Fertilizers and Chemicals Travancore (FACT) has recorded a loss of over Rs. 130 crore during the first six months of the current financial year, triggering fears of the company falling under the Board for Reconstruction of Public Sector Enterprises (BRPSE) after erosion of the company’s net worth from accumulated losses.
BRPSE role includes examining proposals for revival/ restructuring of sick or loss-making public sector enterprises for their turnaround.
The public sector fertilizer company, staggering under an unprecedented rise in raw material prices and insufficient working capital, had shown a loss of less than Rs. 30 crore during the first six months of 2011-12. Observers fear that even considering the naphtha compensation due to the company may not be sufficient to put it back on track to financial health.
A delegation of Save FACT Action Committee, comprising trade union leaders from various political parties and MPs from Kerala, will make their fears about the fertilizer company heard in New Delhi in the coming week, sources told The Hindu here on Sunday.
The delegation is expected to talk to the Union Fertilizer Ministry on the issues involved, including revised payment in naphtha compensation until natural gas is made available in Kochi.
Sources in the fertilizer company said FACT had not been able to source sufficient raw materials in time, the prime cause for the troubles faced by the company.
Though there has been lack of raw materials, there has not been significant fall in demand for products from the company.
The key reason for interruption in the supply of raw materials is the lack of long-term contract for supplies, which has been on the discussion table for years now. The lack of raw materials had also resulted in production interruptions.