Fertilizers and Chemicals Travancore (FACT) is expected to see a major investment in expansion and capacity addition in 15 years in the form of a new, 1,000-tonnes-per-day Factamfos plant at the Kochi division.
The last major investment in the fertilizer company was in a 900-tonnes-per-day ammonia plant, which involved an investment of more than Rs. 600 crore.
Involving an investment upwards of Rs. 250 crore, the proposed Factamfos production facility is among several other plans on the anvil for the public sector fertilizer giant.
A Rs. 680-crore, five-lakh-tonnes-per-day urea plant, using carbon dioxide from FACT's ammonia plant and 2,000-tonnes per day sulphuric acid plant have also been proposed.
The detailed project report is ready for the proposed Factamfos plant and a detailed environment impact assessment study is under way. The plant is likely to be commissioned in two years, the money being found through internal accruals and assistance from the Union government.
FACT management is also preparing a detailed project report on increasing the capacity of 360-tonnes-per-day phosphoric acid plant to 540 tonnes per day.
Factamfos, the 20:20:0:13 complex fertilizer from FACT, is its sales driver and during 2010-11 the company sold nearly 6.5 lakh tonnes of the product. Factamfos sales this financial year stands at over 4,20,000 tonnes till the end of December.
Meanwhile, it is learnt that consultant Deloitte is reviewing the working capital requirement of FACT, which uses naptha as feedstock.
The consultant had recommended in 2008 that FACT should be given a lifeline in the form of a special assistance of Rs. 450 crore in working capital.
The money, being given as interest-free loan, was meant to bridge the gap in working capital till LNG was made available in Kochi with the commissioning of the LNG terminal.
FACT is at a disadvantage over some of the other fertilizer companies in the country considering the feedstock it uses.
While the cost of LNG input is a little more than U.S .$ 4 per MMBTU, naptha costs six times that amount. Though the Union government provided Nutrient-Based Subsidy Scheme to make up for the gap, FACT's share of compensation was, initially, much lower than some of its competitors.
For example, while FACT was awarded Rs. 2,331 per tonne of Factamfos under the NBSS, its counterpart Madras Fertilizers was awarded Rs. 4,784 per tonne for its Factamfos-equivalent product. This anomaly is being rectified through an interim increase in the rate of compensation to FACT.
The FACT Officers' Association has said that the fertilizer company made a profit of Rs. 30 crore over the last two quarters and that the company would be able to end the year with a profit given that it would get its share of fertilizer subsidy and other incentives.
A spokesman for the Association said that FACT's future depended on the availability of natural gas at competitive rates.
He pointed out that if FACT received LNG as feedstock at the rate it was made available to other fertilizer companies, FACT would have ended the financial year 2010-11 with a profit of more than Rs. 200 crore.
