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G.K. Nair

Kochi , Dec. 31

UNCERTAINTY prevails over the revival of the ailing central public sector, Fertilisers and Chemicals Travancore Ltd (FACT) as a decision on how to settle the outstanding loans amounting to Rs 497.2 crore, either by way of writing off or converting it into equity, is still pending.

It is understood that the Union Ministry of Fertiliser and Chemicals has been showing a favourable attitude. But, a decision on this has to emanate from the Finance Ministry.

However, Mr K. Chandran Pillai, MP and member of the Consultative Committee of the Fertilisers and Chemicals Ministry told Business Line: "Uncertainty is there about the revival till the capital loan of Rs 497.2 crore is either converted into equity or written off."

He said that the Union Minister for Fertilisers and Chemicals, Mr Sukh Dev Singh Dhindsa, had agreed to hold a meeting with all parties concerned during his visit to Kerala some time before January 15.

He said that it was essential for the company to take up effective and competitive revamping schemes, which would involve an investment of about Rs 300 crore and for that the Centre may have to provide the funds as loan at 7 per cent interest, he said.

Meanwhile, the State Government should also have to seriously consider the demands of the company in its revival package from the State Government, he said. Once the capital restructuring is done then revamping of the company could be undertaken along with manpower rationalisation and maximum utilisation of the in-house facility, he said.

The company had submitted a restructuring proposal to the Centre seeking writing off 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.

However, contrary to expectations the Union Government had taken a lukewarm response to the proposal. The Cabinet Committee on Economic Affairs (CCEA) had waived the interest on loans amounting to Rs 80 crore for 2002-03 while granting a one-year moratorium on payment of interest for 2003-04.

From 2004-05, the company has been allowed to repay the loan along with interest at 7 per cent instead of the existing rate of about 14 per cent, which would come to around Rs 580 crore in 10 years. It would provide a relief of Rs 88 crore, a senior management official said.

For implementing the VRS the Government had extended a loan of Rs 60 crore at 7 per cent interest.

Mr Balasubramanian, Chairman and Managing Director, told Business Line that the present crisis emanated from heavy cash loss and liquidity crunch, drop in sales of fertilisers, severe glut in caprolactum market, and unprece- dented increase in the cost of all input raw materials and utilities. The present cash loss comes to Rs 66 crore.

More Stories on : Sick Units | Fertilisers | Kerala

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