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FACT clarifies

K. Karunakaran

Dy. General Manager,

Fertilisers and Chemicals Travancore Ltd

This is with reference to the news report titled ``FACT losses mounting'' (Business Line, February 8). FACT earned a net profit of Rs 1.75 crore for January 2001.

The estimated loss for the current year will be less than Rs 90 crore, while the cost of petroleum products is Rs 206 crore more than last year. Even freight is Rs 15 crore more than last year. The loss in the year 1999-2000 was Rs 39.80 crore whereas th e increase in the cost of petroleum products as raw materials and fuel was Rs 110 crore more than the previous year. Freight was higher by Rs 15 crore. The loss in the year 1998-99 was Rs 48 crore.

The investment of Rs 638 crore in the new ammonia plant involves Rs 65 crore interest, Rs 35 crore depreciation and Rs 10 crore as conversion cost. Thus, Rs 110 crore per year has been added to the cost of production of the company. Whereas the loss was Rs 40 crore despite the Rs 110 crore extra expenses. There has been a saving of Rs 195 crore by way of cost reduction by input supplies and all time high capacity utilisation of plants leading to extra realisation of Rs 50 crore.

If the company has spent Rs 8,000 per tonne on new ammonia production, extra expenditure in a year will be Rs 208 crore on 2.60 lakh tonnes. But the loss is only Rs 39.80 crore. The transportation cost for ammonia is only Rs 22 crore and not Rs 50 crore as reported.

There is a feeling that FACT has not gone for joint ventures abroad. Joint ventures require funds which FACT does not have at present.

The 900 TPD sulphuric acid plant is part of the restructuring of FACT under consideration of the Government and is yet to be sanctioned.