1077
113
190
107
1297
r15
1412
113
1525
UDL
C_I
C-_r
C-II
Reeched.led
001 Leone
hupees)
21
47
26
2/
ity
in
Iw-resses
Leng Term Lone
Bank Borrowings
72
14
(1)
Tota1 Dpreciaton
A-ontintion
Expeases
1W3
Ending March 31
of Indian
(Milli.oa
SOURCE
of Funds F-recont
Applioation
-
Debt
WadAdvnoesa
TOTAL SO218E
20
-
289
APPLICATION
Pined
ABeet3
UDL
C_I
Working Capital
C-I
Total
Workiog Capita1
Acoroe-d E
open
Loon Bepaymets
IFCI
Goe.t
UDL
UDL
C-I
C-II
C-I
IOt an Credit
Debt
Re..hede3d
13
epoyeot
Total.oIn.
UDL
C_I
BpesMee
Deferrd
-
Taxen
Disideed.
Ten Dsbt
onLong
Intert
on GOI LmOn and
Internet
lIAdva,es
9
30
1
27
2
23
1
34
44
30
159
338
285
271
230
194
W
TOTALAPPLICATION
3
34
Conh BMn3p1n (Deficit)
Conh Balsee
1/
Per detcls3
,/
Bs 52 =Jlion
3/
(a)
RB 75
in 1971 for
dllion
debt
PreJecte
April 1971
neroice
Departratn
10
20
-
10
91
111
1i0
358
97
208
166
524
in
645
2 ond 17
in 1971 Cad Ba 23 million
./ .eeAnnex 19 far
Iadrstril1
to An.exes
refer
(24)
10
Coebin Ij
by diioa.n
in 1972 for
Coohie I,
(b) Ba 27 sillio.
Bal.o1s
far Coehin
in 1971; Ba 7 eilion
II
in
1972 sad Ba 3
illi.o
in 1973 for
UDL; (e)
Balaaoe fwr Coehin LIIL
FACT
Coverage
Long-Term Debt Service
of Rupees)
(in millions
Years Endring March 31
Fiscal
1979
1980
1981
1982
1983
1984
1985
1986
1987
1-4
74
107
14
74
107
14
74
107
19
74
107
35
90
107
35
121
107
35
121
107
35
121
107
35
121
107
35
121
133'
94
94
94
94
89
57
26
26
26
26
287
289
(50)
289
-
(85)
289
(90)
289
(100)
289
(105)
289
(nO)
289
(120)
289
(120)
289
(120)
289
(120)
267
287
239
204
199
1a9
184
179
169
169
169
169
1972
1973
1974
1975
1976
1977
12
2
-
22
50
-
21
65
-
16
66
33
15
74
84
14
74
105
56
76
76
102
94
Sub Total
Less Taxes
70
148
162
217
267
-
-
-
-
A. Total
70
148
162
217
10
20
8
19
6
17
5
-*
27
SOURCES
UDL
C-I
C-II
Profit Before Interest
and Taxes
Depreciation
and
Forecasts
1973
-
Amortization
-
RflUIREMENTS
UDL
C-I
Intereste*
C-II
30
Total
UDL
C-I
C-II
Principal**
Total
Times Covered
*
Assuming interest
**
After
is
Rescheduiing.See
Projects
April 1971
financed
1
7
1
5
1
2
1
-
-
-
-
-
-
-
-
-
-
-
-*
15
14
13
11
10
8
6
5
3
2
1
-
23
34
30
26
21
17
13
9
6
5
3
2
1
1
-
-
-
19
1
1
19
19
16
9
2
25
21
19
16
9
2
26
22
18
10
2
9.4
16.9
79.5
32
18
-
28
39
-
28
40
-
27
40
3
26
40
10
5
34
17
5
5
5
34
19
34
19
31
19
50
67
68
70
76
56
58
58
55
34
94
91
0.9
1.6
1.8
by project
furds
ard charged
Page 2 attached.
Department
2
10
3
12
19
80
B. Total
Industrial
_a
3
12
-
15
14
104
106
82
2.1
2.5
3.5
to Cochin II capital
costs
75
79
2.8
3.0
until
1975
68
2.9
5
43
31
4.4
5.9
6.9
7.7
FACT
Long Term Debt Repayment Schedule
A.
UDL DIVISION
FY 72
F72
FY 74
14.3
5.7
10.0
5.7
3.9
4.4
FY 75
FY 76
10.0
5.7
8.8
5.7
6.9
6.o
5.0
5.0
5.0
After
FY 77
Reschedul-ing
F
Y 79
Arrears
on March 31, 1971
FY 80
FY 81
FY 82
1.1
FY 83
FY 64
FY 85
FY 86
FY 87
THIRD STAGE - GOI
Normal
Arrears
50.0
28.8
75.6
FOURTHSTAGE- GOI
Normal
Arrears
47.2
2.8
.5
.5
.5
.5
5.0
5.o
5.0
4.5
2.7
12.2
.6
.8
WAYSAND MEA4N- GOI
Arrears
12.5
2.5
2.5
2.5
2.5
2.5
11.2
2.2
2.2
2.2
2.2
2.4
12.3
2.5
2.5
2.5
2.5
2.3
20.5
3.4
2.3
21.5
3.4
2.3
21.5
3.4
2.3
21.5
3.5
2.5
21i5
21.5
21.5
19.2
3.4
2.3
12.6
12.6
12.6
12.6
12.6
12.6
12.6
12.6
12.1
-
-
3.0
100
17.0
19.0
19.0
19.0
19,0
19.0
19.0
19.0
16.0
9.0
2.0
66.6
68.2
70.0
76.0
56.1
58.1
58.1
54.8
33.9
24.6
20,8
19.0
16.0
9.0
2.0
IFCI
Normal
INTEREST
Arrears
.
COCHINI
-
Normal
Rescheduled
Arrears
GOI
186.6
17.1
11.7
215.4
-
4.5
1.2
ITALIAN CREDIT
Normal
C.
COCHINII
Normal
TOTAL
Industrial
112.9
- GOI
190.0
-
683.1
49.9
Projects
April 1971
Department
roF
FACT
ALAROSS2'T
SORNUASTS
FISCAL YEARSEMAIMAMARCH31
(Million.
DIVI8
ASSETS
3
1972
1975
1976
1977
of I0di.
1978
MApR..0)
1979
1981
1980
1982
1983
12&
1985
1966
1987
1077
3.78
116
206
USC1
178
116
206
1297
178
116
206
13.12
178
316
206
1.525
178
116
206
O-rr0nt ka0et0
CMAh
Other current
7DL
C-I
C-I3S-
-. at.
C-mreet Amete
Total
DOL
C-C
C-Cl
Fixed Aset.
Tote
Lees
Depr-.ti.6on
Net Fixed Amaet
358
1o
165
54
-
1o
166
104
-
20
178
140
50
III
178
128
140
208
178
122
190
178
116
206
229
280
388
557
698
058
1,145
8459
178
737
178
116
206
116
206
1,578
1,462
1,349
1,237
963
178
11.6
206
1,691
320
2,026
1,913
1,798
320
.90
330
320
320
490
490
330
330
320
490
201
320
490
282
320
490
330
320
490
330
320
490
330
320
320
320
320
320
490
490
490
4397
490
490
490
330
330
330
330
330
330
330
673
(172)
1,011
(230)
1,092
11340
(402)
1,130
(496)
1,140
(590)
1,140
(684)
1,140
(778)
1,140
(872)
1,140
(961)
1,140
(1,018)
1,140
(1,033)
1,140
(1,070)
1,140
(1,096)
1,140
(1,122)
1,140
(1,122)
771
784
738
644
550
456
362
268
179
122
96
70
44
18
18
701
4
4
4
4
4
4
(308)
4
4
4
4
4
16
8
958
1,071
59
183
185
173
229
253
253
67
68
70
76
56'
309
312
302
364
9
125
209
33
100
7
99
183
101
87
5
73
156
166
74
TotAl Long Term Debt
Less COrrent Y4twittLee
476
(67)
477
(68)
Net Long Tem Debt
4309
283
Tlgni=
3178
16
206
317
490
66
4
MApensee (Market Deeeloet)
Deferred
1,024
63.5
320
24
Irestat_t.
523.
178
116
206
1,299
1,184
1,346
1,412
4
i,484
4
1,511
1,533
1,509
-4
1,58
678
1,765
1,846
1,935
2,048
179
253
LiAILrTCCS AND IAPTAL
COrreet LiabilitieM
Aocs,Ad E p-ne
Trade
L-,,
O-erdrmTt, Goarene,t
PVmbles a-A Advomee
19)
M tr8iMf Debt (See A-n
LTA;}Utime
T7ta1 Ourrent
109
1446
253
149
253
253
159
253
163.
253
3.69
253
179
253
179
253
179
253
58
58
55
34
25
21
19
16
9
2
368
370
420
452
436
437
438
443
448
441
434
3
38
129
187
61
1
24
102
177
b3
19
B0
160
36
14
58
4
18
103
2
6
84
65
46
27
11
2
24
9
37
122
12
474
(70)
428
(76)
352
(56)
295
(58)
237
180
125
(53)
(55)
(34)
92
(25)
68
(21)
46
(19)
27
(16)
11
(9)
2
(2)
309
340
352
295
237
lO
125
92
68
46
27
11
2
350
(0)
416
62
440
440
440
440
440
440
232
365
494
440
532
440
143
440
445
b40
(43)
589
666
770
866
240
350
478
583
682
805
885
934
982
1,029
1,106
1,210
1,306
1,184
1,299
1,346
1,412
1,484
1,511
1,509
1,533
1,538
1,678
1.3:1
1.S:l
1.9,1
2.3:1
2.4:1
2.5,1
2.8:1
3.1:1
3.4:1
9/91
6/94
4/96
59
59
59
59
59
432
Losg TormoDebt
UDL
UDL
C-I
C-II
C-I
IPC1
oc-ersont
CreOit
Ita}i-n
v1.1
1
2
Sauity
Sh-e Capital
S-rp1lu (Deficit)
Tetal 114,1it/r
TOTALIHIACITISS
958
CAPITAL
AIND
.7:1
Ratio
0,,re,t
Net Leeg Temn Debt,/Nfity
1/
8.
Asner 7 for ae.segstiOne
P-8e.ote
Ininotriel
April 1971
63/37
Ratio
Deprtent
for Coc-hi.
I sesottg
1,071
.9:1
54/.6
cepital.
47/53
38/62
UDLand Cochin I -oon-t
30/70
rewe.ieble
23/77
forecasted
17/83
on basis
12/88
coesletemt
sith
C-ohib
CI.
40o
963
440
440
1,061
1,176
1,403
1,501
1,636
1,765
1,846
1,935
2,0348
3.6,1
3.8,1
4.1,1
4.411
4.7 1
2/98
1/99
O/1Oo
O/100
0/A
V
k.
710
AGAIT
;et
AFGHANISTAN
1S4INDIA
eo-
W7¢
|S
PLANTS
AND PROPOSEDMAJOR FERTILIZER
PRESENT
a-
'-t,^
J
IN SOUTHINDIA
<,~\
/¢:,*.rrte
tor {!r'.
MAJORFERTILIZER PLANTS
Csptd
C_~~~~~~~~~~~~~~~~~~~
Un,LerconsBtOicBO
t
-V
c'-.--/
Propooed
~~~~~~~~~~~~~~~~~~~~~~~0
ggugermIhways
unde, construction
~~~~~Railw.ys Broad
Stote on unadnlerritory boundares
boundcries
.... ~~~~~~~~~~~~~~~~~~~~~~-...Iternat,o
I
'-7
Hi/MACHAL
.V/T-
WEST
|-.--
-----.-
k%~~~~~~~~~~~~~~~~~~~
S'-*,
.5
fJ
n'd KASHMIR
JiAMMU
> >E
*
'1,A
P'RADOSH
Nationo cap,tol
'00
0
200
r
PAKISTAN
Cdqart,a
200
500
40:)
300
MILES
0)
oo
*00
300
600
70o
Boo
PUNA
30
f
tewDelhi
T
_,
;iARYANA
{ 1_ l
I
B
.
T
E
' .
LI rTAR
(
_.IM
~~~~~~~P0'AOESH
~ NEA
'
BHUTAN
BtRRf
E
5
R A 'A S TH A A/
~'
,M
A SAM
Y~~~~
)
X \
-
0
/t
KANDU4
)
IFFO aSi>
X
\.
-
12
-.
v-
-*
i
*
kMrCHA14YA
S
AKISTAN(
t
f
(
i 'i
91ENVGAL
0X
\& ! <BURMA
,0
,
~~~~~
00'
r
AzsARASH RA,f
7.'vft8A
a
7
t
OO4ARAMS
17
i0
<
18
l i5~~~~
f
t >S
7AMAGUNOAML
o1
?07ROMAAMA
9
-)
MORR2J1
-X
V J
ay
,/_,--
k
0/PANSIObS
OROMAN.Dfi
4
B eNnA
Se ngo/
/
A N7f'A
Arobion
ZUARI0005
1
~ ~ ~ ~~~ ~ ~ ~ ~~~~~~~~~~~10y
Y,~~~~~~~~~~~~~~~~~~~
Uhl~
f;"
MANr,AL*
B-gal-
r'
o
'0.
:
MAY
1971
15LAND3
MAY
J.
~~~~~~~~~~~~~~~~~~~~FCT
197100-3
~
~~~~~
~
~~~
~
-Roadsj
h X$
54/D
~~~~~~~~~~~~~~~~~~~~
E5RD- 33,