FACT issue referred to Central agency; hearing on Sept. 16

The case of financially-troubled Fertilizers and Chemicals Travancore (FACT), one of India’s largest fertilizer makers, has been referred to Board for Industrial and Financial Reconstruction (BIFR), which has posted the first hearing on the case for September 16.

The hearing will be an opportunity for stakeholders such as employees’ unions and banks and financial institutions, with exposure to FACT.

BIFR, under the Department of Financial Services, looks into financially troubled companies and orders either revival or closure. Usually when a company accumulates losses equal to or more than its net worth it is considered a sick unit. Net worth is paid up capital plus its free reserves.

FACT recorded net losses during the last two financial years. The fertilizer company registered a loss of Rs.264.96 crore during the last financial year. During the previous year, the loss was Rs.353.96 crore. Sources said FACT would be the first Schedule A company to come under BIFR net and the company’s case would be heard by the Chairman’s Bench. A spokesman for Save FACT Action Council, a combine of trade unions at the fertilizer company, said if the financial package recommended by Board for Reconstruction of Public Sector Enterprises was sanctioned FACT could get out of the BIFR net.

However, the recommendation for Rs.999-crore financial package has been pending for about two years now.

A recent visit by the Union Fertilizer Minister Ananth Kumar had raised hopes that the company would see better days. Save FACT Action Committee had called off its 249-day relay hunger strike with the assurance from the Union Minister that FACT revival would be addressed on an emergency basis.

The management of the company had also submitted long-term and medium-term plans for its revival and sustained growth.