NFCL announces major capacity expansion

PRESS RELEASE

NFCL announces major capacity expansion

• New facility at Kakinada to enhance Urea production by 1.3 million tones

• The cost of expansion is about Rs.4500 crore

• First project to take up expansion after the Government announced its policy on Fertilizers

Mumbai 11thJanuary 2013: Nagarjuna Fertilizers and Chemicals Limited (NFCL), India's largest private sector and second largest urea player overall by volume has started project work on its 3rd plant at Kakinada in Andhra Pradesh. This new facility will enhance to overall Urea production of NFCL by 1.3 million tones taking the total production capability to 2.9 million tones. NFCL, as part of the EPC contract, has awarded early work order to Technimont of Italy. The cost of expansion is about Rs.4500 crore, which will be financed through an appropriate mix of debt and equity. The brownfield expansion is an addition to NFCL’s existing capacity of about 1.6 million tonnes per annum. The proposed increased quantity is already being marketed by the Company through imports. The project is unique as it is ideally located in a region deficit in urea and also at the pit head of the country's largest natural gas reserves.

The policy provides floor and ceiling price mechanism with an assured return of 12% to 20% on equity. The policy also provides compensation for variation in the cost of input gas.

NFCL is the only large urea producer based in South India. The company will be ideally placed to utilize natural gas for the expanded capacity when there is increased production of natural gas from new fields in the KG basin by existing and new operators. The is a new LNG terminal proposed at Kakinada Port and NFCL would be able to utilize the LNG through this terminal. The present policy provides for priority allocation of natural gas to the fertilizer sector. Since NFCL is located at the pit head, it would have distinct advantages in terms of availability of gas as well as economy in transport cost.

NFCL commissioned its first plant in 1991. The capacity was doubled through commissioning of its second plant in 1997. Both plants were revamped in 2007 resulting in an increase in capacity. Key project approvals, such as environmental approval, allocation of water, contracts for natural gas and are complete and the company expects to be the first in the country to complete its brown field expansion and start production.

For Further Information Contact

Aurum Media

Puja / Daisy/ Janardhan

9820473457/ 9820724179/ 9004631875

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