The Hindu Business Line : Survival of TCC hinges on Kerala Govt decision on loans

THE survival of the State-owned Travancore Cochin Chemicals Ltd (TCC) now seems to depend on a positive decision by the State Government either to write off Rs 47 crore loan or covert it into its equity as heavy interest burden is eating into the company's profits.

Though the Government had waived payment of service charges besides rolling back the lease rental and making available power at a concessional rate, the company's demand for converting the loan into equity or writing off is still pending decision, Mr N.R. Subramanian, Managing Director, TCC, told Business Line on Tuesday.

Unless the Government takes a positive decision on one of these options, its survival would be difficult, he said.

The company at nearby Eloor, which has been struggling to get out of the red for the past several years due to heavy debt burden, had requested the State Government to convert its loan liability into equity, he said.

Attributing the poor financial performance to the loan liability of Rs 47 crore to the Kerala Infrastructure Revitalisation Fund (KIRF) at 12 per cent, he said the company has to dole out Rs 6.5 crore for debt servicing alone per annum.

"Once this loan is converted into equity, no concessions would be needed for running the company profitably", he claimed. In fact, he said, the company is making a cash profit every month but for the interest outgo it is in the red.

Closure of Mavoor Rayons, South India Viscose and Travancore Rayons Ltd (TRL) has resulted in the company loosing its basic market i.e., 40 per cent of its caustic soda capacity, he said.

The drop in demand is made good by producing caustic soda flakes and marketing it in other markets such as Mumbai, he said.

However, for its by-products hydrochloric acid and chlorine, there is sufficient market in the State itself as the units such as the Kerala Minerals and Metals, Cochin Minerals and Rutiles Ltd, Hindustan Newsprint Ltd etc. are the major buyers.

Mr Subramanian said that for the user companies also the survival of TCC was necessary as the transportation cost of these hazardous chemicals from outside the State was higher than the material cost.

To reduce the cost of production, TCC had already closed down its mercury plant and expanded the membrane cell unit raising the capacity to 150 tonne a day involving an investment of Rs 22 crore.

Shifting to this technology from the power-intensive mercury cell technology has helped the company to make saving of 30 million units of power per annum and a cash saving of Rs 1.05 crore, he said.

Around 50 per cent of the turn over of the company viz., Rs 45 crore goes towards power cost per annum, he said.

The company had dropped its proposed captive power plant project in Kannur district, as the cost of the power generated here would come to Rs 3.03 per unit.

The final cost of the project would come to over Rs 70 crore for generating 38 million units, which would be around 30 per cent of its requirement, he pointed out.

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