The Hindu Business Line : FACT revival package to be discussed on Sept 19

THE Board for Reconstruction of Public Sector Enterprises (BRPSE) is expected to take up for discussion the revival package issue of the ailing central public sector, Fertilisers and Chemicals Travancore Ltd (FACT) at its meeting on September 19, sources told Business Line.

The company management has resubmitted its earlier proposal trimming it as desired by the BRPSE, they said. The Fertilisers and Finance ministries are convinced of the future prospects of the company especially after commissioning of the LNG terminal here by the last quarter of 2009.

The company had requested the Centre to write off 50 per cent of the total outstanding loan of Rs 574 crore as on March-end and covert the balance 50 per cent in to equity of the government. Besides, it had sought waiving of Rs 81 crore outstanding towards interest as on March 31 last.

They said that the fertiliser pricing policy coupled with high cost of raw material naphtha had driven the company into the red. Once the revival package is approved and it is put back on the track the company would be able to break even in two years' time, he said.

However, some of the technocrats and employees have expressed pessimistic views on the revival of the company, which they apprehend might not take place due to the opposition by the Left parties in the UPA to the disinvestments of the profit making PSUs.

According to them the revival of the loss making PSUs has to be financed with the funds available from the disinvestments and that is unlikely to happen.

But, given the growing demand for fertilisers in the country in recent months coupled with the drop in production, revival of the FACT without further loss of time would be in the interest of the industry, they claimed. "Production capacity of the fertiliser units has been reduced, when the consumption is growing at five per cent per annum," they pointed out. Add to this the price of caprolactum, one of the products of FACT, has also crossed Rs 1 lakh a tonne. Besides, all the commodities are having good prices signalling the revival of the manufacturing sector, they added.

The FACT officials said that when the ammonia and urea plants were set up the price of naphtha was around Rs 4,000 a tonne.

Where as, it is ruling above Rs 20,000 a tonne now. Besides, they said, the urea plant at Ambalamugal is very old and that needs to be modernised.

"It has tremendous potential for expansion once LNG becomes available to the company."

The terminal, which is going to be the first in the South, would place FACT at a comfortable position.

Modernisation schemes with low investment and easy payback facility would ensure sustained profits.

Besides, new proposals on infrastructure development, expansion etc, would increase further profits, while new ventures in different emerging fields would stabilise the organisation and ensure steady growth, they said.

FACT has now been placed at an advantageous position following the GAIL's decision to set up a downstream petrochemical complex on 220 hectares of land owned by the former.

With the sale proceeds, the ailing public sector would be able to finance its modernisation plans besides liquidating its liabilities.

By that time the LNG terminal would also be in position. Discussions on the sale of the land are on.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page