The Hindu Business Line : Fund board offers to restructure TCC loan

TO help the State-owned Travancore Cochin Chemicals Ltd (TCC) at nearby Eloor make a turnaround, Kerala Industrial Revitalisation Fund Board (KIRFB) has recommended a reduction in the interest rate on its loan of Rs 47 crore besides raising the repayment period to 10 years.

The company had submitted a restructuring proposal to the Government two years ago to extricate itself from the red.

In its proposal, the TCC management had argued, "If the loan is converted into equity or a soft loan is provided to liquidate the high cost loan, then the company could make a turnaround."

Now, KIRFB has recommended the reduction in the interest rate from 12 per cent to six per cent and spreading the repayment period to 10 years. The recommendation has been sent to the Government for obtaining the Cabinet's approval, Mr N. R. Subramanian, Managing Director, TCC, told Business Line on Tuesday.

TCC, he said, is doling out Rs 6 crore towards interest every year on the Rs 47 crore-loan availed for setting up a membrane plant. If the restructuring proposal were implemented, the company would have posted net profits.

He said that during the first nine months of this fiscal, the company had made a cash profit of Rs 11 crore and a net profit of Rs 3.5 crore even after servicing the debt and paying the electricity charges at normal rates.

The production has gone up to 38,000 tonnes and the entire quantity has been sold out, he said.

Given the stable demand from the consumer industries in Kerala such as Kerala Minerals and Metals Ltd, Hindustan Newsprint Ltd, FACT and IRE, the production this fiscal would touch 52,000 tonnes, Mr Subramanian said. TCC hopes to make a cash profit of Rs 14 crore and a net profit of Rs 5 crore by March 31, he added.

The unit's capacity is getting expanded to 175 tonnes per day from the present 150 tonnes and it would be completed by April/May at a cost of Rs 22 crore, he said.

As the consumer industries in the captive market in the State are under expansion, the TCC capacity also needs to be expanded correspondingly to meet their future demand.

The only constraint at present is the high cost of transporting raw materials. TCC is currently bringing salt from Gujarat for which it has to shoulder an additional burden of Rs 2.5 crore a year towards transportation cost.

The un-seasonal rains in the Tuticorin area, where TCC used to procure salt, has adversely affected its raw material supply. In fact, following the disruption after the tsunami, it has been procuring salt from Gujarat, he said.

TheTCC won national award for energy saving in the chlor-alkali sector last year.