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G.K. Nair

Kochi , Oct. 25

REVIVAL of the Fertilisers and Chemicals Travancore Ltd (FACT) depends on the State Government's commitment on the issues pending with them.

The Government is yet to come out with a notification reducing sales tax, abolition of entry tax on feed stock, reduction in annual land rental and making power available at affordable tariff to the ailing unit, Mr K. Chandran Pillai, CPI (M) MP and CITU leader who has been pursuing the issue with the Union Fertiliser Ministry, told Business Line.

Though the State Government had been giving indications that it would consider favourably the demands as part of the revival package of the FACT management, it is yet to take it seriously, he said. "If the Government is serious it should act," he added.

According to him, if the State Government comes out with a notification reducing sales tax and abolition of entry tax etc, it would give the impression that it is serious about the issue. Only then can it pursue the Union Government to take a favourable decision on the restructuring proposal, he said.

He said that the Fertiliser Ministry had already circulated a "Note" on FACT to the Finance Ministry and the Planning Commission. The Fertiliser Ministry is understood to have suggested an option that 50 per cent of the total outstanding loan amounting to Rs 574 crore be converted into equity and to write off the balance 50 per cent along with the accumulated interest.

Besides, it has also suggested that the Centre give government guarantee for availing the working capital by the company amounting to Rs 100 crore, he said.

Mr Pillai said that the main argument put forward for writing off is that the FACT had started making losses only after the setting up of the new ammonia plant in 1994 at a total cost of Rs 617 crore with OECF assistance, following the closure of its ammonia tank at the Wellington Island on the orders of the Kerala High Court on a PIL filed by Law Society of India and others.

Restructuring alone would not be sufficient for the revival of the company, he said, adding that the State Government would have to reduce sales tax, land rental and power tariff, besides withdrawing the existing entry tax of 29 per cent on raw materials.

More Stories on : Sick Units | Fertilisers | Kerala

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