FACT urgently needs Rs 500 cr to survive

It has to pay its debts and to maintain the over draft facility

Public sector fertiliser company Fertilisers and Chemicals Travancore (FACT) is in a critical financial position as it urgently requires roughly Rs 500 crore to pay off its debts and maintain the overdraft facility, by this month end.

Sources close to the company told Business Standard that the company has to pay Rs 245 crore to BPCL-Kochi Refinery towards the price of naphtha and furnace oil and Rs 120 crore to GAIL as the cost of LNG. The company has already availed of Rs 850 crore, the maximum permissible  limit, as overdraft from banks and a large sum is needed for re-payment to maintain this facility in the next financial year.

The company is now sinking as the financial crisis is so serious, and unless we get financial support there will be a stoppage of production. The plants of the company have been closed for their annual maintenance and re-start will not be possible unless the financial issues are settled immediately, he said.

The sale of products will be active only by the beginning of the next monsoon season and sales revenue will pick up only then, he added.  

Meanwhile, the stalemate over the rehabilitation package from the Union government is continuing as finance minister is yet to cleat it. The ministry of Fertilisers and Chemicals has to submit the package for the approval of the Cabinet Committee on Economic Affairs (CCEA), once the finance minister approves it.

But the package is now facing an in ordinate delay in the office of the Finance minister. So there is a serious apprehension over the plight of the package as election announcement is around the corner. Both the top brass and the workers of the company are optimistic as there is strong political pressure from Kerala on the Finance minister.

“So we hope the minister will sign it soon. We don’t need cabinet approval for this, only the CCEA approval is needed. We hope we will get all clearances this week itself, he said. If this is not approved before the election announcement, the condition of FACT will be critical as the package will be cleared only after the elections.

This will take much time as the new government has to study the package afresh. So it may prolong to June or July. The company can not withstand such a condition under the present financial position, he added.

Board for Reconstruction of Public Sector Enterprises (BRPSE) had approved the Rs 991 crore package last December and Ministry of Fertilisers and Chemicals had proposed this in January.  Five ministries and expenditure secretary had already cleared this. Now this needs the clearance of the finance minister.

Meanwhile, Save FACT Action Committee, which is now on an indefinite hunger strike, has decided to intensify their strike further.