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FACT seeks govt help, says costly LNG, Raw Materials may force it to close shop

Fertilisers and Chemicals Travancore (FACT) is facing a serious crisis due to shortage of working capital and the PSU may stop functioning if the Centre does not intervene within a week, top officials of the company said on Monday. High prices of LNG and raw materials have been attributed to the crisis and the company is facing a serious cash problem with most of the plants not operational.

Save FACT Action Committee, which has been leading a protest seeking government intervention, said if the revival package approved by the Board for Reconstruction of Public Sector Enterprises (BRPSE) is not cleared immediately, the PSU would be in serious trouble with the net worth of the company having eroded.

The company employs nearly 3,000 people and is the largest fertiliser company in South India. BRPSE had approved a INR 991-crore package, which includes an interest-free loan of INR 300 crore, repayable over the next 10 years with a moratorium of two years.

"Had the above package been approved in time, this crisis could have been averted to a great extent. FACT would have been able to borrow from financial institutions, at least to have a hand-to-mouth existence, thus keeping the plants in operation. Now that the Caprolactam plants have been shut down for almost 20 months and with the intermittent shutdowns of Ammonia plant, the health of all the plants has been adversely affected, K Chandran Pillai, convener of Save FACT Action Committee told reporters.

Shifting of its feedstock from naphtha to the environment friendly LNG has only compounded the problems faced by FACT. The use of LNG is not going to make any positive impact in the financial status of the company unless FACT gets LNG at competitive prices, sources at Save FACT Action Committee. The company has decided to stop production of Ammonia and taking steps to import it as it would be relatively cheaper at the current cost. The company is also demanding supply of LNG to FACT at fair price or compensation for the additional amount spent on the purchase of LNG.

FACT has made a loss of INR 350 crore in FY13 and a loss of INR 180 crore so far in FY14, union sources said.

Source-On Request