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| Ratan Tata: India cannot be immune to recession
Last Updated: 2008-08-05 10:36:21
Mumbai: India cannot be immune to recession which has hit the US and Europe, said Ratan Tata, Chairman, Tata Chemicals Ltd.
Answering shareholders’ queries at the 69th Annual General Meeting, Tata expressed concern over rising input cost and said, “Monsoon has been good so far theoretically, but I do not believe it and have my reservations.”
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While welcoming the government fertiliser policy, Tata informed the shareholders that the fertiliser business is fully controlled by the government. “Fertiliser business depends on the government subsidy which is paid after 4-5 months after the sale is executed. Now, it is even paid through bonds. The time lag creates liquidity constraints and affects the bottomline,” he said.
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Homi R Khusrokhan, Managing Director, Tata Chemicals, said the new fertiliser policy pegs subsidy to the international prices of key ingredients phosphorus and potassium.
The government currently subsidises fertiliser costs by fixing retail prices. It then pays manufacturers the difference between the sale and production prices, plus a reasonable profit. To arrive at this, the government looks at the actual cost of production while determining the price at which the producer sells to the government.
Bio-fuel foray
To tide over the crisis, Tata Chemicals is now venturing into new areas, especially bio-fuel business, he said.
The company will set up 30 kilo litres a day bio-ethanol facility at Nanded in Maharashtra with an investment of Rs 50 crore. Production is expected to start in December. Arrangements are being made with farmers in districts in and around Nanded for growing sweet sorghum. Trial cultivation has so far been very successful.
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The company has also undertaken field research on Jatropha, a non-edible tree crop for bio-diesel production. The company has set up a research farm in Aurangabad and has started varietal trials for developing a package of practice. It has also set up multi-location trials for jatropha in Gujarat, Maharashtra, Tamil Nadu and Andhra Pradesh.
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