Fertilizers and Chemicals Travancore, which has drawn up a list of long-term investments totalling roughly Rs. 7,000 crore, will monetise its assets to raise approximately Rs. 650 crore to scale up production of a phosphoric acid plant and to build new sulphuric acid and complex fertilizer plants at the Kochi division.
The Chairman and Managing Director Jaiveer Srivastava told a press conference here on Tuesday that the public sector company would use its assets to raise money for the three projects, one of which had already received the environmental clearance. He did not divulge the details of how the company would go about raising the money.
Mr. Srivastava, who took charge in April this year, said that the plans involved raising production at the phosphoric acid plant from the current 360 tonnes per day to 500 tonnes. The proposed sulphuric acid plant will have a capacity of 2,000 tonnes per day and the new complex fertilizer (Factamfos) plant will produce 1,000 tonnes per day.
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Despite its financial troubles, FACT “is on resurgence” mode and “things are moving in the right direction”, said Mr. Srivastava, who described the recent recommendation by Board for Reconstruction of Public Sector Enterprises (BRPSE) for a Rs 991-crore financial package as a positive development. But you must hold your horses now, he said, pointing out that only the final approval by the Union Cabinet of the recommendation would call for true celebrations.
Gas price
However, Mr. Srivastava said that the long-term sustainability of the company depended on the price of natural gas. The company switched from naphtha to re-gassified LNG in early September this year. However, the price has been too high for the company to make a profit out of it.
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The CMD said that he was hopeful of the government of Kerala exempting RLNG from the purview of VAT. The price of natural has spiralled since it was first bought by FACT at $19.42 per mmBtu. The fuel was sold to FACT at $21.57 per mmBtu when the second consignment arrived in Kochi at the Petronet LNG operated terminal, serviced by GAIL’s pipeline network.
The latest offer price has been shocker for FACT. Mr. Srivastava said that gas was now being offered at $23.92 per mmBtu for the third consignment. Every dollar increase on gas price has an impact of Rs. 50 crore a year on the company’s financial performance.
High price of raw materials like benzene and feedstock has forced FACT to stop caprolactam production during the current financial year.
Mr. Srivastava said that FACT Design and Organisation and FACT Engineering Works was expected to generate a combined business of Rs. 1,000 crore in a year. FEDO has been formally declared an independent profit centre of the fertilizer company and will soon open its offices in Delhi and Mumbai, Mr. Srivastava said. He said that FEDO had the potential to become an international consultancy. The unit had landed contracts with Cochin Shipyard Limited and Bharat Petroleum Corporation.