The Hindu Business Line : FACT submits revival proposal to Kerala CM

THE ailing Fertilisers and Chemicals Travancore Ltd (FACT) has submitted a detailed revival proposal to the KeralaChief Minister soliciting the State's support by way of granting concessions apart from persuading the Union Government to expedite its restructuring and stop the disinvestment of the central PSU.

Speaking to Business Line, Mr Balasubramanian, Chairman and Managing Director, FACT, said that the Chief Minister might have to take up the issue of restructuring the company and stoppage of disinvestment "at very senior levels at the Centre".

Even the Chief Minister might have to think of taking these issues with the Prime Minister through the leader of opposition, he opined.

He said that efforts of the cooperative movement to revive the company might not yield positive results. The only possible way to get the company back on the profit-making track is by implementing the proposal now submitted to the Chief Minister.

Mr Subramanian said, "I am confident that if the proposals were accepted and implemented in time the company would make a turnaround and an annual profit of Rs 150 crore in three years."

He said that the present crisis emanated from heavy cash loss and liquidity crunch, drop in sales of fertilisers, severe glut in caprolactum market, and unprecedented increase in the cost of all input raw materials and utilities. The present cash loss comes to Rs 66 crore. The annual net loss of current operations of Rs 200 crore included impact of increased taxation by the State Government amounting to Rs 60 crore, doling out of interest, capital instalment return to the Union Government of loan for ammonia plant and depreciation of Rs 140 crore per annum, apart from infrastructural bottlenecks to economically source costly raw materials.

He said the company had submitted a restructuring proposal to the Centre seeking writing off of outstanding loan of Rs 497 crore (ammonia plant Rs 378 crore plus Rs 110 crore) and hitherto accumulated interest burden, and a VRS package to reduce employee strength to 3,000 from around 5,000 at present.

The State Government has been requested to grant concessions such as abolition of entry, which is costing the company Rs 31 crore per annum and reduction in sales tax amounting to Rs 20 crore now. Besides, withdrawal of recent hike in electricity tariff that had inflicted an additional burden of Rs 10 crore and reduction in the lease rent of Rs 2.5 crore, had been solicited, he said. "If these additional burdens are removed the company would make a saving of Rs 63.5 crore per annum," he pointed out.

It is understood that the loose talks such as that the cooperative sector has enough funds to back up the revival plans being contemplated by this sector seem to have resulted in a change of attitude in the Union Finance Ministry on the restructuring plans including writing off of outstanding loans.

On the other hand, the conditions put forward by the IFFCO are also said to be rigid for the cooperative sector to accommodate.

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