Hindustan Fertiliser Gets Nod To Sell Ailing Units Disposal

The Board for Industrial & Financial Reconstruction (BIFR) has decided to dispose of the unviable Durgapur and Barauni units of ailing public sector Hindustan Fertiliser Corporation Ltd (HFCL) and decided to sale assets of the Haldia unit.

Stating that the HFCL has not been able to submit an acceptable proposal till date, a two member bench of BIFR said that the Board could straightway proceed with the winding up of the company.

The bench also said, the latest status note submitted to it by the operating agency (OA), ICICI, in January 2000 indicated that no concrete proposal to revive the company has emerged after the rehabilitation scheme was prepared by OA in 1997 envisaging a cost of Rs 1,039 crore.

 

According to HFCL chairman & managing director (CMD) J L Nehru, the accumulated loss of the company has gone up to Rs 3,628 crore as per the audited balance sheet of March 31, 1999.

However, the number of employee in the company has gone down to 7,800 from 9,900 in 1992, Nehru said. The voluntary retirement scheme (VRS), which was in force from 1994, had to be suspended since last seven months for want of funds, he said.

The basic reason for all the units running into losses right from inception were deficencies in technology and installation of unproven machinery containing more indigenous components, according to Nehru.A techno-economic viability study (TEVS), conducted by Fact Engineering & Design Organisation (FEDO) in 1996, recommended that the units could be revived at an overall cost of Rs 1,039 crore.

According to Nehru, the situation has further deteriorated after 1996 due to continued cash losses, obsolescence of technology resulting in higher usage of inputs and energy and very long hours taken in shut down and start up of plants etc. "Due to these factors, Barauni and Durgapur units are no longer considered technically or economically viable," he said.

The revival of Namrup unit was undertaken by the government in October 1997 with a fund of Rs 350 crore. The government is investing Rs 313 crore to revamp the three plants at Namrup and the balance amount of Rs 37 crore to meet the cash loss during the period of revamp, the government representative Ravi Mathur told BIFR.

According to Mathur, the revamp of Namrup-I and Namrup-III will be completeted by May 2001 and the estimated time for completion of Namrup-II is September 2001.

Stating that the time limit for finalisation of rehabilitation packages by the BIFR was 180 days, the bench said, "Ideally, BIFR would prefer all the units of sick company (HFCL) to be

revived, but in circumstances where more than enough time and opportunity had been

allowed without success, the next logical step of hiving off of

unviable units for the revival of the rest of the company had to be followed."

With regard to Haldia unit, the bench observed that "since there was no scope for revival of the unit at all, making attempts to hiving off would be a meaningless exercise and a more appropriate course would be to proceed with sale of assets of that unit straightway."