Hindustan Organic Chemicals Ltd. (HOCL), which manufactures phenol and acetone, is in serious trouble. While on the financial front the company has made a loss of Rs.20 crore so far this financial year, large scale import of phenol and acetone from foreign markets threaten to bring curtains down on one of Kerala’s largest Central public sector undertakings.
Company sources said losses would mount this year as there has been no production of phenol over the past 60 days. Last year the company registered a profit of Rs.26 crore and a profit of Rs.130 crore during 2010-11.
Anti-dumping duty imposed on phenol and acetone imports from countries such as the USA, Korea and Taiwan was lifted in March 2012. The key reason for the company’s troubles is the unprecedented dumping of phenol and acetone in India from these countries.
Though India produces nearly the entire quantity of its requirement of 1.25 lakh tonnes of phenol, unscrupulous traders have been importing more than what is needed and selling the product at rates much lower than HOCL’s.
According to marketing sources, HOCL sells phenol for between Rs.93,000 and Rs.95,000 a tonne whereas imported phenol is sold for Rs.87,000 per tonne in addition to undisclosed incentives given to buyers. More trouble is expected for HOCL from October 2013 when anti-dumping duty on the products will be lifted from South Africa, Singapore and some of the European Union countries, said a spokesman for Save HOC Joint Action Council, a combine of trade unions at the public sector unit.
HOCL’s Kochi unit at Ambalamedu has an installed capacity to produce 40,000 tonnes of phenol a year, but actual production has been reduced by half this financial year and there has been virtually no production over the past two months.
The situation threatens the future of nearly 500 employees, including officers, directly employed by HOCL.