The Hindu Business Line : A hard FACT

LAST week saw a change of guard at what many still regard as the classical icon of the industrial landscape of Kerala - the Fertilisers and Chemicals Travancore Ltd (FACT), incorporated in 1943 and set up as India's first large-scale fertiliser plant on the banks of the River Periyar at Udyogamandal, near Alwaye, not far from Ernakulam, Kerala's commercial capital.

Dr G.C. Gopala Pillai, former Managing Director of the Kerala Industrial Infrastructure Development Corporation (Kinfra), took over as Managing Director of FACT. He took charge from Mr S. Balan, Chairman and Managing Director of Rashtriya Chemicals and Fertilisers Ltd, Mumbai, who had been given additional responsibility for the ailing public sector company at Udyogamandal.

Dr Pillai inherits an enviable chair alright - one that has been warmed by no less legendary a figure in Kerala management circles than M.K.K. Nair, who, as the pioneering Chairman of FACT, saw the company through its infancy. Those, however, were the gloriously innocent days of yore, when FACT existed in a controlled economy, cocooned from the vicious forces of an unfettered market. Today no one would really envy Dr Pillai his posting nor wish to trade chairs with him, for FACT is precariously poised.

Initially promoted by the Seshasayee Brothers, FACT became a public sector company in 1960 and by 1962 the Government of India had become the major shareholder. FACT is India's largest manufacturer of ammonium phosphate sulphate (a complex phosphatic fertiliser), which it sells under the brand name `Factomphos'. FACT has backward-integrated plants for the production of sulphuric acid, phosphoric acid and ammonia.

The company also manufactures nitrogenous fertilisers, namely, urea and ammonium sulphate. It is also one of the only two Indian manufacturers of caprolactam, a petrochemical product, the other being the Gujarat State Fertlizers and Chemicals Limited, with which it shares the domestic caprolactam market equally.

However, these are faded laurels. For the past decade or so, the company's financial performance has been badly affected primarily on account of high-interest loans, increasing raw material prices, competition from imports, and inept marketing. Perhaps believing in the long-term sustainability of the company, the Government of India provided financial assistance in terms of waiver of outstanding interest amounting to almost Rs 227 crore during the fiscal year ended 31 March 2002.

But the company's troubles are far from over. Recently it entered into an unsavoury spat with Kochi Refineries Ltd (KRL) over dues for raw material supplied. FACT could resume operations only when KRL agreed to accept post-dated cheques for the due amount of Rs103 crore. Earlier, on 20 February, FACT had shut down all its plants, citing maintenance schedules. However, observers believe that the probable cause for the shutdown was shortage of working capital. The closure of the plants meant a record loss for FACT of approximately Rs 45 crore in March, taking the total loss to around Rs 280 crore. Rumours of a layoff have also terrified employees.

Dr Pillai thus has his job cut out for him. His immediate task is to get the Centre's approval for FACT's revival package. And then will come the more difficult goal - the actual revival itself. To do so, Dr Pillai will have to dig deep into his repertoire of managerial skills. And these are not inconsiderable. The Kolkata-based National Institute of Personnel Management recently conferred its `Life-time Achievement Award' on him.

As a young student of social welfare and personnel management at Loyola College, Trivandrum, he must have visited Udyogamandal several times as part of his field trips to understand how companies are run and how negotiations are made with trade unions. This time, though, a new generation of students are waiting to learn from him how to turn around a sick giant.

The writer can be contacted at kgkumar@gmail.com

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

Stories in this Section
Companies Act revamp will bring down legal provisions: Gupta

IOC, IBP boards to decide on swap ratio for proposed merger

BRPL merger: Merchant banker soon

A hard FACT

General Motors eyeing call centre, BPO cos to boost sales

Amul targets Rs 150-crore export turnover

Indian Oiltanking plans terminal facility in South

New chief for Vizag HPCL