Zuari Agro Chemicals Ltd said its board has given in-principle approval for sale of a fertiliser plant at Goa to its subsidiary Paradeep Phosphates Ltd at an agreed valuation of $280 million.

 

Besides, it approved investment in the share capital of its subsidiary Zuari Farmhub Ltd by Morocco-based OCP Group and execution of an agreement in this regard.

 

The company said its liquidity position had deteriorated during the last fiscal due to delay in receipt of subsidy from the government and drought-like situation in key marketing areas. This had led to elongation of the working capital cycle.

 

That apart, the company was unable to pass on the increase in prices of raw materials to farmers, which contributed to the cash flow mismatch and reduced financial flexibility of the company.

 

These factors adversely impacted the company's cash flows and debt positions, and led to delay in repayment of loans on contractual maturity date, recall of loans from two lenders due to covenant breach and prolonged shutdown of plants for different period during the year, it added.

 

As a result, the company has a net current liability position of Rs 1,506.22 crore as on March 31, 2020.

 

On the impact of COVID-19 crisis on business, the company said its operations have not been affected significantly despite some issues relating to non-availability of labour and supply chain disruptions.

 

The company has been able to operate its plants at normal levels by mobilising critical work force and adopting stringent social distancing, safety measures and guidelines issued in this regard, it said.

 

"The impact assessment of COVID-19 is a continuing process given the uncertainties associated with its nature and duration.

 

"The impact of COVID-19 may be different from that estimated as at the date of approval of these financial statements and the company will continue to monitor any material changes to future economic conditions," it added.

 

On the financial performance, the company's consolidated net loss widened to Rs 304.60 crore during the fourth quarter of 2019-20 on poor sales as against net loss of Rs 255.17 crore during the corresponding quarter previous year. Net income declined to Rs 1,031.93 crore from Rs 2,001.30 crore in the corresponding period of the preceding fiscal. Expenses remained lower at Rs 1,266.73 crore as against Rs 2,154.90 crore earlier.

 

For the full year, the company reported net loss of Rs 801.96 crore in 2020 as against net loss of Rs 288.38 crore previous year. The sales also declined 38.08% to Rs 5017.15 crore as against Rs 8102.90 crore in 2019.

 

The consolidated results include those of its joint ventures and subsidiaries such as Mangalore Chemicals and Fertilisers Ltd (MCFL), Adventz Trading DMCC (ATD), Zuari Farmhub Ltd, Zuari Maroc Phosphates, Paradeep Phosphates Ltd and Zuari Yoma Agri Solutions.