Financial Daily from THE HINDU group of publications
Saturday, Apr 20, 2002
Corporate - Sick Units
Industry & Economy - Fertilisers
Days numbered for Fertiliser Corpn units
KOLKATA, April 19
UNCERTAINTY stares nearly 7,000 employees of Fertiliser Corporation of India as the Appellate Authority for Industrial & Financial Reconstruction (AAIFR) has ordered the winding up of all the five units of the public sector fertiliser company.
The order was passed by AAIFR early this month after a hearing of the company's case.
The units are located in Sindri ( Bihar), Gorakhpur (Uttar Pradesh), Talcher (Orissa), Ramagundam (Andhra Pradesh) and Jodhpur (Rajasthan). While the first four units produce fertilisers, the last one runs gypsum mines.
The Sindri unit, the country's first fertiliser factory, is a producing unit, operating at a high capacity, but the other three units are closed Gorakhpur, since June 1990, Talcher and Ramagundam, both coal-based fertiliser factories, since April 1999.
However, in the case of Talcher and Ramagundam units, the management prefers to use the expression "under preservation" instead of closure, it is learnt. The Jodhpur unit operates gypsum mines and has been posting profits since 1999, it is learnt.
FCI has an accumulated loss of about Rs 856 crore, of which Rs 638 crore alone is the interest burden.
Meanwhile, AAIFR hearing of the Hindustan Fertiliser Corporation's units is due on April 26. HFC has now three units two located at Haldia and Durgapur in West Bengal and one in Barauni (Bihar). The unit located in Namrup (Assam) has been delinked from HFC and reconstituted into a separate public sector company, Brahmaputra Valley Fertiliser Company.
The Haldia unit has remained closed since 1986, Durgapur since 1997 and Barauni since 2000. However, unlike other closed public sector fertiliser companies, HFC's Haldia unit has some earnings of its own about Rs 18 to 20 crore annually. This has been possible because of the successful leasing out of the utilities to neighbouring factories such as Indian Oil Corporation, Hindustan Lever and others.
The income so earned has been enough to pay for the wages and salaries of those still on the company's payroll. Right now, the total workforce of the Haldia unit is a little over 1,300.
In 1995, the Union Government invited bids from private firms interested in reviving all the four units of HFC. Only four firms showed interest and that too only in the Haldia unit. None of the proposals was acceptable to the Government. Interestingly, no proposal for revival was received in respect of other HFC units.
The local management of the Haldia unit as well as the workers and officers all seem convinced that the unit could still be revived. They even submitted a Rs 100-crore proposal to the Government to produce NPK at the rate of 1,100 tonnes per day. The Government has not yet responded to the proposal presumably because it is opposed to making any further investment in the unit.
The Government's stand, according to the unions, is untenable because even during the period of closure in past the 15/16 years the unit continued to earn money. Part of the earnings, it is felt, could be used for revival.
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