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CMD resignation leaves FACT rudderless

BS Reporter  |  Chennai/ Kochi 

In a dramatic move that may seriously hit the new development initiatives of the public sector major Fertilizers and Chemicals Travancore (FACT), its chairman and managing director G C Gopala Pillai tendered his resignation on Saturday.
Talking to mediapersons at the Kochi international airport, he said that his resignation was purely on 'personal ground' and was reluctant to elaborate further.
He added that he would concentrate on management consultancy services based either at Thiruvananthapuram or Kochi.
But sources close to him said that his differences of opinion with Ram Vilas Paswan, minister for fertilisers and chemicals, had forced him to put in his papers.
Gopala Pillai was appointed CMD of FACT in July 2005 while he was serving KINFRA, a state-owned industrial infrastructure development agency, as its managing director. Even his appointment was as unexpected as his resignation last weekend.
As the 17th CMD of the ailing public sector major in Kerala, he had initiated several measures to bail out the company and was largely successful in reducing the losses during his 17-month tenure. FACT registered a loss of Rs 90 crore during H1 of the current fiscal and at a recent press conference, he attributed huge losses to the steep increase in the cost of raw materials and fuel.
FACT is one of the few in similar line of production that uses naphtha as fuel to produce ammonia. Gopala Pillai said that the company could contain the loss at Rs 100 -110 crore by the end of current fiscal and was struggling to turn around despite the revival plan approved by the ministry.
Experts said that the company could not be run profitably unless it switched over to LNG-based production process.
Meanwhile, Gopala Pillai initiated several projects to tide over the grim situation. Sources said that he might have resigned finding no support from the ministry of fertilisers and chemicals to his diversification initiatives.
The company mooted several projects like defence park, tech park and food park with the participation of private sector and also planned to expand the production capacity of caprolacutm from 50,000 tonne to 150,000 tonne.
On August 10, FACT had signed a memorandum of intent (MoI) with Syrian-based Adi Establishment for setting up a joint venture ammonia plant in Egypt.
The company also held several rounds of discussion with the Korean company, Joongang Chemical Industry Limited (JCIL) for setting up a gypsum-based building material unit at Kochi. The next round of discussion with the Korean company has been scheduled for the last week of December.
But the unexpected resignation of Pillai may hamper the ongoing projects, it is learnt.
Meanwhile, a section of the employees of the company said that the resignation was a pressure-building tactic as the PMO might have to intervene and reinstate Pillai. However, the response of the LDF government is also very crucial at this juncture.
Almost all the parties in the state opposed the initiative to disinvest the company during the NDA regime.

First Published: Mon, December 18 2006. 00:00 IST