Bharat Fertiliser Industries Ltd has entered in to a long-term lease contract with public sector Rashtriya Chemicals and Fertilisers Ltd (Chembur) for contract production of single super phosphate (SSP) and granular SSP fertiliser.
Bhart Fertiliser Industries will manufacture these products under a lease contract with RCF for a period of 5 years. The contract can be extended by an additional 2 years on mutual consent, Bharat Fertiliser Industries said in a filing with the Bombay Stock Exchange (BSE).
Under the contract, RCF will utilise the entire annual SSP fertiliser production capacity of 1,32,000 tonnes and granulated SSP capacity of 99,000 tonnes on conversion basis.
RCF will supply raw materials, including packing material, with notified ratio of raw material conversion, the company said in its filing.
Based on estimates of 75 per cent quantity in granular form and 25 per cent in powder form, the companies' annual turnover under conversion charges will be Rs18.38 crore a year (Rs1.53 crore per month) and may reach a minimum Rs92 crore in 5 years.
The leasing out of fertiliser production by the PSU is aimed at addressing the problem of shortage of phosphatic fertilisers due mainly to a decline in import of DAP as well as lower production of phosphatic fertiliser in the country due to shortage of raw materials.
RCF, which has a network of around 5,000 dealers all over India would undertake the distribution of the entire SSP/GSSP production leased out to Bharat Fertiliser.
RCF has already issued letter of intent and once all administrative clearances are obtained from the Department of Fertiliser, raw material will be supplied before monsoon in order to facilitate supply of SSP/GSSP fertiliser in Maharashtra and other adjoining states during Khariff-2011.