The Hindu Business Line : Govt role sought in FACT merger

The State Government's intervention has been sought in the proposed amalgamation of Fertilisers and Chemicals Travancore Ltd (FACT) with either Kribhco or RCF as physical and intellectual assets belonging to FACT would impart strength to the State's industrial development efforts.

The Government, therefore, may consider the takeover of FACT into its fold and a high-power committee be constituted to deliberate on this issue , Dr M.P. Sukumaran Nair, a senior technocrat with FACT, currently on deputation as the Managing Director of Travancore Cochin Chemicals (TCC) Ltd, told Business Line.

Financial crisis

The continuous financial crisis, of late, in the pioneer fertiliser unit seems to have prompted the Department of Fertilizers of the Union Government to consider FACT's integration with either Kribhco or RCF. If the amalgamation process materialises, the whole assets of FACT will belong to them the real estate value which itself is around Rs 5,000 crore, he said.

FACT has a vast pool of technocrats and proven expertise in the industry and project management, who can lead massive industrialisation projects.

It also owns large assets including 2,500 acres. The present crisis will be short-lived for a maximum of three years. When it starts operating on imported ammonia, losses were bound to ease, he said.

LNG terminal

With the coming up of an LNG terminal at Kochi (latest by 2009), FACT will make regular profits of the order of at least Rs 100 crore per annum from current operations alone, he said.

The 900-acre Udyogamandal complex is a industrial holding best suited to house any major projects. The site has a fully developed industrial infrastructure and township. Independent facilities such as training centres, guest house, office complex, power plant, water and power supply, Roads, quarters and utility services, hospital, club, schools, entertainment house are also available.

The 1800-acre (including 200 acre lake) Ambalamedu complex of FACT is adjoining INFOPARK, Kochi and is well connected. The complex may also provide support to intending IT/computer hardware manufacturers. The revenue from such a project will help to meet FACT's losses till the LNG project is commissioned and cheap natural gas is available as a feedstock/fuel, he said.

Assets belonging to FACT also include 4.5 acres in Tiruchi and 2.5 acres of land in Thanjavur , Tamil Nadu, guest houses in Delhi and Mumbai, several marketing/ sales depots in own building at different locations. Besides, there is a 7,000-strong dealer network spread over the southern States and the brand equity of FACT and Factamphos.

It has an internationally acclaimed design and consultancy wing, FEDO, and FEW, engineering works at Palluruthy, a major engineering shop in the South.

Major projects

In fact, a major hurdle for industrial development in Kochi is the difficulty in identifying land for projects. With FACT's land coming to the Government fold this problem will be eased. Major projects can take off soon. There is a major potential for a new world-class ammonia-urea complex (1500 mt per day ammonia and 2400 mt per day urea) at Ambalamedu using natural gas.

The existing vast infrastructure and utilities at Ambalamedu remain redundant and unused now following the closure of the old ammonia and urea complex based on naphtha.

It can be used to save nearly 40 per cent of the total investment of Rs 1,500 crore needed for the project. This will help FACT to competitively operate in the fertiliser market, maintain and continue its growth and increase the turnover by Rs 1,000 crore a year, he said.

Another major venture is the Petrochemical Hub at Kochi. Recently, the Central Committee on Feedstock Policy and Pricing for Petroleum, Chemicals and Petrochemical Investment Regions headed by the Petroleum Secretary, Mr M.S. Srinivasan, identified Kochi along with six other locations as best suited for setting up of petrochemical hubs.

Kochi along with Dibrugarh (Assam) is already identified as site for a petrochemical complex by the Gas Authority of India Ltd with an investment of Rs 7,000 crore in the first stage. The Centre has already approved the Assam Gas cracker complex at Rs 5,460.61 crore.

As regards the Cochin project, a preliminary feasibility of the project has been established and site location is under way. Neighbouring Kochi Refineries Ltd and the proposed LNG terminal at Kochi are expected to provide the necessary feedstock for the petrochemical project. The petrochemical project upon completion will generate a huge employment potential besides paving way for establishing a number of downstream industries.

FACT was operating profitably for 15 years up to 1998 when the turnover was Rs 1,800 crore and employed 9000 people. It is now a sick unit with an annual loss of around Rs 200 crore.

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