REC takes control of Facor Power after loan default

Mumbai : Rural Electrification Corp Ltd has taken over management control of Facor Power Ltd, a subsidiary of Ferro Alloys Corp, after a default in the repayment of a loan. The state-owned company has appointed V.K. Singh, S.K. Sahu, and Sanjay Kulshrestra as new directors of Facor Power and asked all other key personnel to demit office, according to a document reviewed by Cogencis.

  Facor Power Ltd had reported a turnover of 1.22 bln rupees and net loss of 858.47 mln rupees in 2016-17(Apr-Mar). Rural Electrification Corp Ltd had provided a term loan of 5.18 bln rupees to Facor Power Ltd, and the lender had issued demand notice for 5.72 bln rupees in November 2015.

Facor Power Ltd had set up a 100 MW thermal power plant in Randia, Odisha. The power plant project was to supply electricity to the parent company and to other captive consumers. The company had tied up for sale of 35 MW to Balasore Alloys Ltd but the agreement did not materialize, which resulted in a shortfall in revenue. As the loans to Facor Power Ltd had corporate guarantee of Ferro Alloys Corp and personal guarantee of two directors, corporate insolvency resolution process has been initiated against the parent firm.