`If the resources available with FACT are beneficially used, it could turn around.'

G.K. Nair

Kochi, Oct. 27

Even as the Centre is understood to be moving ahead with a proposal to merge the Fertiliser and Chemicals Travancore Ltd (FACT) either with Rashtriya Chemicals and Fertilisers Ltd (RCF) or Krishak Bharathi Co-operative Ltd (Kribhco), the trade unions of the company have mooted a proposal asking the State Government to takeover the company claiming that its present problems were temporary.

According to them, the company has around 2,500 acres of prime land in its possession and has very good potential to diversify into other income generating activities. Besides, they said, it has the technical expertise and sufficient infrastructure facilities and qualified manpower.

Restructuring Formalities

The Centre had written off half of its accumulated losses and had converted the other half as its equity in the company. Thus, the company's losses have been wiped out. Once the restructuring formalities are over, the Centre would be holding 97 per cent of the total paid up capital of around Rs 640 crore.

The State Government at present has a meagre 1 per cent of it and thus the trade unions have decided to ask the State Government to takeover the company by enhancing its equity.

The unions have suggested that the State owned Kitco Ltd and FACT's FEDO be merged to create a separate entity under the Government making it a viable institution generating substantial revenues.

Since the Supreme Court has cleared the dispute on using the FACT Ammonia tank located at the Willington Island in its favour, the company could renovate it and import ammonia.

The landed cost of imported ammonia would come to $250-$280 a tonne, whereas the cost of indigenously manufactured ammonia at FACT's plant at present comes to $520 a tonne. The unions said that the move would result in a substantial savings.

On the other hand, once the Petronet LNG's terminal at Kochi becomes operational, the FACT could switchover to the cheaper raw material Natural gas from the high cost Naphtha, which is about four times higher than that of LNG.

"If the resources available with the FACT are beneficially utilised by diversifying its activities for income generation, it could turnaround," unions said.


The Union Fertiliser Ministry has recently suggested that FACT be merged either with the RCF or KRIBHCO.

To discuss the suggestion, a meeting of the officials of FACT and Ministries of Fertilisers and Finance was held on October 6 in New Delhi. Based on this, to assess the performance of the company, Dr J.S. Maini, Additional Secretary in the Union Ministry of Finance, visited the FACT on October 17.

(This article was published in the Business Line print edition dated October 28, 2006)
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