The Hindu Business Line : FACT charts diversification plans

Aimed at survival and growth, the public sector FACT (Fertilisers and Chemicals Travancore Ltd) has drawn up several diversification plans in joint venture projects with private participation, which include setting up a food park, high-tech park and defence park.

The company's contribution for these projects involving an investment of over Rs 3,500 crore will be in the form of land and other infrastructure facilities available with it, Dr G.C. Gopala Pillai, Chairman and Managing Director, said at a press meet here on Saturday.

The company, he said, has plans to set up a high-tech park under the SEZ rules through public-private partnership considering the potential of Kochi for IT and IT-enabled industry. It has earmarked 500 acres of land at its Ambalamedu division for setting up this facility.

The food park is conceived as a special economic zone for processing food for export to foreign countries.

Regarding defence park, Mr Pillai said that it is now in a proposal stage as the Defence Ministry is encouraging private participation in defence production.

A preliminary study revealed that large industrial groups have aligned their focus on defence production. FACT can provide 100 acres of land for setting up this venture. Moreover, the Master General of Ordinance has written a letter to FACT saying that they are examining the proposal, Dr Pillai said.

Besides diversification programmes, the company has also initiated various other short-term, medium-term and long-term expansion plans for the future benefit of the company. The short-term plan is to maximise production and productivity, while the medium-term plan includes efforts for sustaining growth and achieving profitability.

During the current financial year up to October, he pointed out that the company is burdened with an additional cost of Rs 91 crore by way of rise in input costs, but the subsidy benefit is much less than that. He suggested that a total review is needed on the parameters adopted for deciding subsidy. High increase in the cost of production due to skyrocketing prices of naphtha and other petroleum products is not being compensated by way of subsidy.

Subsidy based on making cost

Since natural gas is expected at Kochi by 2009, FACT has submitted certain proposals before the Government stating that the subsidy should be based on the actual cost of production until such time LNG is made available. It also urged the Government to make naphtha available at subsidised rate on par with cost of LNG to provide a level playing field for FACT.

The market price of naphtha is almost three times higher than that of gas and all the fertiliser companies in South India are facing serious crisis due to the non-availability of natural gas, he added.

The company also submitted proposals suggesting adequate changes be made in the pricing concession scheme such as inclusion of sulphur for subsidy for Factamfos, change in the subsidy pattern for complex fertilisers and bringing ammonium sulphate under subsidy.

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