The financially troubled Fertilizers and Chemicals Travancore (FACT) is set for some relief and gain a little leeway in its revival projects with the Union Cabinet on Wednesday approving the sale of 481.79 acres held by the public sector company to the Government of Kerala.
FACT has been allowed to utilise the sale proceeds for various programmes drawn up by the company.
Kishor Rungta, Chairman and Managing Director, welcomed the decision and said the ₹970 crore generated by the deal with the Kerala government would go a long way in helping the company revive its fortunes. The priority is to add 3.5-lakh tonne capacity to fertilizer production. The products will include both Factamfos and DAP.
Capacity augmentation
Besides, the money will also be utilised to improve storage capacity. The acid tanks are deteriorating and have to be refurbished and new storage capacity added.
These projects will be done after meticulous planning to ensure that the money is used optimally, Mr. Rungta said.
A spokesman for the Save FACT Action Forum welcomed the development but expressed disappointment that the sale was not approved in tandem with the approval of a proposal for financial restructuring.
The financial restructuring would have involved writing off about ₹2,000 crore of company’s debt. The spokesman also claimed that FACT land was being sold to the State at a rate below the prevailing market rate.
Capital deficiency
The Cabinet decision also means that the sale proceeds will be used to address working capital deficiency, improve balance sheet, and enable the company enhance physical and financial performance by implementing capacity expansion projects for sustainable growth.
The land sale approval will help FACT reduce bank borrowings and implement projects for enhancing fertilizer production capacity and upgrade logistics/raw material handling facilities.