Financial Daily from THE HINDU group of publications
Thursday, Nov 20, 2003
Financial Daily from THE HINDU group of publications Thursday, Nov 20, 2003 |
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Corporate
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Sick Units Kerala agrees to consider FACT recast demands G.K. Nair
Kochi , Nov. 19 THE Kerala Government has agreed to consider the demands made by Fertilisers and Chemicals Travancore Ltd (FACT) in its revival package submitted to the Chief Minister, Mr A.K. Antony, two months ago. This is despite an assurance sought from the Centre that the ailing public sector at nearby Udyogamandal would not be privatised. The restructuring proposals were discussed at a meeting convened by the State Ministers of Finance and Industry with the company's Chairman and Managing Director, Mr Balasubramanian, and senior officials at Thiruvananthapuram on Tuesday. The Ministers had agreed to the concessions demanded by FACT, official sources told Business Line. However, it appeared that the Government wanted as a precondition before taking a final decision an assurance from the Centre that it would not privatise the company. However, it had agreed to discuss it internally and then come out with a decision, the sources said. The company had requested the State Government to grant concessions such as abolition of entry tax, which is costing it Rs 31 crore per annum, and reduction in sales tax amounting to Rs 20 crore. Besides, withdrawal of the recent hike in electricity tariff that had inflicted an additional burden of Rs 10 crore and reduction in the lease rent of Rs 2.5 crore, had been solicited. If these additional burdens were removed, FACT would save Rs 63.5 crore per annum, company sources said. The FACT officials said that they had convinced the Ministers that if the revival package is accepted and implemented, the company would turnaround and make an annual profit of Rs 150 crore to Rs 200 crore, failing which it will have to be closed down. The Centre did not accept the restructuring proposal. The Cabinet Committee on Economic Affairs (CCEA) last month had waived the interest on loans amounting to Rs 80 crore for 2002-03 while granting a one-year moratorium on payment of interest for 2003-04. From 2004-05, the company is allowed to repay the loan along with an interest rate of seven per cent instead of the existing rate of about 14 per cent, which would come to around Rs 580 crore in 10 years. Besides, it has also agreed to allocate funds for implementing the VRS. The restructuring proposal has also sought writing-off of outstanding loan of Rs 497 crore and hitherto accumulated interest burden; and a VRS package to reduce employee strength to 3,000 from around 5,000.
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