FACT revival plan approved

Fertilisers and Chemicals Travancore Limited (FACT), the oldest public sector undertaking of Kerala, has a sigh of relief now as the Bureau of re-construction for Public Sector Enterprises (BRPSE) has approved the revival package of the fertiliser giant which is in red since 1998 -99.

A top official of the company told Business Standard that the Union Cabinet would consider the proposals and final clearance is expected by next month. This will open a new era in the history of the company which commenced operation way back in 1944.

According to the proposals cleared by BRPSE, the total outstanding loan, which comes to the tune of Rs 573 crore would be partly converted into share holding of the government. It has been proposed that 50 per cent would be converted as capital and other half would be waived off.

But there is another proposal under consideration now by which 50 per cent of the loan outstanding would be converted as capital on preferential allotment basis instead of writing off. It has been reported that the government is not in favour of writing off loans.

Sources at FACT said that the company had so far not received an official communication from BRPSE. FACT, which is in deep crisis, had submitted the revival package a year ago.

FACT had also requested for Centre's guarantee for availing fresh loan to the tune of Rs 100 crore. But it was not granted. BRPSE has also proposed to write off the interest accrued, amounting to Rs 81 crore. The proposals approved by BRPSE have been accepted by the employees, trade unions and political parties.

FACT has been facing closure for the last few years as the loss has accumulated to Rs 393 crore and the crisis has aggravated recently due to poor demand and rising production cost.

The company had been demanding for a price restructuring in the light of the changed economic scenario, but the government is yet to concede.

FACT produces ammonia in its own plant, uses naptha as fuel, which is much costlier and can not compete in the domestic market as imported ammonia is very cheaper.

The basic cause of the crisis was the ammonia plant which sabotaged the prospects of the company to a very large extent.