G.K. Nair

Kochi , July 22

FERTILISERS and Chemicals Travancore Ltd (FACT) is in the process of becoming a joint venture partner in the Petrochemical complex proposed to be set up in Kerala by GAIL.

Preliminary discussions are over and GAIL (India), whose response has been positive so far, is preparing a feasibility report which is expected in a month, Mr G.C. Gopala Pillai, Chairman and Managing Director, FACT, told Business Line on Thursday.

He said FACT had expressed willingness to part with 500 - 600 acres of land for setting up the plant in its Ambalamugal complex. Certain portion of the land value could be its equity in the proposed company, he said. Besides, the infrastructure available at Ambalamugal could be made available for the proposed complex, he said.

Meanwhile, he said, FACT has resubmitted its earlier proposal to revive the unit by "trimming it" as desired by the Centre to the Board for Reconstruction of Public Sector Enterprises (BRPSE) on July 6. As the Union Government is actively considering the proposal, it is expected to clear the package by end-August, he said. The Ministries of Fertilisers and Finance are convinced of the future prospects of the company especially after commissioning of the LNG terminal here by mid-August 2009. ***

The company had requested the Centre to write of 50 per cent of the total outstanding loan amounting to Rs 574 crore as on March 31, 2005 and convert the rest into Government's equity in the company. Besides, it sought waiving of Rs 81-crore outstanding towards interest as on March 31, 2005. Mr Pillai said his discussions with the officials in the Ministries of Fertiliser and Finance early this month were encouraging.

He said that the fertiliser pricing policy coupled with high cost of raw material (naphtha) drove the company into the red. Once the revival package is approved and it is put back on the track the company would be able to break even in two years' time, he said.

When the ammonia and urea plants were set up, the price of naphtha was around Rs 4,000 a tonne. Where as, it was Rs 19,374 on July 1. Besides, he said, the urea plant at Ambalamugal needs to be modernised.

Modernisation schemes with low investment and easy payback facility would ensure sustained profits. Besides, new proposals on infrastructure development, expansion etc, would increase profits, while new ventures in different emerging fields would stabilise the organisation and ensure steady growth, Mr Pillai said.

Besides, he said, the FACT Engineering Development Organisation (FEDO) and FACT Engineering Works (FEW) would undertake infrastructure projects such as road, bridges and those related to power generation. FEDO could take up project formulation, preparation of detailed reports and their execution independently, he said.

According to him, FACT is also embarking on diversification by entering into manufacture of bio-fertilisers. It also mulls producing bio-pesticides apart from venturing into agri-rural related activities, he said.

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