Indo Gulf Fertilisers surged on Monday on the back of strong FY 2002-03 results of the company.

The scrip of the fertilisers major leaped by 12.4% at Rs 41.70 on the BSE in early-afternoon trades. Earlier in the session, it rallied by as much as 19.9% to a high of Rs 44.50. 350,000 shares changed hands on the counter. The scrip of the restructured company scaled to a new high today after it was listed on the BSE on 27 March 2003. It had made a debut at Rs 33.10.

Indo Gulf Fertilisers IGFL) was formed as a result of restructuring within the A. V. Birla Group, whereby the copper business of erstwhile Indo Gulf Corporation was transferred to Hindalco Industries. The fertiliser business of IGCL was transferred to IGFL.

IGFL said it has achieved a turnover of Rs. 6,752.10 crore (Rs 67.52 billion) and a net profit of Rs. 1,728 crore (Rs 17.28 billion) for FY 2002-03. There were no comparable results for the previous year due to the restructuring carried out by the company.

Operational efficiencies, stringent cost control and better realisation in the market place on the back of a strong brand equity, has enhanced its profitability, IGFL said in a release.

The company's production of urea at 8.65 lakh MT reflects a 100% capacity utilisation, in line with the assessed capacity determined by the government. It marketed 8.67 lakh MT of urea. IGFL is amongst the most cost-efficient producers of urea.

The government's long-term fertiliser policy, which has replaced the unit based RPS (Retention Price Scheme) with the Group Concession Scheme, effective 1st April 2003, shall have no major impact on the company during FY 2003-04, as it favours cost-efficient units, IGFL said.

However, the dividend of Rs 2.60 per share was quite disappointing, given the fact that IGFL has strong cash reserves.

IGLF has inherited only Rs 35 crore of debt from IGCL, resulting into a debt-equity ratio of just 0.11 as against the industry average of more than 1. This leaves it with considerable room to leverage further to raise funds while bidding for state-run fertiliser companies that would be put on the block, analysts said.