It is rightly said that you need to take one step backwards if you want to stride forward and this adage equally applied to GSFC and the phase between 1999-2002 was a phase of one step backwards which in fact facilitated endless strides forward. GSFC never ever then looked back. The period between 1999 to 2001 was a phase where it was veering on the brink of a cash crunch. This phase of GSFC was attributed to many reasons. To name a few are increased energy costs, technical hiccups and delayed commissioning of new Ammonia plant after a gestation period of eight years and resultant increased project cost, excess outflow of interest etc. This new Ammonia plant continued with technical snags which could stabilise only by end of 2003. The liquidity problems further compounded due to expansion of DAP capacity at Sikka (1999-2003) which required infusion of Rs. 180 Crores. The Government of India also recovered subsidy amounting to Rs. 375 Crores. The drought during this period further depressed prices and demand for all products. There was also a shortage of gas that resulted into use of costly LSHS and Naphtha. The margins in Melamine and Caprolactam, GSFC's blue chip products, were low in this period due to depressed industrial demand internationally.
The turnaround story of the Company began from FY 2003-2004. Under able leadership and timely intervention of Hon. Chief Minister Shri Narendra Modi in taking certain bold policy decisions, the company could work on the strategies to enhance its productivity, bring down costs through technical innovations and improved management information systems. The revival measures were fully supported by Govt. of Gujarat and the Company was given complete autonomy to roll back to the track. Finally the major factors that brought company out of red were improvement in the Operational Efficiency, Reducing Cost of Sales, Regenerating Confidence in Suppliers & Customers, Moral boosting of employees, strategizing foray in the global market, consolidating through further Expansions, focusing on ideal product mix to insulate performance from downtrends etc.
Govt. of Gujarat provided the proactive support to GSFC, which brought out a scheme of deferred sales tax of an amount up to Rs. 45 Crores per year for five years, thus improving the Company's cash flow position. Another important breakthrough was the increased availability of natural gas in Gujarat, from GAIL, GSPC and Gujarat Gas, which substituted costly Naphtha and LSHS.
All these measures finally resulted into GSFC becoming a financially strong, profitable and stable Company. Coming out of Corporate Debt Restructuring (CDR), GSFC approached the CDR Cell, this time to accelerate the debt repayment. The debt, which was scheduled to be completely paid by 2013, was re-paid in 2006.
As a step towards backward integration as well as a part of global trotting for feed-stocks has participated in a joint venture in Tunisia viz. Tunisian Indian Fertilizers S.A. (TIFFERT), this would ensure the consistent supply 1, 80,000 TPA of additional Phosphoric Acid per annum required for the production of DAP. GSFC has also acquired a strategic stake in M/s Karnalyte Resources Incorporation in Canada. This secures availability of Potash for the Company in long run.
The Company during the period of past half decade has entered the Second Green Revolution phase by developing alternative energy generation facilities and initiating the spread of drip irrigation systems in Gujarat. The Company has provided valuable services to farmers by way of agricultural inputs and marketing support.
Entering the second green revolution, GSFC continued its role of encouraging agricultural growth by developing and supplying Bio-Fertilizers and Bio-technology products to the farmers under one roof. The Company has also advanced Tissue Culture facilities to support horticulture and other crops. In order to provide farmers with high-tech inputs, GSFC has formed 100% subsidiary GSFC Agrotech Limited for research and production of liquid bio-fertilizers, Plant Growth Promoters-Sardar Amin Granules/liquid, Tissue culture and Seeds.
GSFC also promoted Gujarat Green Revolution Company Limited (GGRC) to promote drip-irrigation and sprinkler irrigation systems amongst farmers so as to optimize the usage of water and implementation/monitoring the Government subsidy scheme in co-ordination with GSFC.