Fertilizers and Chemicals Travancore (FACT) is keen to host the proposed common sulphuric acid plant for public sector fertilizer companies to source raw materials as a consortium.
Jaiveer Srivastava, Chairman and Managing Director of FACT, has said that fertilizer PSUs have decided to join hands to attain self-sufficiency in raw materials. As part of these efforts, there is a plan to set up a common sulphuric acid plant. “If that happens FACT Kochi is keen to have the plant here”, he said.
The plant is part of FACT’s Vision 2020 plans, unveiled early this year, which include investments to the tune of Rs.6,500 crore to achieve a total sales turnover of Rs.7,000 crore and a profit of Rs.300 crore.
Mr. Srivastava said that a team comprising officials from the Ministry of Fertilizers and Indian Fertilizer Association and heads of public sector fertilizer companies had visited Russia recently to open talks on sourcing raw materials commonly.
The talks, he said, ended on a positive note and miners were open to the idea of long-term contracts provided the fertilizer companies readied the logistics for the transport.
Some of the miners offered to form joint ventures in mining or even asked the Indian companies to set up sulphuric acid plant close to the mines.
Report of the Working Group on Fertilizer Industry for the 12th Plan says that about five million tonnes of rock phosphate and 1.2 million tonnes of sulphur are imported every year.
Nearly 65 per cent of the requirement for phosphoric acid is met through imports and India imported about two million tonnes of phosphoric acid during 2011-12. Besides, the entire requirement of potash, both for direct application and production of complex fertilizers is met through imports.
Price of LNG
“FACT is looking to cheaper LNG to sign long-term contract for purchase of the fuel, possibly in the range of $10 per mmBtu”, he said.
In order to reduce its burden, the fertilizer company has requested the State government to exempt its LNG supply from VAT, which works out to 13.5 per cent and Union government to exempt it from Customs duty (two per cent). Every dollar increase in the price of LNG per mmBtu costs FACT Rs. 51 crore per year.
He said that FACT had a geographic disadvantage but there was glaring difference in the price of gas being made available to public sector fertilizer companies.
Gas for upcountry fertilizer producers came at less than five dollars per mmBtu whereas FACT had signed a short-term contract with GAIL Gas for buying LNG at $19.5 per mmBtu.
Mr. Srivastava said that FACT was seeking LNG at the rate at which it is supplied to other companies or some compensation to make good the extra expenses on account of higher gas price.
He said the management and employees’ team at FACT was working hard to turn the company around as early as possible, within a timeframe of about two years.
The company has chalked out short-term, medium-term and long-term plans to achieve its goals. The short-term plans include augmenting revenue through sale of agricultural produces and imported fertilizer raw materials as well as finished products.
Some of the steps taken to increase cash flow include making FEDO and FEW independent profit centres and venturing into new areas.